Strategic customer development is a linchpin of success for early-stage startups. It inspires innovation, guides your business model, and maximizes your resources. The earlier you are, the greater your risk. This lean startup strategy reduces risk by increasing your odds of success and sustainability. Let’s explore the core concepts of this process.
What is Customer Development?
Entrepreneur Steve Blank coined this four-phase process. Blank recognized that startups that prioritize identifying product market fit and confirming consumer validation could launch with less capital and generate profit faster than those that skip the validation process.
You and your team have a vision of how you want to meet consumer needs, but without validation, you can’t ensure relevance and viability. As a tech startup, you’ll likely begin with a prototype or minimum viable product (MVP) that you test and build upon.
The more disruptive your product, the more critical it is to launch in phases. Launching in phases supports agile frameworks, identifies early glitches, and provides invaluable user feedback. The phases below can improve your product, take your product in a different direction, or lead to scrapping a product that doesn’t resonate. If your product or SaaS doesn’t resonate as you had envisioned, the market feedback you generate will guide the innovation process for an alternative product.
What Are the 4 Phases of Customer Development?
Customer development is a lean startup strategy. Complete this process before you develop your first product or business model. A similar process can be utilized for post-startup new product development.
Phase 1: Customer Discovery
The discovery phase challenges your initial hypothesis beyond your passion and presumptions, uncovering quantifiable and action-oriented market insights. Begin by identifying a genuine market gap, who your demographic is, and what problems your technology solves.
Phase 2: Customer Validation
Now that you have identified a market gap and primary demographic, it’s time to validate market fit. The feedback you receive in this phase will likely refine how your product meets precise customer needs and expectations.
Validation can be completed via interviews, surveys, explainer videos, prototype or MVP testing, and digital marketing geared toward gauging interest. For example, Dropbox validated its file-sharing solution by creating and marketing an explainer video to gauge interest, gather feedback, and guide development.
Phase 3: Customer Creation
Now, you can begin mapping out a comprehensive business model and development framework. Phases 1 and 2 provide the green light to invest your time and capital with less risk. This includes transitioning your focus from prospects and early adopters to marketing to a broader market. Ensure feedback channels are built-in to gather data continually.
Phase 4: Customer Building
In this transitory phase, you stop thinking like a startup and start thinking like a brand. Sustainable brands never stop innovating. As you generate revenue and profit, reinvest time and resources in process refinement, building your team, scaling operations, and developing next-generation and new product lines. This is also when you ramp up your sales and marketing efforts. Never lose sight of your initial and evolving customer demographics with every decision.
Need Help With Your Validation Process?
Launching your startup begins with an inspired vision. However, without customer development, the best product won’t make it to market or achieve its full potential. I’m here to help with tailored technology consulting. This includes One-On-One Tech Founder Mentorship, Startup Revitalization, and Product Development and Optimization. I can advise on the process above and eliminate the blind spots you and your team may be too close to see.
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