Rethinking Everything: Customer Discovery

Good Morning,

The goal of Customer Discovery is to determine or reaffirm the parameters that will lead to success or even greater success in business.  It supports the launch of new products, services, and/or businesses. COVID-19 is making us rethink everything especially in terms of who was our customer before, our customer now, and who will be our customer when the country reopens. If the answer is “I don’t know” or “my customer has changed or shifted”, this begs the question of should your product or service shift to better meet them where they are. Essentially business owners must discover what business, product, or service they should be building or adjusting to save time and money.  Customer discovery (talking to the customers you serve or plan to serve to inform the product or service delivery) helps mitigate premature execution and waste, which can lead to failure for most businesses. Most of you have ideas right now on what to do, but have you talked to any customers about it?

 

3 States of Discovery

Probable success: A good indicator of probable success is significant, meaningful, and positive feedback during the customer discovery process.

Probable failure: A good indicator of probable failure is when a business owner is unable to attract the interest of many potential customers or draws negative feedback and doesn’t adjust the product or service. It is acceptable to “fail fast” in the discovery process because failing is an opportunity to rethink ideas and attempt a strong comeback.

Stasis/Uncertainty: Uncertainty is the worst-case scenario. Here, the business team must determine if the business is closer to probable success or probable failure through more discovery work.  Uncertainty with customers is the worst state in which to be, so it is important to thoroughly test your assumptions with customer feedback.

 

When probed, we find that entrepreneurs and business owners alike cannot provide meaningful indicators of their probable success in their new/existing product or service offerings, because they haven’t had meaningful discussions with many customers.  In some cases for existing businesses they may know only one aspect of their product or service and be unclear about the other assumptions such as their price points.

 

The Four Customer Discovery Hypotheses to Be Tested

During the discovery process, we need to test four fundamental hypotheses with actual customers.

Problem Hypothesis: COVID-19 has introduced problems that you have never imagined possible, and at the same time problems that have always been there are being uncovered at your most troubling time. And you must be thinking about your customer and the problem they are facing, not just your problems. How can the scope of the problem be measured? How painful is it?

Solution Hypothesis: Next, it is important to think about what specifically would solve the problem. Determine what 20 percent of features/ideas will satisfy 80 percent of customers — this feedback will help tell you how to adjust your product or service

Price/Business Model Hypothesis: How much is the solution worth? Does it save the customer time? Money? Are the customers willing to pay for the solution? How much? Note that the price is closely linked to the pain of the problem being solved. The more painful a problem is, the more people are willing to pay to have it solved. Also note that the price needs to be able to cover the costs of the business.

Go-to-Market Hypothesis: How will people find out about the product? Acquire it? A business’s goal is to spread awareness of the solution as far and as wide as possible and ensure the buying process fits into the customers’ routine. If it does not fit the customers’ routines, the launch is unlikely to be successful. You must think about your current customer experience and journey as it is today and in the future.

 

Testing the Hypotheses With Customer Feedback

It is important to gather feedback about the four hypotheses because it will help to determine whether the business, product or service will work.  Normally we would recommend talking with 50 potential customers; but in this environment you may only be able to talk to 5-10; do this but keep doing it over time. And make sure they are actual potential customers that are the real target of your business. Note that family and friends cannot be on the list; they may be reluctant to give an objective review of the proposal for fear of causing offense if they don’t approve of it.

During the meetings explore each hypothesis with the customer.  Beginning with a general discussion, you can eventually work toward introducing the specific hypotheses. Take notes and have an open mind toward other problems, solutions, business models, and market strategies. Over time refine your hypothesis as you learn more and more from your customers. Customer discovery is something a business or organization should never stop doing.

For more information on the importance of customer discovery, we suggest watching this video we created.

https://www.youtube.com/watch?v=_vrg6vhRRjc&feature=youtu.be

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