A couple of weeks ago I learned all about Customer Development, by attending another fantastic Founders Network event. Once again, superbly put together by Tech North.
The event was delivered by co-founders of Lyst; Rob Fitzpatrick and Devin Hunt, and Rob kindly gave us a signed copy of his wonderful book ‘The Mom Test‘, which gives some wonderful insight into assessing what your customers want.
Rob Fitzpatrick and Devin Hunt, getting ready to deliver the event
Although the event was focused on Customer Development, it also gave us some interesting insights into how startups can become thriving businesses. Including finishing off the session with a fireside chat from one of the founders of Cocoon; Sanjay Parekh.
What is Customer Development?
Devised by business school professor Steve Blank, in short, Customer Development is discovering and validating the right market for your business idea.
Why do Startup Businesses Fail?
Rob started off by asking us a simple question, what is the number one killer of startups? A few valid answers were thrown up from the floor, including:
- Cashflow issues
- Founder Conflict
- Too many ideas / Not enough focus
- Issues finding the right people / Talent
- Poor Customer Research / Market Research
- Insufficient testing of the business idea
However the answer given was Premature Scale.
Premature scale is when a small company starts acting like a big company before it is ready. This may include investing in an idea early, and not leaving enough room to pivot.
The antidote to premature scale is to take ‘baby steps’, or using Robs words, to:
- Learn (find out all you can about the market)
- Confirm (seek feedback and evidence to ensure you are choosing the right path)
- Grow (grow in the direction that has the supporting evidence)
Ensure that your business has the correct foundations in place before it can expand.
How do we Ensure we get the Foundations Right?
Talk to your customers (is the obvious answer), but this is not as straight-forward as you may think.
Customers are bias, and can easily be swayed (even if they don’t realise it) into giving compliments and/or opinions, instead of hard scientific facts.
The way around this is to ask the right kind of questions.
Rob gave us a few examples. I will list them here, describing why they are good or bad:
Do you think its a good idea?
This is a bad question, as people don’t usually like to offend, so may give a yes, even if they think otherwise. Even though it doesn’t seem it, the question is a leading one.
Would you buy a product which solved this problem?
Another bad question. You are leading people towards your product, and again people don’t like to offend, so they may say yes, even with no intention of buying such a product.
How do you currently deal with this problem?
This is a good question, you can gauge the replies and formulate a solution based on them.
Talk me through the last time you had this problem
Another good question, similar to the previous question. This allows you to learn how they solved the problem and potentially offer a simpler solution.
How much would you pay for this?
This question is only good if it is instantly followed up with an order, or a deposit is placed for your product.
How much are you already spending?
A better question then the previous one. You can gauge the market and assess how much is being spent on a similar solution.
Buy the Book
You can find out more about Customer Development by buying the book: The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you.