CUSTOMER

DEVELOPMENT

AN INTRODUCTION

JONI SALMINEN, 20.11.2014

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

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.

STEPS OF CUSTOMER

DEVELOPMENT

CPSCustomer

Problem

Solution

UNDERLYING

PHILOSOPHY

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.)

10 PRINCIPLES OF

CUSTOMER

DEVELOPMENT

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)

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)

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.

4. MAKE NOTES

Make notes - obviously. You don't want to forget, but without notes

you will.

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.

6. AVOID LOADED

QUESTIONS

Avoid loaded questions. False: "Is this design good?" Correct:

"What do you think of this design?"

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)

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).

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.

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)

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?

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.

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.

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.

CASE PLANTUI …

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 :)

THANKS FOR

LISTENING!

(You can reach me at LinkedIn)