What is Customer Development in Product Management?

Customer development is a way to learn about your customers and find out if the product you make meets their needs. Customer Development is part of the Lean Startup process that focuses on problem understanding. This requires thoroughly screening the prospect and confirming that the suggested remedy would satisfy client demands. Typical product development methods start with the ideal solution in mind and proceed straight into execution; this is not the case with customer development.

What is a Customer Development framework?

The Customer Development framework was developed by Steve Blank as part of the Lean Startup methodology. It is usually the intermediate step in the process, which is followed by agile engineering and preceded by business model design.

Companies that adhere to this method can comprehend the demands of the market and generate numerous viable solutions. Subsequently, the procedure identifies the underlying assumptions of the different hypotheses (assuming that the organization has no prior facts) and verifies those assumptions. As soon as an MVP is delivered, start regularly reviewing it to make sure the solution is optimized to meet the needs of the business and provide value.

What are Examples of Customer Development?

Customer Development consists of asking potential customers open-ended questions and presenting them with hypothetical solutions to evaluate just how on or off-target they might be. It is not a sales pitch or a way to nurture leads; it is 100% information gathering, discovery, and confirmation of assumptions.

1. Dropbox

• Dropbox remains a wildly popular product and one of Silicon Valley’s most outstanding achievements. However, this achievement did not come without difficulty.
• Despite having a strong engineering team, Dropbox lacked experience in marketing, which led to them overspending on a variety of marketing platforms. They used to spend hundreds of dollars acquiring new customers for a product that only cost $99 to make.
• Then Dropbox gave up on conventional marketing strategies and started concentrating on customer development. They shifted their focus to working with their clients, and this allowed them to effectively deploy word-of-mouth marketing.

2. Groove

• Groove is an online support desk solution for companies. At first, Groove was a profitable subscription business.
• Groove could bring in new business, but they struggled to hold onto their existing clientele. Their 3 percent attrition rate was excessive, and they were unable to identify the reason even using remote customer surveys.
• Groove made the decision to reconsider its approach after discovering consumer development. They took extra time to get to know their clients and present Groove to them.
• Groove was able to solidify its place in the market with the aid of this innovative tactic. Additionally, they gave Groove users a more tailored experience and focused on SMBs.
• These small changes drastically lowered its rate of attrition.

3. Buffer

• Despite having a large number of paying clients, Buffer found that many of their customers’ decisions to buy and use their solutions were still unclear to them. Nowadays, they use a social media network to speed up the process in addition to running every theory and assumption through the Customer Development process to validate it.
• Buffer merely calls on consumers within a specific market or feature set to join a virtual call and offer feedback. This allows them to get same-day feedback on customer development while saving time managing large contact lists and scheduling interviews.

What is the Customer Development Process?

There are four steps to customer development:

Customer discovery process

• A business creates a plan to test two hypotheses during this phase. Customers’ pain spots are identified and interpreted by the “problem hypothesis.” One “product hypothesis” concentrates on finding remedies for problems that customers face.
• Here, listening is very crucial. To obtain input, the business needs to speak with its clients. It has to hear the wants, concerns, and views of its customers in order to determine the value of its product.

Customer Validation Process

• An essential first step in customer development is Customer Validation. Here, a business needs to be prepared to sell. A scalable sales process is required.
• It’s the viability test for the product. In the event that the product fails to pique the interest of enough customers, the business has to go back and fix the most pressing issues.

Customer Creation Process

• This marks the start of the project’s execution or implementation. At this point, a company has effectively created demand for its goods on the market. Its primary objective is to make demands and guarantee profit, expansion, and scalability of the firm.

Company Building Process

• The final phase in the process is company building, which necessitates a shift in the way the company operates. Ensuring the overall performance of the company is the primary concern. A company needs to hire more staff and create additional departments in order to implement this shift.

Who is Involved in Customer Development?

