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Customer Development

Customer Development

Introduction to customer development

Many companies fail because they did not exercise customer development and gain product-market fit
Customer Development:
Understand customer problems and needs
Develop a repeatable sales model
Deliver on customer demand
Product-Market Fit - identifying a compelling value hypothesis
Features you build
Audience who cares
Valuable business model
Create a product that solves a need at a price point the customer will pay.
Customer development helps you quickly find product-market fit
Customer development lets you save money and time while deciding the market need.

Four stages of customer development

Good customer development = constant contact with your customers

Phases of Customer Development

Customer Discovery
Who are your customers
Is the problem you’re solving important to them?
Secondary research
Primary Research - surveys & interviews
Customer Validation
Build a repeatable sales process
Sell the product to early customers
Customer Creation
Increases demand for a product
Company Building
Transitions into a more formalized structure

Identifying a Problem

Where product ideas come from

Great products solve painful problems
Product Ideas:
Both internal and external origins
Sales questions
Customer service calls
Data scientist observe use trends
Customers share their needs
How to cultivate leads:
Look at industry trends
Observe your competition
Product manager:
Look at product ideas critically
Determine market opportunities

Overview of customer discovery

Goal of customer discovery:
Who are your customers?
Is the problem you’re solving important to then?
Will customers pay for your solution?

Four aspects of Customer Discovery

State problem hypothesis
Test problem hypothesis
Test solution
Verify the hypothesis or pivot

Assumptions

Who are our users?
What are their problems?
Why would they buy our product?

Customer Discovery

Generate measurable data to confirm or deny your hypothesis
Assumptions are hypotheses

Creating Hypotheses

Who are your users?
What are their problems?
How will you solve them?

Listen and learn about your target audience and their problems

What is a problem hypothesis?

Problem hypotheses is not the same as a product hypotheses

Create a Problem Hypothesis

Define who are your users
What are their needs, goals, or desires?

User Story Template

As a [user type] I want [behavior] so that [outcome or benefit].
Example (Twitter):
As a user I want to be able to share short ideas with my friends so that I can stay connected without spending a ton of time writing.
Example (Salesforce):
As a sales professional, I want to be able to manage my leads in one place so I can close more deals.
User story = hypothesis

Create your own problem hypothesis

This is not for demographics or marketing personas
Form a hypothesis > user needs
See below worksheet:
02_04 Hypothesis Worksheet.pdf
112.9 kB

User Research

Performing User Research

Avoid guessing at what a user needs
Products start as a ideas, but they are all assumptions

Questions to answer:

Have you identified a problem the customer wants to solve?
Does your product solve the customers needs?
Is your business model viable?
Have you learned enough to begin selling it?

Primary & Secondary Research

Research can come from both primary and secondary sources
Secondary Research:
Academic research
Private research firms
Consumer reports
Expert interviews
Primary Research:
Acquiring information by talking to users directly
Direct feedback from your users is the most valuable

Define Your Target Market

Get feedback from target users about their problems and your proposed solution
Psychographics - How people are classified by their attitudes, aspirations, and psychological criteria.

Target Audience

Use demographic information or job title
Look for patterns in the responses during customer research

Defining Your Target Users

Start with demographic profile
Gender
Age
Job
Location
Discover psychographic profile

Secondary research techniques

Secondary Research:
Academic research
Private research firms
Consumer reports
Expert interviews
Use research that already exist

Secondary Sources

Google Scholar
Pew Research Center
Consumer Reports
Expert interviews

Seek expert advice

Avoiding pitfalls
Refining your hypothesis
Defining your target user

Primary research techniques

There is no replacement for speaking directly to customers
Primary Research:
Acquiring information by talking to users directly
Direct feedback from your users is the most valuable
Two most common forms of primary research are surveys and interviews

Surveys

Measure attitudes
Collecting quantitative feedback
Understand the degree of user beliefs
Reveal how user feelings change
Open-ended questions are not good for surveys. For example:
Do ask how they like a product on a scale of 1-10
Don’t prompt them to answer a long-form field asking if they like their job. Leave these kinds of questions for interviews.

