What is customer discovery?
"Develop the product for the few, not the many" - Steve Blank
While most startups blindly focus on the first customership, they only find out after the product is out of the building that the customers do not behave as expected.
As the name implies, the purpose of this first step is to find out who you customers are and to see whether the problem you believe you are solving is important to them. The goal can also be articulated as problem/solution fit. Formally speaking, you need to discover whether the problem, product and customer hypothesis in your business plan are correct. You need to leave the guesswork behind and get out of the building in order to learn what these "high value" customer problems are, what is it about your product that solves these problems and who specifically are your customers and users. What you will find will also help you describe your unique differences to potential customers.
An important observation is that the goal of customer discovery is to define the product and its positioning not to collect feature lists from potential customers nor to run focus groups. The job of the customer development team/the founders is to see whether there are customers and a market for that vision.
Your customer discovery phase will depend a lot on the type of market you are entering. When researching the market, you should decide in which market type you want to position the product.
During this step, the startup should find visionary customers who are willing to be early adopters for the product. These customers understand that they have a problem and they are actively looking for a solution or built a solution out of parts. These customers are called earlyvangelists.
The framework on gathering information in this step is through customer interviews.
Given all you've learned talking to customers, does your initial assumption about the solution and the problem still stand? You will need to revise your assumptions and assemble your first product presentation. If it's too early got a real product demo, the product presentation should cover five key product features. This presentation will be shown to everyone who you talked to in the customer interviews and qualifies as a potential customer.
Some of your customers give better insights and feedback on the product presentation than others. Take another look at these customers and decide is they are candidates for a customer advisory board.
When testing the product presentation, customers will fall into four main categories:
- love your product, no changes are needed
- like your product but they consistently want more features at the first release
- customers understand your product after a long presentation but they're not pulling the product from your hands
- customers don't see a need for your product
So, after you have feedback, you should do 4 things:
- verify the problem
- verify the solution
- verify the business model
- pivot or go to customer validation
Iterate until you find early customers that get a buy-in for your solution.
Once you find these early customers, the first release should be tailored according to their wishes.
The order of these 2 actions is important: first you find customers for the product you are already planning and then you tailor some details of the release within the limits of the original product vision.
The aim is to learn whether or not the startup has realized a real problem that is meaningful for the ideal customer. You are limited in a limited number of customers and not just randomly contact some big potential customer.
When customer discovery is considered done, you need to write the deliverables to the next sub process, customer validation. The deliverables are a problem statement document, a product requirement document, a revenue plan and a solid business and product plans.
As a short summary, in this process you need to answer:
- have we identified a problem that a customer wants to get solved?
- is our product a solution to these customer needs?
- have we learned enough to go out and sell now?
If and only if, all the answers are positive, it's time to move on to customer validation.