3 Steps to Great Customer Development

I had the good fortune to work with many inspiring entrepreneurs from the US, Asia, Australia on Customer Development. I am also very fortunate to learn from seeing Kevin Dewalt, Justin Wilcox, Joel Gascoigne, Hiten Shah, Jason Evanish, Tristan Kromer, Trevor Owens, coaching entrepreneurs through the CustDev process.

Customer Development has always seem like a myth. As an entrepreneur new to the process, it is extremely jarring. A lot of people get disoriented by the type of questions that they should be asking, and are often overwhelmed by the mixed responses you receive.

In the past couple of months, I tried to hack my own process and came up with a spreadsheet system to make this iterative process as transparent and qualitatively measurable.

In three steps you can have a system that can be used in a loop, and allow you to figure out which questions are effective in a systematic way.

Much inspired by one late night conversation with Hiten several months ago. I hope this becomes a tool that many of you will find useful.

Other Useful Tools

First of all, there are plenty of awesome tools out there that inspiring teams have put together. Lean Canvas by Spark59, Validation Board by Lean Startup Machine (* disclaimer, I used to facilitate LSM workshops), Bento Boxes by LUXr. These tools are very good at helping you conceptualize Customer Development goals.

My own process heavily rely on distilling these concepts into a system that helps me track and get better at doing customer discovery.

I created this Google Spreadsheet and invite you to download, copy, share, modify, and use! The following three steps go over how you use the system.

Step 1: Defining the MVP

Whether you use the Lean Canvas, or Alex Osterwalder’s Business Model Generation, or the Validation Board, you are making a set of assumptions about the world where you believe your customers and product exist.

Writing things down really help, and the table below is my attempt in writing assumptions down in the first tab of the Spreadsheet. I call it the tab: MVP.

Much of this is based on my experience working with the Validation Board. I like the Validation Board approach because it helps me zoom in on the most crucial assumption that will break the business model.

(** I must credit Trevor and the Lean Startup Machine team in iterating the Validation Board to today’s form, and Hiten in encouraging the Spreadsheet approach)

Once you write down who your customers are, the problems, and the assumptions (assumptions can be anything from your business model canvas or lean canvas) for the model, you are ready to move on to the next step.

Step 2: Painting the Customer Persona & Needs

In the spirit of writing things down, I believe that it is best to define your customers before you go out to find them. I follow the framework that LUXr published on their blog.

The exercise pushes me hard to think of someone that I know who might fit the profile of my customer. I write down as much details as I can to make sure that I can relate to the customer when I encounter them. In this case, my friend Rob is an ideal customer.

The important thing to remember here is: your friends and family really should not be your Early Adopters. They won’t tell you that your baby is ugly. However, knowing them well can help you identify other customers in the real world.

After going through a few of these exercises, you may start to form assumptions of the roots of the problem these customers are facing. I like the Three Needs approach, where you can drill down to WHY (latent needs) and look beyond the HOW (implied needs) and the WHAT (expressed needs). Take a look at Simon Sinek’s Golden Circle for more on this.

Step 3: Writing out the customer discovery questions

After going through the first two steps, I believe you have given yourself a thorough opportunity at empathizing with your customers.

In every customer discovery conversation, the ultimate goal is to stay consistent and evaluate whether or not your questions are effective in providing insights to validate or invalidate the assumptions that you have. Therefore, I found writing them down before hand really helpful.

I lumped the customer discovery questions I designed into their respective categories as shown in the table above. The end goal is to evaluate whether the person you are speaking to a) is your target customer, b) has the problem, c) has behaviors that satisfy your riskiest assumption.

The spreadsheet above helps me frame these questions and allows me to take notes against the questions that I conceived. At first, you wouldn’t know which questions are effective, and most entrepreneurs struggle with this part. This is why the spreadsheet has been so helpful.

Over time, I could gleam from the answers I record, and the qualitative evidence that I gather to decide which questions are effective and insightful for my customer discovery goals.

As a plus, I stay consistent with the ways I validate assumptions.

Bonus: Asking for referrals

Lastly, always end your customer interview by asking for referrals. This helps you start building up a list of early adopters that you can constantly reach back to.

Conclusion

I’ve shared this with quite a few mentors & friends (thanks Rob, Michael, Lukas, Kevin) that are extremely active in customer discovery. This is definitely the version 1, am excited to see what you all think.

Download the CustDev Tool spreadsheet here http://i.raywu.co/custdevtoolsvbtle

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Download the CustDev Tool spreadsheet here http://i.raywu.co/custdevtoolsvbtle

 
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