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Why Customer Learning Comes Before Building in Lean Startups


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Let’s be honest.

Researching your customers before building your product can be… umm… kind of a downer.

Not for any good reason, mind you. Only because it immediately intrudes on the fantasies you might be holding about a potential product. In learning about your target customers — whatever the tactics — you’ll discover a lot you didn’t know and quite frankly, didn’t wanna know. Like…

  • your hunch about an “untapped” market (Underwater Pyromaniacs?) is really small
  • your analysis of a burning problem (Belly button lint?) is not shared by anyone
  • your hypothesis about customer behavior (bartenders paying for drinks?) is flat wrong

So yeah, it’s totally understandable if you view the learning process as something to endure, like weekend road construction. But learning about your customers before building anything is what the smartest entrepreneurs ALWAYS do. It’s baked into the lean startup model because the ROI in time, money, and frustration is ginormous.

You don’t want to shuffle the process deck. Everything you do — the learning, the building, the measuring — has to revolve around the customer. Without (eventual) paying customers — no matter how cool/awesome/disruptive the technology — you have no business.

Fortunately, customer research doesn’t have to be a painfully long process. You can discover what you need to know before building a product in a matter of days and weeks, rather than months and years.

Here are three things to keep in mind:

Size matters (but not as much as you probably think) — You usually need to talk to people, and generally the more, the merrier. A larger sample size is more reliable for highlighting existing problems. However, in some cases, a small sample of people will tell you everything you need to know.

The key to learning is uniformity of response. If you find that after talking to 5, 7 or 20 people, your hypothesis has completely crumbled, then quit it. It’s a loser. Talking to more people will only give you more of the same. By the same logic, if your hypothesis lines up perfectly with what 5, 7, or 20 people are sayin’, then stick with it. You’ve touched a nerve.

You’re not looking to optimize anything — Initial customer research is about big, wide-open discovery questions. You’re going in with a few assumptions that you can test. You should be able to adjust those assumptions with very little delay. In fact, you should be able to willingly drop whatever you thought you knew, without feeling betrayed. Worrying about minor details at this point will slow you down and muddy the research waters.

Your customer avatar is a stick figure — When you have nothing more than an idea, you have nothing more than potential customers. Don’t be in a rush to categorize them. Their pain points will surface as you learn. In time, your avatar will resemble a walking, talking human. You’d be surprised by how many entrepreneurs let their biases about who their potential customers are override clear, staring-you-in-the-face evidence.

Customers are strange birds

A small warning about customers. They suck. Just kidding! But Eric Reis does say that “customers can only tell you what they think they want and tend to have a very near-term perspective. If you just build what they tell you, you generally wind up with a giant, incoherent mess.”

That means, it’s doubtful that your ideal customer is thinking about future trends and market considerations when they share their thoughts with you. Building empathy around customers is a carnival ride of discovery (“Aha!” ) and confusion (“What? That makes ZERO sense!”). You have to read the tea leaves and piece together what they’re really trying to say.

Now would be a good time to say this: the customer research phase should be a blast. Seriously! Learning about your customers and the market they represent will flood your brain with a gaggle of new ideas, hard questions and everything in-between. If it begins to feel sterile or predictable, you’re either doing it wrong, or your assumptions are crapola. Stop and reboot. Come back to it later. Customer research is too important to gloss over.

Now let’s walk through what you’re trying to figure out during the customer research process.

Customer Discovery — The most common tactics for learning about customers are what you would expect: personal conversations, demographic research and reverse engineering your competitors. There are probably other tactics that would work fine — phone tapping, email hacking, dumpster diving — use your judgement.

Record everything and compare notes with your team. If you’re doing in-person interviews, it’s helpful to have another person (or three) present to pick up on little important things like body language, tone and passion. Especially look for passion. Remember to act cheerful and friendly through the whole interview. That way, nobody resists your nosy and intrusive questions.

Helpful Questions to Test:

  • What are these customers doing now to work around the problem you see?
  • How do they describe their present situation?
  • What kind of emotion do they show regarding the problem?

Useful Tools:

The Value Proposition — Charles Kettering said it well: “A problem well-defined is a problem half-solved.” Articulating the problem you solve for in plain language is something many entrepreneurs struggle with. In the early stages of customer learning, you’re still a long way from a fully formed value proposition. But as you learn about potential customers, you’ll begin to see different propositions take shape. Hold on to all of them for safekeeping. Some of em’ might be worth refining.

As you think ahead to the value you might be able to create, avoid tipping your hand with interview subjects. You are not looking for “right” answers. Ask open-ended questions. Keep your instincts in check too, as you read through trade publications, industry newsletters and competitor’s marketing collateral. You are looking for gaps in service that might show an opening in the market (i.e. white space). You can penetrate even saturated markets, provided you can show value.

Helpful Questions to Test:

  • What assumptions do customers have about the problem?
  • What expectations do customers have about products in this market?
  • What have they been exposed to already?
  • What problem is the most urgent?

Useful tools:

The Business Model — According to Marc Andreessen, the #1 company-killer is lack of market. He believes a good market can overcome a mediocre team and product. Given the high rate of failure among startups, it’s safe to say that many entrepreneurs skimp on the initial customer learning process. Were it a priority, Flooz never would have gotten funded.

During the initial customer research phase, you’re not honing a business model. You’re looking at the size of the market (number of consumers, spending habits) and fitting that into your calculations. Common VC advice is blunt: go after a BIG market! The more crowded — it’s thought — the better. Conversely, any market that’s easy to dominate won’t stay that way for long.

Helpful Questions to Test:

  • How big is the market for your assumptions?
  • Are customers in that market paying for a solution?
  • Can those customers afford to pay for a solution (i.e. no starving musicians)?
  • Who are the biggest players in the market?
  • How fragmented is the market?

Useful tools:

In corporations and late-stage startups, you hardly ever hear about initial customer research. The learning process — even in lean businesses — comes after you’ve created an MVP. Which sorta makes sense; after all they wouldn’t be in business if they weren’t selling products.

The trouble is, that when companies only talk about customer development, it sends the wrong message to would-be entrepreneurs. That you have to rush an MVP to market or beta test before you can really learn. No freakin’ way! It just ain’t so. Yes, the learning process never stops and must constantly be incorporated into your product. But for first timers, it is always, always, always better to learn FIRST, and then — if everything checks out — move onto building.

That’s how we do at New Haircut. If you’ve got a reasonably good idea about a problem that needs solving, get in touch with us. Together we can figure out whether our lean customer learning process makes sense for you.

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