Most entrepreneurs and product managers (PMs) know that they need to find out what people want. In this article, we will look at how to conduct what is called ‘customer development’ – the process through which a business comes to understand the needs, pain points, and behavior of potential customers through direct conversation and feedback.
Customer development is often carried out through discovery calls, made over the phone or by video call, or it can be done in person. The collected information is then taken into product development meetings, focusing all future engineering efforts on addressing the customer pain points in a way that can be monetized.
In my experience as a founder as well as a consultant to startups and companies of all sizes, I have recognized five key principles that can make the customer development process more productive. Without mastering these five concepts, entrepreneurs and PMs are unlikely to discover what customers value, how to monetize that value, or whether the product prototype will meet customer expectations.
1. Know that people have poor self-knowledge
While it may seem reasonable to expect that most people will have a good understanding of their motivations and behaviors, people often don’t know what drives their behavior, fail to predict how they will respond in a given situation, or falsely report an intended course of action in order to cast themselves in a favorable light. Research has shown that people’s ability to know their own true feelings and to predict their own behavior is not reliable.
To avoid this trap when conducting customer development interviews, an entrepreneur or PM should focus on past behaviors, including actions taken, motivations, and the frequency of occurrence. From there, listen to the customer’s story and record the granular details of their experience, including their emotional state and level of motivation to alleviate given pain points.
2. Separate your research from the product
In most fields, the only way to get reliable research results is to distance the participants and researchers from the desired outcome of the research by employing certain research methods such as blind studies or placeboes.
In a similar way, distance yourself from the product in order to get more objective feedback. If people know that a product is important to you, or that you have invested substantial time into it, then they are likely to tailor their feedback to make you feel good about what you are building. While this may be emotionally satisfying, false hope is not a sound basis upon which to launch a new product.
Ask for opinions, without leading people towards a preferred answer or letting people know that you are invested in a particular outcome. You may be looking for honest feedback about a particular product, pricing strategy, distribution channel, logo, or brand name. Instead of asking “do you like this logo?” you might instead ask “on a scale of 1 to 5, rate each of the following five logos based on: alignment with the brand / originality / aesthetic attractiveness / message clarity / distinctiveness / overall impression / etc …”
I once tried to build a shoe product with my college friends, and while conducting customer research, we ran into this type of problem.
Initially, I showed potential customers a picture of a product concept and asked them what they thought about “our new product”. When I framed the question this way, people responded favorably, but I couldn’t tell if their answers were genuine or not.
However, when I asked a friend what they thought about a particular company name, and didn’t mention that it was my company, the feedback I received was more useful. My friend told me bluntly that the name sounded like a theme park, which I recorded. I asked her about a second name, which she said sounded like a car wash. Although this wasn’t the feedback I had been looking for, it was the genuine feedback I needed to gain a more objective perspective.
3. Ask follow-up questions and listen
Don’t interrogate people, but instead ask natural questions that show your interest and a desire to understand the situation and solve the issue at hand.
Entrepreneurs are often looking for a specific answer based on what they already believe. As a result, when a potential customer tells them about a specific need or problem that is different from what they had expected, they may brush the comment aside and miss a golden opportunity to ask a follow-up question that allows the person to express their real concerns.
For instance, if someone mentions a time they felt uncomfortable with an existing product, ask what they mean by “uncomfortable”. Ask them how that felt, and how they managed to work around the problem.
In the end, your follow up questions may uncover the most important pieces of information that you obtain from potential customers.
4. Make the call enjoyable
Discovery calls are not just about collecting data, but also about getting genuine feedback while building relationships.
People will generally be more open and willing to share accurate information if they enjoy the process and can think clearly about past experiences. You don’t want to make the interview uncomfortable simply because you are aiming to extract as much information as possible. If they know you are there to help them, they will be much more willing to answer your questions.
People who enjoy the interview process might also become customers or be willing to beta test your product, so you want to make sure that they enjoy the experience.
5. Ask for a connection
Towards the end of your discovery call, ask if there is anyone else they know personally that you should talk with. There may be people in their pool of acquaintances who are currently experiencing the problem you are trying to solve, or who understand the problem better than they do.
Ask for a contact, but be careful to not come across as pushy. They won’t necessarily connect you with someone, but it never hurts to ask.
Finally, express gratitude for their time and insights, and ask if you can stay in touch to provide them with additional help in solving the problem or to ask a few more questions down the line.
In conclusion
To conduct effective customer development, entrepreneurs and PMs must use the proper combination of questioning, listening, and leading the conversation.
Customer development is not necessarily about building and selling products, but rather it is about understanding the pain points and problems faced as part of the customer experience.
If undertaken properly, the process of customer development can allow founders and PMs to design products that ultimately solve customers’ problems, leading to satisfied customers, revenue growth, and ultimate business success.
Wes Brooks is an incoming Summer Business Analyst at Cicero Group and an undergraduate studying economics, management, and strategy. He is a serial entrepreneur, works in venture capital, and enjoys singing a capella and piano improvisation.
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