Building a Business seminar: does my customer’s problem actually exist?

Our MD, Dave Fletcher, recently presented to budding entrepreneurs as part of the Building a Business series at the Saïd Business School.  He provided some useful tips on the first two stages of Steve Blank’s Customer Development Model. In this final blog, he looks at Customer Validation and how start-ups can establish whether a customer problem actually exists…

In my previous post I gave an example of how to recognise, then validate your main assumption. Here, I’ll answer another question: How can I be sure a customer problem (or desire) actually exists?

I’ll cut straight to the chase. Your product or service will not be used by search engines, or even organisations – it will be used by people. So it makes sense to get a deeper understanding of your customer. This will help you further validate the problem you are trying to solve.

To do this we must do what successful entrepreneurs have always done: get out there and have real conversations. Ideally, you’d be looking to speak to 30-50 potential clients with the overall purpose to allow you to get a better understanding of your typical customer.

Understanding your customer and the issues they have goes hand in hand with collecting quantitative data (discussed in my previous post using the example of Foyles). And having both forms of validation allows you to to go back and strengthen your Business Model Canvas.

What do you speak to potential customers about?

At this stage you are not out to persuade customers. You are out to collate evidence of their problems (or desires). And you can get this by using questions that give you more than yes or no answers. One thing that you shouldn’t ask a potential customer, for example, is whether or not your idea is a good one. Chances are that diplomacy will stand in the way of honesty. And even if you do get the truth, you will garner little value out of a simple yes or no.

Asking things like “What’s your biggest problem?” will allow you to dig for detail. They will enable you to ask follow up questions like “Can you give me a recent example?” And you won’t always know exactly what you are looking for either. So probing a little further, and listening to people’s answers, will enable you to discover those unknowns – things you didn’t even think about asking in the first instance.

There’s something I still hear it many times though. That is “I already know my customers.” I’ve never known it to be true, however. From experience, you will always learn something speaking to customers, which will fundamentally change your product.

What to do once you’ve spoken to potential customers

Once you’ve completed all your customer conversations you should be ready to adapt your Business Model Canvas.

You should leave each customer with a number of things. Firstly, remember to ask them to agree to get involved by becoming an early adopter. In itself, such an agreement is a kind of validation that the customer actually has a problem that they are willing to spend time resolving.

To help, you might build a discovery scorecard, where you include your findings. These could include measures about how painful a problem is for your customers, and their current workarounds.

And if you hear your potential customers talking about workarounds, it’s always a good sign. If they have created their own then it means they are likely using inferior products to solve their problem. In this scenario, the chances are they will see value in your product.

Equally, look out for clues that go the other way. As Steve Blank’s says Lukewarm responses can indicate a profound problem”. The point here is that you need to be brave enough to either walk away from a product, or change direction. If you feel people don’t care enough about the problem you are trying to solve, then it makes little sense to carry on building it.

In conclusion then, an entrepreneur’s decision to proceed with a product should be deliberate. Establishing whether a customer problem actually exists during the early stages of the Customer Development Model is a key part of making this decision. It’s what will enable you to move on to building your Minimal Viable Product – the simplest version of your product that will get people excited.

Talking of excitement, always be on the lookout for enthusiasm – it’s a heartfelt sign that you are developing something that people need. But at the same time, be ready to (dramatically) change your ideas and approach based on what you find.
View Dave’s presentation, How can I know if my idea is good?
More about Building a Business seminar series.
Some recommended further reading: The Lean Start-up – Eric Ries, The Start-up Owners Manual – Steve Blank.

 

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