Customer Development: detail guide

Before we will start to discover what Customer Development is according to the book “The Four Steps to the Epiphany” written by a great thinker and strategist Steve G. Blank, we would love you to read something quite simple to understand and to catch the wave.

It is hard to understand the difference between User Experience design process of user research and customer development process. Seems like those are same. But they are not. There is no UX design without Customer development and it is foolish not to do UX design after Customer development.  There are two stories that can teach us a lot about the importance of customer development stage in full life cycle development of any product - software or even cookies. Also, we will figure out the difference between creating a product with and without customer development stage.

First story

Once upon a time in the USA one food company produced a new fast food line - it was a ready-to-cook pie dough. All that was needed to do with this dough is to put it in a baking oven. Businessmen rushed to invest in a new product because this is just a dream of every housewife - a ready pie that just needs to be baked. However, despite the predicted success - nobody bought the product. Nobody! What was wrong? First answer - advertising! Then the corporation poured enormous funds into an advertising campaign. Investors were still calm. Just need more advertising and sales will grow. But no matter how strange it sounded - sales fell apart and the company was close to bankruptcy. Almost without hope for the success of the product, the managers rushed to psychoanalysts and psychologists of behavior to find out what went wrong and where their fail was. They made a focus-group of housewives and asked them to use a product at home to feed their families. And one of the women said - “I will not, I do not like this product.” They asked her - Why? This product is so good, all components are of high quality and so on.  But the woman was like - “You know, I do not feel I am making something for my husband. It is too simple.  And I am not lazy one at all, I can make this dough by my own. Even better one.” The rest of women took the dough and cooked it at home. But when they were asked about their feelings - they were not happy and not exited with a product like it was planned by marketers. Few days of analysis and behaviorists made a conclusion - product was too simple to be loved. When a wife is cooking for her husband she is making some efforts to make him happy. The efforts are making a process of cooking exciting for a woman. And this new product limited the efforts of a woman so it limited her happiness. Fantastic! But what to do with a huge batch that is already produced and is waiting in shops for a customer? The behaviorists and psychoanalysts were thinking a lot and they decided to put one egg into a ready for cooking the dough. Sounds so funny! But if you love to cook you know that one more egg will make a pie more tasty - it will not change the recipe so much. But one egg is a symbol of effort and taking care. So that company made another advertising campaign with such words - “ Just put one egg and bake it!”. That`s all! The campaign was successful - women started to buy a product because there were two efforts in one sentence - “put an egg and bake it”.

This is a really exciting story that teaches us how to pay attention to the value that people are willing to pay for. And as we see now - excessive comfort can frighten the user.

Second story

One girl from our UX team told us a story how her mother gave her an excellent and really comprehensive explanation of customer development. Her mother is a trainer in a fitness club. When people come to this club trainers are making an interview with them to figure out a lot of things. First of all, they are asking their customers about their needs. It seems pretty clear - to lose weight, to gain more muscles, to find harmony, to feel better. According to the received information, trainers made “use cases” or goals for a customer. But at the end there was one question, that was really hard to get the answer to. It sounded like: what is the greatest reason that will drive you to come for training? To get the proper answer to this question trainers had special lessons and tutorials. There are some indicators of a proper answer. It is a bingo-effect, there is some emotional condition when the customer is saying the true reason. One woman was so hard to interview with, she was like - I just want to lose weight, that is all! But trainer was persistent, he did not stop asking because he has not seen a corresponding emotional surge during the answers. The woman started to cry and said at the end - “Actually I have a dream to wear my favorite dress. I could not wear it for 15 years after giving a birth to my baby.” After that trainer signed a contract of starting a fitness program. The woman went home in tears but the trainer was sure that this customer would come for every training and work hard. Also, he was sure that this woman would do everything to reach the goal.


So where is customer development?

In the first story, we have read about eggs and dough and money that were spent on an unnecessary and not effective advertising campaign. Why did it happen? Customer development process was missed in that case. This is canonic product-centric launch model.  They made a product without the understanding of user`s needs. Ok, they have some understanding that ladies want to bake a pie fast and tasty. But why is she baking it? For whom? What is she feeling while preparing a dough? All of those answers were missed.

