Customer development: An introduction

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A presentation at Boost Turku, Finland. 19th October, 2014.

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Customer development: An introduction

  1. 1. CUSTOMER DEVELOPMENT AN INTRODUCTION JONI SALMINEN, 20.11.2014
  2. 2. STRUCTURE 1. What is customer development? 2. Steps of customer development 3. Principles of customer development 4. Barriers of customer development 5. Other ways of validation: landing pages, crowdfunding
  3. 3. WHAT IS CUSTOMER DEVELOPMENT? A method of validating demand for a (software) product by developing hypotheses (”guesses”) and then testing them objectively ”outside the building”. The goal is to enable a scalable startup by finding a repeatable sales model. The method is developed by Steve Blank of Stanford University.
  4. 4. STEPS OF CUSTOMER DEVELOPMENT
  5. 5. UNDERLYING PHILOSOPHY CPS Customer Problem Solution
  6. 6. CUSTOMER DEVELOPMENT = RESEARCH Takes usually the form of semi-structured interviews (=method). You want to avoid both false positives - i.e., getting the impression your idea is good although it sucks; and false negatives which is to conclude the idea is bad although in reality it's not (=objectivity). You want to create pull instead of push. For that, you need to first find the right product and market (=research purpose). (Market risk is higher than technology risk.)
  7. 7. 10 PRINCIPLES OF CUSTOMER DEVELOPMENT
  8. 8. 1. DON’T FOCUS ON YOUR PRODUCT Don't ask about your product, ask about their problem. Wrong question: "We have this product A - would you use it?". Right question: "Do you ever have this problem B?" [that you think the product A will solve] “Abstract your problem by a level. For example, if you want to know whether someone will use a healthy lunch delivery service, ask about ‘lunch’” (Cindy Alvarez)
  9. 9. 2. LISTEN, DON’T PITCH Pitching is for other times - you DON'T need to sell your product to this person, you only need to hear about his or her life. “Shut up for 60 seconds. This is a LONG, LONG time and it feels awkward. It also forces the person to go beyond the short (and probably useless) answer and go into detail.” (Cindy Alvarez)
  10. 10. 3. REPEAT, REPEAT Repeat what he or she says - many times people think they understand what the other person is saying, but they don't. Only by repeating with your own words and getting them to nod "That's right" you can make sure you got it.
  11. 11. 4. MAKE NOTES Make notes - obviously. You don't want to forget, but without notes you will.
  12. 12. 5. ”WOULD’VE SHOULD’VE…DIDN’T” Don't ask "would you" questions, ask "did you" questions. People are unable to predict their behavior, but they can fairly well tell what they have done.
  13. 13. 6. AVOID LOADED QUESTIONS Avoid loaded questions. False: "Is this design good?" Correct: "What do you think of this design?"
  14. 14. 7. AVOID ”YES OR NO” Avoid yes/no questions. What would you learn from them? Nothing. Avoid yes/no questions. Whichever one the person chooses, it's probably not useful for you. (Cindy Alvarez)
  15. 15. 8. DON’T VALIDATE, DISPROVE Focus more on disproving your idea rather than validating it. In philosophy of science, this is called falsificationism. It means not claim can be proved absolutely true, but every claim can be proved wrong. Rather than wanting to prove yourself right (at the risk of making a false positive), you want to prove yourself wrong and avoid wasting time on a bad idea. Remember: most startup ideas suck (it's true - I've seen hundreds, and most will never amount to real business - be very, very critical about your idea).
  16. 16. 9. REACH FOR SATURATION Make many interviews. Many = as long as you notice there are no more new insights. In research, this is called saturation. You want to reach saturation and make sure you've identified the major patterns.
  17. 17. 10. WAIT FOR IT… Only in the very end introduce your solution. Then ask openly what he or she thinks about it: "What do you see problematic about it?" Also ask if they know someone who would like this solution. “Avoid talking about your product or your ideas until the end - but then DO give the person the opportunity to ask you some questions. This is NOT a chance for you to sell your idea, it's just an equalizer. You've been asking questions the whole time, now it's their turn.” (Cindy Alvarez)
  18. 18. EXAMPLE QUESTIONS (CINDY ALVAREZ) • How is your customer currently dealing with this task/problem? (What solution/process are they using?) • What do they like about their current solution/process? • Is there some other solution/process you’ve tried in the past that was better or worse? • What do they wish they could do that currently isn’t possible or practical? • If they could do [answer to the above question], how would that make their lives better? • Who is involved with this solution/process? How long does it take? • What is their state of mind when doing this task? How busy/hurried/stressed/bored/frustrated? [note: learn this by watching their facial expressions and listening to their voice] • What are they doing immediately before and after their current solution/process? • How much time or money would they be willing to invest in a solution that made their lives easier?
  19. 19. BARRIERS OF CUSTOMER DEVELOPMENT • Social desirability bias (they want to please you) • Recall bias (they remember wrong) • Confirmation bias (you want to be right) • ”Build it and they will come” • Internalizing problem These are fancy names meaning that you want people to tell you honestly what they think, and you want to interpret it in an objective way, not being too fixed on your initial assumption (i.e., hypothesis). Be ready to change your opinion, like Gandhi advised.
  20. 20. NON-INTERVIEW METHODS, E.G. TESTING VIA LANDING PAGES a. Force customers to pay from the beginning - this way you see if the thing you’re building has value to anyone. b. MVP. Create first the non-scalable, bare minimum solution. This is not even a product, it's a service. Use manual labor over technology and get the user information through free tools like Google Forms, and track everything with analytics. The advantage is that you get hard data, not opinions. The disadvantage is that hard data doesn’t tell you why.
  21. 21. OTHER WAYS OF VALIDATION: CROWDFUNDING • Before, to manufacture a product you needed money from investors. • Now, you can collect that money through crowdfunding from buyers of that product. • Benefits 1. Pre-test concepts before production 2. Gain valuable customer feedback 3. Gain legitimacy for investors 4. Generate actual sales before even building.
  22. 22. CASE PLANTUI …
  23. 23. LEARN MORE • If you have to read one book about this topic, read this one: http://www.amazon.com/Interviewing-Users-Uncover- Compelling-Insights-ebook • If you want to read another book, then it's this one: http://www.amazon.com/Lean-Customer-Development- Building-Customers-ebook • If you need to read a third book, then you should stop doing a startup and become a researcher :)
  24. 24. THANKS FOR LISTENING! (You can reach me at LinkedIn)

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