• A cross-functional effort including marketing, sales, engineering, and, of course, product management should be included in Customer Development. The ideal people to spearhead the project are those in marketing and Product management since they have experience gathering and analysing consumer input and translating it into needs identified by the market.
• Executives and founders ought to be heavily involved in customer development as well. Their buy-in and prejudices will play a major role in determining whether the process is ultimately successful or unsuccessful, even though they are not required to be involved in every detail of every client engagement. Team members need to feel at ease sharing results that defy the founders’ theories and assumptions. If not, employees may undermine the entire procedure by attempting to stroke the egos of the founders at the expense of market reality.
• But real customers matter more than any certain employee. There is seldom a better time to follow the proverb “get out of the building” than during customer development. Methods like as observations, surveys, chats, and interviews are essential to gathering data regarding the issues, worries, and preferences of both present and future clients.

What are the Benefits of Customer Development?

• Customer development is very beneficial to organisations because it allows them to postpone spending a large amount of money on developing solutions until there is a clear need for them and a guarantee that the end user will benefit from the product. Companies can save money and effort by doing this upfront exercise instead of investing in items that should function but might not work.
• Customer development also keeps businesses from making the common error of falling in love with a solution or product before thoroughly evaluating if it’s the right course of action. Customer Development’s strict validation procedures may take a lot of the emotion out of decision-making and replace it with data and facts.
• Customer development should be relatively “cheap” by design, allowing businesses to save money or postpone further fundraising at this time. When it is clear that the business has done its due diligence and verified the opportunity and viability of the solution, it can not only give the company a longer runway but also make the investment far more appealing to potential investors.
• Additionally, this frequently leads to far simpler solutions because businesses can concentrate on developing what they really need (ranked by customer importance) rather than attempting to address every problem they believe their clients may have. This is because they have a deeper understanding of the industry and consumer requirements.

What are the Drawbacks to the Approach?

• There are drawbacks to using customer development, of course. If completed in-depth, it could affect time to market and slow down the process of developing new products. It could also destroy the “covert” aspect that some businesses cherish, as it’s difficult to converse with clients frequently without having them discover that you’re at least looking into a specific market or region.
• In order to conduct successful customer development, the team must also acknowledge that they are not experts in the field, which can be difficult for those with decades of relevant expertise who think they are. Even while all of it may be priceless, it can rarely generate bigger prejudices and incorrect presumptions than someone who is completely unfamiliar with the industry. What actual paying consumers have to say is what counts.
• Another frequent mistake made by businesses is to believe that after a successful MVP and a first round of research, customer development is “done.” However, customer development is a continuous, iterative process that has no real conclusion. Not every business is willing to continuously invest those resources or need to prove that they’re headed in the right direction.

Conclusion:

We have a clear understanding of customer development from the talk above, and we also covered two instances of it. Businesses can assess the viability of their products or services with the aid of consumer development. It guarantees that goods take care of consumer issues.

Frequently asked Questions(FAQ’s):

1. What is the meaning of customer support development?

Customer support refers to the assistance and guidance provided to customers before, during, and after the purchase of a product or service. Its purpose is to address any issues or concerns the customer may have, and ensure their satisfaction with the company’s offerings.

2. What does a customer developer do?

Customer Development consists of asking potential customers open-ended questions and presenting them with hypothetical solutions to evaluate just how on or off-target they might be. It is not a sales pitch or a way to nurture leads; it is 100% information gathering, discovery, and confirmation of assumptions.

3. What are the goals of customer development?

Its main goal was to understand a business problem and figure out if a company’s product would meet customer needs or not. Consumer development is a startup framework created by entrepreneur Steve Blank. It’s between Business Model Design and Agile Engineering.

4. What is the role of a customer development executive?

Build strong relationships with your customer base through following a contact strategy, providing account reviews, answering questions and solving issues. Have meaningful conversations with customers, understanding their needs making suggestions on what products and services would benefit them the most.