In the second story, we have read about hard interviewing and getting answers. The trainer knew what to ask the client because company arranged the customer discovery path and gave these questions to the trainer. That is why business model of this fitness-club is successful all over the world and customers are happy. Can you imagine people that are dying while working on fitness and they are happy to do that? That`s it. It is a hard work but business is interested in their customer not just to pay money once, but come and get trained, get a result, get joy and recommend this fitness-club to his or her friends.

Customer Development as methodology

Customer discovery is more concerning. Human factors and can be arranged with skills in philosophy, psychology, cognitive science, sociology, and behaviorism.  It is not just user research, empathy map, customer journey map, and analysis. It is much deeper than those methods. And Customer Development is a bro of a Product Development.These two methods are different in aim and use. Sometimes CDM can be dangerous and useless for business, sometimes PDM can be the wrong choice.

How to know what will make your startup succeed? Steven G. Blank said that product development is a path to DISASTER, and customer development model is a path to  EPIPHANY. He articulated the methodology of Customer Development when it was already in use. At that time in Silicon Valley, some of the startups began to develop in spite of existing patterns. They just put a customer in the center of developing. They were creating a product according to user need. And yeah, they were still using a Product Development model to measure their development team, to control cash flow, to manage time and so on.

Customer Development for startup: four-steps framework

The main goal of Customer Development process is to build the right features that solve customers' needs.

Customer Development is four easy-to-understand steps: Customer Discovery, Customer Validation, Customer Creation, and Company Building. The flow starts from focusing on customer`s needs and problems. After that we are creating a business model, that can be replicated. Then we are creating and driving end-user demand. And the last one step is engineering a “well-oiled machine” that will be your business system, your company. Let`s come closer to each of steps.

Customer Discovery

Actually, Customer Discovery step is a process of creation and testing of hypotheses:

    • Who is your client?
    • How will the customer use the product?
      • What kind of problem or complex of problems will be solved by the product?
        • Hat is high-value customer problem?

        And so on. Why? Because we need to know will this project work when we run it.

        “ The job of the Customer Development team is to see whether there are customers and a market for that vision.” (1)

        Customer Validation

        Customer Validation is creating a repeatable sales map road that your team will follow in future and it is one of the most exciting steps. This step is a prove of Customer Discovering step. You are looking for tools to make a clear picture of future product running.

        Customer Validation looks like a crash-test, beta-version of your business project. After testing a real product with real customer and analysis of results you can return to the previous step and do it all again.

        Customer Discovery and Customer Validation are for :

          • verifying your market
          • locating your customers
            • testing
              • discovering a real value or product for your customer
                • identifying  the economic buyer
                  • establishing pricing and channel strategy
                    • sales cycle and full process checking

                    Customer Creation

                    Basically, Customer Creation is a creation of end-user demand. This is like condition for a behavioral pattern of buying and using, that we created while we were making steps of Customer Discovery and Customer Validation. It is not just a marketing communications.  This is a long trip and you need to be patient. Customer Creation starts from Choosing a market type and positioning. According to Launch type you are selecting customer audiences and most effective messengers, that will be fittable to your user. Before you start to send messages with some content you need to understand the media. At the end, you will have full cycle customer creation stage completed. (2)

                    Company Building

                    The last one step of Customer Development methodology is Company Building, where your startup team is transforming into formal departments like VPs of Sales, Marketing and Business Development and so on. All previous experience was learning and discovering, iterating and testing, improving and repeating. Now each of you has a mission that aims all members to repeat and increase the company’s early market success.

                    Each of these steps can and should be logically comparable according to your startup. It depends on many things. This methodology will work only in case of deep understanding of missions of each step. Startups are very different. That is why flows of making Customer Development will be different as well.

                    In the next article we will find out how to create Minimum viable product prototype: fusing hypotheses, Brainstorming & Mind Mapping, Redlines and others insights.


                    References:

                    1. Steve G. Blanck. “The Four Steps to the Epiphany”, more info here: https://web.stanford.edu/group/e145/cgi-bin/winter/drupal/upload/handouts/Four_Steps.pdf
                    2. Customer Development Model: Understanding Customer Creation. More info:https://www.cleverism.com/understanding-customer-creation-customer-development-model/