By Christian Dahlen & Oana Olteanu
Technology startups and mature companies alike know that building successful products requires a close collaboration with the customer. Steve Blank in particular has championed the idea of the Customer Development where startups can systematically improve the chances of product success by developing a better understanding of their customers.
So why is it that so many startups still end up in the product graveyard, need to pivot after significant development investments have already been made, or, even worse, gain only a handful of customers and join the living dead?
Much has been written about the Minimum Viable Product. Based on our experience with startups and large companies in the enterprise software space, there seems to be a common theme: Not picking the ‘right’ customers and not spending enough time with those customers from the beginning is likely to cause damage which proves irreparable.
Here then are six steps to finding the Maximum Desirable Customer
- Profile and qualify your initial customers. A startup need to have a crystal clear hypothesis about its product target audience, unless it wants to be at the mercy of random customers with ulterior motives. Early customers in particular may simply want to use the start-up as an extended development bench, and that hidden agenda is easy to overlook when a startup is hungry for first customers.
Two caveats are particularly noteworthy: A mature company with existing customers needs to watch out for Christensen’s innovator’s dilemma and actively seek new users, buyers and partners. And everyone likes to brag about Fortune 50 companies as customers: However, these sought-after brands usually have the most complex requirements that far exceed a Minimum Viable Product.
- Validate problems/solution with all your channels. It may be comfortable to validate your product with the initial and existing customers only. But the reality of today’s channel landscape is complex and imposes product requirements on your product from day one. Involving partners early will also prepare the ecosystem when the product is finally launched.
- Talk to all of your customer stakeholders. The buying decision is never influenced by one person only. One must ensure that each layer of customers wants to hire the product for the job that they have to do: The end user needs a great user interface and a necessary and sufficient set of functions. The buyer has to weigh competing priorities, and may have a different job for which he might want to hire the product for. Other stakeholders in IT and in finance may have the final budget authority. There is a whole ecosystem around these stakeholders who influence the buying decision.
- Solicit active feedback from your customers. It may be very comfortable for both parties to have the product team broadcasting what they plan to do. But shouting out and not getting an engaged response is a clear warning sign that things are not going well. If in doubt, make sure to engage with the business users.
- Find a stable use case and persona. Working with only two or three initial customers only is a risky undertaking. A customer advisory council helps build a stable persona that survives even if some initial customers decide to drop out. Moreover, the more customers are involved in defining the persona, the higher the chance of catching the common traits and building a true Minimum Viable Product (MVP).
- Build a low fidelity Minimum Viable Product for customers requiring the least amount of features. Now that the ‘right’ customers have been picked, comic book type storytelling and simple proof of concepts can save the startup from wasting months of development work and having to start all over again.
In a nutshell, the time spent with future customers before beginning a massive development effort is time well spent. Following the six simple rules to finding the Maximum Desirable Customers ensures that the right customer pipeline is built from the start.
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