Intro

Up to this point we’ve made sure that there is a problem in the market for your concept to solve through research and that notable experts have verified that you’re on the right path. Now we begin the last test of early validation - customer discovery.

We’re using customer discovery as a methodical approach to ensuring the problem and solution you’ve identified aligns with what customers actually want at a price they are willing to pay.

Key Takeaway

Confirm that the problem, solution and revenue model align with what actual customers really want.

Customer Discovery

centers around 3 critical pillars of your business model - the Problem, Solution and Revenue Model. Since you’ve identified that customers likely have a problem worth solving, now it’s time to see if your solution is the right fit and that someone would pay for what you’ll produce. Customer Discovery will put those hypotheses to the test so you can refine your product before you even build it.

The Customer Discovery Method consists of 4 steps:

one

Create Customer Archetypes

There are typically a number of customer profiles that need to be created representing different use cases of the product. In this step we will clearly define what each customer archetype looks like.

two

Choose Your Validation Method

There are a variety of methods that can be used to validate and prove out your business assumptions.

three

Conduct Customer Validation

Whether you use a survey or landing page for your validation, you’ll want to explore customers from each profile archetype to get a better feel for whether the Problem, Solution, and Revenue Model align with their needs.

four

Evaluate Your Results

Once we’ve collected our survey information we’ll evaluate what we’ve learned and determine whether successive rounds of customer discovery are necessary. If not, we’ll begin using what we’ve learned to formulate the baseline for our business plan.

What you’ll likely find is that the initial few discussions with customers yield a great deal of “aha!” moments that will require you to heavily revise your plan. Soon thereafter, the value of successive customer interviews starts to drop off quickly.


FOOD FOR THOUGHT


If you haven’t heard the Airbnb story, we highly recommend you have a listen on your next drive, walk, workout, or flight.

The founders originally called it Airbed & Breakfast because they literally had people book a night at their San Francisco apartment and let them sleep on airbeds. (They even gave them Pop Tarts the next morning.) Airbnb had a handful of users in New York, so they went and started knocking on doors and chatting with the users to see what was working and what wasn’t. Asking questions about their experience, how they use the app, why they use it, why they stopped using it, and where they get hung up during their experience helped identify the true intrinsic needs and desires of the customer.

These questions led to the insight that the users wanted things like high-quality home images, eventually resulting in a dramatic increase in bookings. Airbnb was able to overcome early hurdles through inference, luck, asking the right questions, and testing different variables with their users. Airbnb is valued at over $31 billion now.

Step 1: Create Customer Archetypes (Personas)

Customers come in many flavors. They tend to vary based on their use cases for your product and of course their own demographic differences. Before you begin your surveys, we will want to help you identify very specific customer archetypes to ensure you get a good cross-section of feedback to synthesize.

Define Common Use Cases

The easiest way to begin segmenting your customers into specific archetypes is to start with use cases.

  1. What are some of the ways people would buy your product?
  2. What problem do people have before they find your product?
  3. What are the different ways your product is used by customers?

Customer Archetype Attributes.

Each archetype will have specific attributes that are meaningful to your product. Don’t torture this. If price isn’t a meaningful attribute, don’t try to build a customer archetype around that attribute. Focus on simple, obvious attributes that clearly represent your audience.

Price Points

Engagement

Sophistication

Demographics

Value buyers

Quality buyers

One-time shoppers

Repeat shoppers

Evangelists

Novice

Experts

Niche market age

Interests

Geographical area

Identify Good Customer Candidates.

Your ideal customers are typically found online in popular social networks, often lurking in the same places you will likely find them when you begin advertising. In this case we’re targeting a small number of candidates so a direct recruiting effort tends to work best.

  • Social Networks (Linkedin, FB, Twitter)
  • User Forums
  • Google Ads (landing page surveys)

Step 2: Choose Your Validation Method

Validating your business comes down to genuine interactions with your potential customers. Whether it is a survey they complete, pushing out Facebook ads, standing on the corner talking to potential customers, or manually conducting a trial with a test individual - the options are endless.

Pick your Validation Method:

Landing Pages

- With a brief landing page, you can include a picture or mockup of the product and mention the top features. Then within a landing page, you would want to have a name and email capture section (call-to-action) to see if people are in fact interested in what you have to offer. Or ideally, you have a button that allows for pre-orders. Pre-selling your solution proves people are willing to pay for what you have.

Pro Tip

Consider asking a potential customer to pay or include a pay option for whichever method you explore. Confirming payment helps to prove the customer’s intent. A customer saying they “would” pay is a lot different from actually paying. This works for any method of validation and is a crucial step towards validation. Read more here.

Digital Advertising -

Ads via Social Media or Google Adwords is a solid method to explore the interest of your target demographic. It allows you to pump curated ads right to your target audience. This method helps to figure out numerous angles of the business such as: How much it may cost to acquire a potential user? What words, images, and emotional cues resonate with your target audience? If they click the ad - then yes. If no one clicks, consider refining and changing it up.

Pro Tip

A/B testing is a best practice to consider. Data driven decisions and well-informed choices are essential to help identify and quantify areas of improvement.

Surveys (surveymonkey.com, Google Forms, AskYourTargetMarket, TypeForm):

Surveys can be conducted online by sharing it within groups and social channels. Or alternatively, in-person interviews can be quite effective and you could potentially conduct those one-on-one or via a focus group. Ask yourself, where are my target customers? Do they work downtown? Are they located somewhere else? Go find them and talk to them!

Manual Test Trials:

To manually validate via a test trial, let’s look at an example. Let’s say you want to have a mobile app or software that will help a customer deliver and order groceries. Before building the app, you could first start by getting a test customer onboard and manually fulfilling each step. Once you have a test customer, you could manually take their grocery order from them, purchase their groceries, and then deliver it to their doorstep. Read more about the example here - Food on the Table.

Key Takeaway

Surveys are great. Interviews are better. If you’re able, go out and actually speak to a potential customer in person. The penultimate validation is actually getting payment for what you are offering.

Step 3: Conduct Customer Validation

Your customer discovery and interactions are intended to prove and refine 3 hypotheses about your business - the Problem, Solution, and Revenue Model. Your customer interactions are not limited to these 3 hypotheses however they tend to form the basis for further discovery so we typically start with these.

Problem

Every new business concept begins with a problem that needs to be solved. Your assumption is that your prospective customers will see that problem the same way you do and be in the market for someone to solve it. Here we want to get inside the heads of customers to see the problem through their eyes.

  1. How do your customers see the problem? (Provide detail)
  2. What aspect of the problem is most painful?

Solution

The solution you provide should be aligned with where the problem is most painful. This means that you must dig into the various features of your solution and ensure that where you’re focusing your product efforts are proportionate to where customers have the greatest demand.

  1. How is the problem being solved today by customers?
  2. Which features of the solution resonate most?
  3. If the solution existed, what problems would still exist?

Revenue model

The revenue model questions will test for price sensitivity, frequency (such as recurring models) and friction (such as the complexity of paying for your product).

  1. Would a customer be willing to pay for this?
  2. How much is it worth?
  3. Is this a one-time or repeat purchase?

Love what you’re seeing?

This is just a small sample! There are hundreds
of videos, in-depth playbooks, and content to
grow a startup fast. Let us show you!

Next
Elevator Pitch
  • Identify the critical pieces of information investors want to know about our business
  • Refine the core components of our idea into a concise, compelling synopsis
  • Be prepared and polished in the event we come face-to-face with a potential investor


Continue to Next Section
Copyright © 2019 Startups.com LLC. All rights reserved.