What is customer development?
The customer development model focuses on understanding customer problems and needs.
Customer development is a methodology of building startups and new corporate ventures. This model is merely a companion for the product development model.
The methodology assumes that new ventures have untested assumptions about their business model:
- who are your customers?
- what features they want?
- what channel to use for reaching said customers?
- what is the revenue strategy or pricing tactics?
- how to get/keep/grow customers?
- what are the strategic activities needed to deliver the product?
- what are the internal resources needed, partners needed and costs?
Customer development starts with the key idea that there are no facts inside your building so get outside to test them.
- Customer discovery is the first step that captures the founders’ vision and turns it into hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts.
- Customer validation tests whether the outcome from the first step is repeatable, profitable and scalable. Iterate until this becomes true.
- Customer creation is the start of product development model. It builds demand and drives it into the sales channels.
- Company building transitions the organization from the search and discovery mindset to execution activities.
Customer development is the opposite of "if we build it, they will come" product development strategy.
This model was created by Steve Blank and according to him, startups and new ventures are not smaller versions of a large organization that executes a proven business model, but an organization in search of a scalable and profitable business model.