Open-ended questions in interviews

Allow the user to speak freely
Watch the user’s body language
Tailor the conversation

Interviews

Dive more deeply with questions

How to create a screener

Screener - determines if someone would be a good candidate for user feedback

Screener

List of user characteristics
Job title
Behavior
Product used
Determine who you do not want to talk to as well
Create a user-friendly online form
Identify the channels where your users spend their time
Facebook, LinkedIn, Reddit, and dedicated forums are good places to screen
03_05 Screener Worksheet.pdf
111.5 kB

User Surveys

What makes a good survey?

When to use surveys?
Measure attitude, intent, or task success
Tracking changes over time?
Quantify user problems
Don’t use surveys to:
Discover the reasons behind your users’ cares and needs
Learn if your product can be used effectively
Understand user behaviour in your product
Problem Discovery & Product Discovery > Interviews

Survey Characteristics

Short
Specific purpose or insight
Questions are grouped together
Broad questions come before specific questions

What to avoid on surveys

Double-barreled questions (two questions in one)
Opened-ended questions (why questions)

How to create a survey

04_02 Survey Example.pdf
94.3 kB

How to analyze survey results

Look at how many responses you have received
04_03 Analyzing Survey Results Example.pdf
104.2 kB

User Interviews

What makes a good user interview?

Customer interviews:
Free flowing
Enjoyable conversation
One-sided (build rapport and keep them talking)

Effective Interviews

Open-ended and non-leading questions
Categories:
Who
What
When
Where
Why
How
Instead of, “Do you like you current cable provider?” ask, “What do you think about your current cable provider?”

Intensity arc

Start with easy questions like small talk or demographic information
As the user becomes more comfortable you can ask more intense questions
Once you’ve gotten to the core, ask more simple questions
Don’t feel confined to your prepared questions

Free-flow questions

Can you give me an example?
Can you say that in another way?
Keep your interview focused on discovery

How to create an interview template

Learning objective
What are you trying to learn by talking to this person?
Introduction
Share expectations
Lay ground rules
Questions
Start with low-intensity questions
“How long have you lived in this city?”
“Who is your current employer?”
Higher-intensity questions?
“What are your three biggest headaches on a daily basis?”
“What are your three biggest problems?”
“If you could wave a magic wand and change anything, what would it be?” (helps when interview gets stuck)
Keep them open-ended
Start with who, what, when, where, why, and how
Seek clarity?
Can you repeat that?
Can you say that in another way?
Can you give me an example?
Don’t be afraid to go off topic
Ended with low-intesity questions
Weekend plans
Personal interest
Contact information
05_02 Interview Template.pdf
110.2 kB

How to conduct a user interview

Before starting the interview, you want to get into the right headspace

Prepping for the interview

Get into researcher mode
Friendly
Engaging
Casual

During the interview

Take thorough notes
Record the interview if possible
Stay positive, but avoid biasing any responses.
Listen to all user feedback
Be curious
Be comfortable with silent
Pay attention to their body language

Make the interview comfortable

Sit lower in your chair
Put space between you
Smile
Be engaging
Make eye contact
Express gratitude
Encourage them

How to analyze interview results

Look for patterns in your interview results

Key patterns

Same problem is mentioned
Users are seeking solutions
Unhappy with the available solutions
Budget available to solve the problem

If you find no patterns, you may have to reconsider your premise and try again
Avoid jumping to conclusions on patterns until you interview each participant
Patterns may or may not validate your problem hypothesis

Conclusion

When to confirm or pivot

You will discover one of three things:
Your assumptions were correct - move on to customer validation
You were close but there are key points for you to reconsider - adjust your hypothesis and conduct more interviews
You were wrong and nobody mentioned your assumptions - change your original assumptions

Discovering your assumptions are wrong

Saves time
Saves money
Solve a different problem
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