What is Customer Development?
There is a very prominent concept in startups and large businesses today called customer development.
Customer development is one of the number one tools a product manager will use to get any sense of whether or not you’re building the right thing, what the market will accept, and what the market will just reject. So it’s something you have to know.
Now, a lot has changed since this book The Lean Startup came out.
Companies, startups, even small businesses are looking at their markets and looking at their customers as well as their business ideas in a radically new way. But the old way of thinking was that you would sit around, come up with the best idea for what you think your market will accept, then what you would do is you would build that and push it out to the market.
Your market will accept, then what you would do is you would build that and push it out to the market. The attitude, in general, was that some products and some new features succeed and some fail. Such is life. You go from concept to production, to promotion, and that’s the entire lifecycle.
Now, if there’s one thing we’ve learned from The Lean Startup is that you can’t come up with product ideas in a vacuum.
There’s a lot more that goes into what makes a product successful and what makes a product unsuccessful, and that information nugget that you wish you had before you started building your product and before you launched it is held by the customer.
So, customer development, in a nutshell, is the practice of establishing a continuous and iterative communication line with your customers, so that you can come up with ideas, come up with hypotheses, try them out with
your customers, get feedback and use that feedback to inform your product decisions going forward.
The idea behind customer development is that by establishing a line of communication with your customers, you can constantly test and validate your product ideas with regards to who’s going to buy them and the market in general. Basis test and validate your product ideas with regards to who’s going to buy it and the market in general. Now, I know a lot of you guys out there have heard of customer development and you probably are thinking, “Well, that’s part of it, right?”
Well, let’s talk about customer development quickly from an academic sense.
The customer development cycle:
1. Validation — in this phase, you use customer interviews to figure out if your product is needed and if it solves a real problem.
2. Development of the first version — in this phase, you use customer interviews to figure out what features you should build.
3. Iteration — in this phase, you are improving the product — you use customer interviews to figure out if they are enjoying the product, who is getting the most out of it, what you are missing, what new features it might need.
Now, the customer development mindset is something that permeates every single section of your product lifecycle, from coming up with the idea to growing your business, and this is true, and product managers do use customer development in every single section of their business.
But, for our purposes, we’re going to focus on the parts of the customer development framework that are actionable and are the most useful, and that is the customer interview.
As you manage a growing product or even a budding brand new product, you’re going to want to increase your product I.Q. by understanding the real reasons why your customers use or do not use your product.
And by doing customer interviews, we can hear it in their own words, which is incredibly valuable.
Now, the first step in the process is that you’re going to come up with an idea. This is the core nugget that you’re going to build your enterprise or your product on. And that means that you’re going to instantly go into the process of validation, trying to figure out whether or not this is a good idea to build. At this stage, you’re going to use customer interviews to figure out whether or not your product is needed, whether or not the problem you think you’re solving is a real problem, and whether or not customers have that problem and are interested in your solution for it. You’re going to constantly reintroduce this feedback that you’ve received into your validation process, eventually landing at the MVP stage, and then onto the next stage, which is the actual development of your first version of one product.
Now, during the development phase, you’re going to be using customer interviews and customer development as a way of figuring out what features are the correct ones to build and how should you prioritize what goes into your version one so that you can be efficient and save resources. After your version one, you go into a process whereby you’re going to start iterating on your product, you’re going to start improving it, adding features, changing things that don’t work out.
At this stage, you’re going to use customer development constantly to figure out things like: Are customers enjoying the product? Are they using it correctly? Who exactly is using the product and getting the most out of it? Is it the group that we thought it was? You’ll use this as a tool for figuring out whether or not you’re targeting the right people, figure out if there’s anything that you are missing, and giving you clues as to what new features or new avenues might be open to you.
Customer development is primarily a tool for two things.
One, risk mitigation, and two, opportunity recognition, and that is what you are going to use customer development for as a product manager.
This is an incredibly useful skill you will use regardless of whether or not you are interested in a product management
