What is Lean Startup Customer Development? In this post, I give you my take on what it means for startups. This is based on my experience with PledgeUp & Knudger and what I learned.
Most tech entrepreneurs start out with a great idea. They see something in their lives through their job, recreation or at home that could be improved. Some see that there is nothing out there to solve a problem that they are continually encountering.
That’s great and should be the starting point for any budding entrepreneur’s idea.
So what then? Well, the tendency has been for people to do a bit of research into the area and see if there is a market for their product. Then you start to build….right? Wrong!
I have seen so many startups fall by following this method. They have an idea, they think it through in their heads and then they decide what features they want to incorporate into their product.
Never, at any stage, do they go out there and learn about who their customers are and what they actually want. It’s a sad fact that entrepreneurs can spend months (if not years) of their lives (and a lot of their savings) building something that has never actually been validated by a customer.
The traditional product development model has been for the team of marketeers to sit and wait until the product is complete before they can go out and sell.
The truth is that this is a sure way for startups to fail.
Startups need to work with the sales & marketing teams to find out what it is that customers want.
What needs to be done is this:
- Research your idea: to see if there is merit in developing a product for the problem. You need to see if what you intend to develop actually solves a problem for others. Use market research techniques to speak to others in the same area and see if they are having the same problem.
- Quantify the market: Test to see what the potential market size would be for your product. You can use google trends to see if others are searching for the same keywords and, from that, you can have a pretty good guess of what the size of the market is and where your potential customers are.
- Get out of the building: Ok, so this is a famous quote from the esteemed Steve Blank. Steve is a startup veteran who has built loads of successful tech companies. This line has become famous among the lean startup community. What it means is that you need to get out of your office and start learning from your potential customers. Only then can you get a through picture of what are the real issues that companies are facing. Startups often think they can imagine what customer’s problems are and then proceed to build a feature set based on assumptions.
The truth is that you need to validate these assumptions as early as possible by talking to your potential customers.
This should be done as quickly and by using the most lean method you can find. Sometimes you don’t even need to create a fully functional product to validate with a customer. Use wireframes or simple sketches to convey your idea. As a wise person once said to me “when designing a house, it’s much cheaper to use an eraser than a sledge hammer”. However, be sure that you are getting quality feedback from the right people.
Based on the market research and the customer validation stages, you should now have a good idea of what the real problems are.
The most important questions that you need to ask these customers are:
- What problems are you facing? – find out if customers are encountering a consistent issue.
- How serious is this problem? – gauge how vital a solution is to their business.
- What solutions or workarounds have you put in place to solve these problems? – if they have cobbled together a workaround, it means they think it’s serious.
- How much would you be willing to pay for a solution? – Put it to them. IF they’ll pay, you’re in business..
In essence, the lean startup customer development strategy is essential for any budding entrepreneur starting out on their new venture