Is customer development important? The short answer is yes, of course! No business can survive without a loyal customer base that uses its product or service.
But customer development is more than just a customer base. It’s one of the three foundations of a lean startup: business model design, agile engineering and customer development.
Customer development is the formal process of identifying potential customers and figuring out how to meet their needs. Many startups spend too much time on their product or service, which is important too, but not more so than the needs of their target audience. A successful startup needs to create a business plan that satisfies their target market and establishes themselves as useful and unique in the marketplace.
What Is Customer Development?
Customer development is a process that can be used to discover, test and validate many business assumptions. These assumptions include whether a product solves a problem for a specific group of users, if the market is large enough to support such a product, and whether or not the business can scale to meet demands.
The History of Customer Development
Customer development came about when Steve Blank was writing about his experiences as an entrepreneur in the Silicon Valley of the 1990s. He noticed a pattern emerging from the startups he was involved with, recognizing that a startup is not merely a small version of a bigger company; they have unique challenges. Startups have business models that are lacking in critical data, and these questions (and more) must be asked:
· Who are our ideal customers?
· What are their needs?
· What features do they want?
· What channels can be used to reach them?
· What methods can we use to maintain customer growth?
In order to overcome these obstacles and unknowns, Steve Blank noted that entrepreneurs needed to have a systemized approach to guide their search for “repeatable and scalable business models.” In order to create such an approach, it’s essential that an entrepreneur get out and test the product in the real world.
Customer development is rooted in the scientific method of posing a hypothesis, and then designing an experiment to test that hypothesis. The results will either prove or disprove the initial hypothesis, or reveal suggestions as to how to modify it. This method reduces the risks inherent in a strategy centered around product development.
So, customer development is broadly about questioning your core business assumptions. That is, put them to the test rather than just accepting received knowledge.