Customer development is a concept developed by the renowned serial entrepreneur Steve Blank. It is a complete methodology to understand the customers and validating your business idea for building the right product or service. It is essential for startups and entrepreneurs so that they invest their time and money in building products and designing services that customers want badly. Furthermore, it opens up new opportunities and ideas, it allows you to test your ideas and optimize existing products for a better response. In today’s world, it is no more difficult to build an innovative product but it is tough to design products that will sell like hotcakes. Hence, customer development is highly important for the success of a product or service and eventually, for the entire company.
The Systematic Approach To Customer Development –
95% of startups shut down within a couple of years because they do not validate their business ideas beforehand and understand the demand for the products they are designing and selling. Without proper customer demand and response, no business can run. Customer development is like an experimentation of your business ideas and only if the results are positive, you can material the idea. This reduces the risk of failure considerably and if you design your products as per demands of your targeted customers, your company is sure to succeed and prosper.
The customer development model assumes that you have untested business ideas in your mind. You do not know who your customers are, what features you should include in your product or service, what should be the pricing, how to reach out to your targeted audiences, and resources and funding required. All you need to do is put together your key ideas and formulate an experiment containing all the questions whose answers you need from customers to design your products perfectly. You have to collect data and information manually from targeted customers and then analyze the data to understand whether your business idea will sustain, need modifications to sustain and prosper or fail completely due to lack of demand. You can hire freelancers to do the interviews and get the feedback from your targeted audiences. You can also post freelance jobs to hire social media enthusiasts to collect feedbacks from online users.
Benefits Of Customer Development –
Avoiding Failure – There are various entrepreneurs who believe in the philosophy of “create your product and the customer will follow”. This approach is highly risky even though the product may be robust because it is built without any touch of the customers’ real demands and requirements. Customer development is based on the philosophy of “ask the customers and deliver as per their demands”. This approach is more logical and has higher chances of succeeding as the targeted customers are defined and they are ready to take your product.
Potential Of Ideas – Before you can invest your money and time on your business idea, you have to understand the potential and worthiness of your idea. It can only be assessed by going in the field and fetching feedbacks. There are some ideas which may seem promising in the short term but in the long run, they are likely to fizz out. You can easily identify them by surveying and analyzing the data collected.
Releasing The Best Product – Before you can make your product available in the market for purchase, you can provide demos and samples to the potential customers and fetch feedback. It will help you modify the product and release the best final product so that it becomes an instant hit.
Understanding Target Customers – Most of the entrepreneurs have a general idea about who could be the potential customers but when you go in the field and interview people randomly, you get the complete idea about the exact customer base to target.
Lastly, you can get new ideas and design entirely new product based on the demands of the customers. Furthermore, if your product is something really different, with customer development, you are carving out a new niche for yourself and preparing customers to accept your product.
The Four Steps Of Customer Development –
Customer Discovery –
From the name, you can understand that this step is all about understanding who your potential customers can be. You need to hire freelancers who can go in the field and make prospects understand your idea of how it is solving a known problem. Those prospects who will show interest in your product, surveyors need to fetch more information about them and how they want the product to be so that they will actually purchase it. Then all the data have to be analyzed to understand the common features of the positive prospects to define the targeted audiences and potential customers.
Customer Validation –
This step is for understanding whether the product’s demand will be short-lived or it can have a long-term demand and there are scopes for scalability and repetition. There is no point in investing time and money into something that is short-lived and has lower chances of making it to the break-even point and making profits. You cannot create a company unless a product is sustainable in the long run.
Company Creation –
This step is all about estimating the funding and resources required, the targets to achieve, and formulating the production, sales and marketing strategies. Based on all these parameters, it is also estimated whether the business is scalable or not.
Company Building –
It is the formal start of execution of all the plans and strategies. Freelance jobs are posted to hire skills people in different departments of the company. All the efforts are put to prepare the best product with the goal of scalability in mind.
Therefore, one can easily understand the importance of customer development for the success of any business and business idea. Every startup needs to adopt the methodological process before they actually start building a company and its products and services.