#5 | ?? Introduction to Customer Discovery Philosophy - How to solve your Customer problems

Daniele Dellavalle - December 18th, 2023?

The Customer Discovery is a critical component of the Customer Development model. This phase is about deeply understanding customer problems and needs before defining a solution. ?

?

A startup begins with the vision of its founders on a new product or service that solves a customer’s problems or needs. The No 1 goal of customer discovery translates into turning founder’s initial hypotheses about their customers and market into facts.?

?

A startup is not a smaller version of a large company?

The approach to the customer discovery process taken within established companies is turned upside down in the startup world. There are several "DON’Ts" that might seem heretical to those seasoned in the corporate world.?

• Understand the needs and wants of ALL customers?
• Make a list of ALL features customers want before they buy your product?
• Leverage Product Development a features list of the sum of all customer requests?
• Build an MRD (Marketing Requirements Document)?
• Confirm if your customers will buy your product through focus groups and tests?

Instead, develop your product for the few, not for the many, and start building before you know you have any customers for it.?

?

Search for the Problem/Solution Fit?

The customer discovery process searches for problem/solution fit. Have we found a problem lots of people want us to solve? Does our solution solve the problem? In essence, does your startup’s value proposition match the customer segment it targets??

?

Develop the Product for the Few?

In existing companies, where the customers and market are well known,?a Marketing Requirements Document (MRD) captures all possible customer feature requests and the engineering team will automatically build them into the next product release.?

In a startup, the first product is not designed to satisfy a mainstream customer. No startup can afford to build a product will all the features and the go-to-market timeframe would take years and make it obsolete by the time it arrived. Instead, successful startup should focus on a very small group of visionary customers.?

?

Earlyevangelist: The Most Important Customers?

Every industry has a small subset of visionary willing to pay to test early products, even if they are not perfect and they are missing some features. Earlyevangelists willingness to pay for early access to the product is pivotal to test the entire buying process. They’ll tell the others about your product and spread the word that the vision is real.?

?

?Build a Minimum MVP?

The goal of the MVP is to build the smallest possible feature set: founders should develop the core features of the product applying small quick iterations. If no one thinks your MVP solution is interesting, iterate, refine your solution or pivot until an adequate number say ‘yes’. If, and only if, no customers can be found for the MVP most important features, bring customers additional feature requests into product development.?

The mindset shift in thinking to an incremental and iterative MVP as opposed to a fully featured first product release is crucial.?

Specifically for software startup, the phases of the MVP development are the following:?

1. Prepare for customer engagement?

• Build low fidelity MVP with a very small group of users?
• Test if the vision of the problem matches customers?

1. Low fidelity MVP test?

• Gradually expand the test audience?
• Understand the problem you are solving?
• Test if customer cares?

1. High fidelity MVP test?

• Determine if customers will buy your product ?
• Identify Earlyevangelists who believe the product solves their problem?

1. Optimize getting more customers?

• Boost the test audience expansion?

?

Use the Business Model Canvas?

The Business Model Canvas by Alexander Osterwalder represents any company in nine boxes, depicting the details of a company product, customers, channels, demand creation, revenue models, partners, resources, activities and cost structure.?

A key aspect to maximize the positive impact of this business artifact on the day-to-day activities is to use the canvas as a scorecard to track progress in searching for the right business model. Once a week update the canvas to reflect any pivots or iterations, highlighting the changes from the previous week. Then review all changes with your team: the approved ones will be integrated in the new version of the canvas. This method highlights the changes over time and clearly shows the business model adjustments and potential future trends. ?

?

The four phases of Customer Discovery?

Phase 1 - Deconstructing the founders’ vision into the nine parts of the business model?

Phase 2 - Experiment to test your problem hypotheses: testing the elements of the business model with the goal of turning them into facts or discarding them if they are wrong.?

Phase 3 - Test your solution, presenting your value proposition and the MVP to customers to compare their responses to the test outcome goals that you have previously set.?

Phase 4 - Assessing the test outcome and verify the following items:?

• Get full understanding of customers’ problem?
• Confirm the value proposition solves the customers’ problem?
• Determine that a sizable volume of customers exists?
• Learn what customers will pay?
• Confirm the revenue model would support a profitable business?

?

* Sources:?

The startup owner manual, Blank/Dorf?