The customer discovery process is where you identify prospective clients, discover their pain points, define buyer personas, and match your solution to their problem.
Customer discovery ensures that the product/service you offer will solve a particular issue for clients, not the masses.
Steve Blank, author of Four Steps to Epiphany, was the first to mention Customer Discovery. He describes how business plans aren’t enough to guarantee the success of a business. Instead, lean methodology and customer discovery favor customer feedback over intuition and experimenting over planning for success.
Why is the customer discovery process necessary?
Assuming a problem and creating a product or service without demand leads to loss. Hence, you need to create a product or service that fits market demand. The best way to do this is by conducting customer discovery.
Let’s look at why you need to conduct customer discovery for your business:
Through customer discovery, you understand real issues
During customer discovery, you interact with possible clients, learn their real problems, and change problem assumptions.
Let’s say you want to develop an app to order fresh mango juice. Customer discovery will help you answer the following questions about the app:
- Do people need a new mango juice app?
- Are there prospective clients who can order mango juice from the app?
- Should I change the mango juice app for another food type or add variety?
- What features can I add to the app to make it efficient or enjoyable?
If you discover that the mango juice is worth venturing into, the next thing is to find a solution and test your app.
Customer discovery reduces the business failure rate
Customer discovery tells you if there is a market for your product or it’s just a waste of time and money.
According to the US Bureau of Labor Statistics, only 50% of startups survive until the fifth year, and only 20% get to their 20th year.
Steve Blank explains that once entrepreneurs with great business plans get money from investors, they start the production process without customer input. They then test the products after resources have been invested in production.
Some months later, the entrepreneur discovers that customers didn’t want or need the product, leading to failure.
Customer discovery helps you create a suitable product for customers
During customer discovery, you learn your customer’s problems and how you can solve them. Using the information enables you to create an excellent product for targeted customers, increasing product adoption.
The phases of customer discovery
Customer discovery has four phases. Let’s take a look at each phase:
Phase 1: Define a hypothesis
A hypothesis defines the problem and solution that helps people understand what you want to solve. The theory should be clear and specific.
Use this formula to create a hypothesis: My idea solves________ by offering________
For instance, my idea solves the time inconvenience of getting fresh mango juice by offering a new mango juice app to order from the tap of your finger.
A hypothesis also shows your product or service assumptions, e.g., problem, solution, customer-centricity, or prospective paying customers. You need to create a hypothetical customer to layout your business assumptions.
When creating a hypothetical customer, include all their background information; age, career, interest, perspectives, and quotes on your business.
Here’s an excellent example of a customer persona below:
Phase 2: Test Your Hypothesis
The next step is to analyze your hypothesis with prospective clients. Here are the steps to follow when testing your hypothesis:
- Tap into your network: Use your contacts to test your hypothesis by building an inventory of prospective customers. A list of fifty names regardless of their position or rank is enough to test the theory.
- Prepare problem presentation: Create a high-level description of your service or product and invite your contacts to give feedback. Remember that your goal isn’t to sell but to get feedback on cost, performance, and efficiency.
- Gain customer insight: Ask in-depth questions beyond your contacts’ problems. For instance, how they spend their day, the performance of related processes, and main expenses in your business category.
- Map market infrastructure: Understand your business environment by attending conferences and trade shows. Also, talk to industry analysts and the media to know your competitors and trends in the market.
Phase 3: Test Your Product Concept
After understanding the product, you need to test and qualify the product concept by carrying out the following process:
1. Evaluate problem/solution fit: Ask questions, take feedback and share it with your development team. For instance, some questions could be:
- How do you ____[solve the problem]__ currently?
- Is the process working for your needs?
- What would improve your experience?
- What do you like or hate about_____?
2. Update product presentation: If the product or service almost solves the client’s problems, you could change some features. Create a new product or service that represents the recent changes.
Next, ask for feedback on the new product from your customers again.
3. Test revision and product solution: Here, you present the second feedback to your development team again. Test the revised problems and update your product development plans.
Phase 4: Evaluate Customer Feedback Following The Next Steps
The final phase of the customer discovery process is to weigh the data obtained from the previous steps. With product solutions and the target market, you can assess if you are ready to start with current plans.
Answer the following questions to see if you are prepared to move on with plans:
- Have I verified the customer problem?
- Have I verified the product/service solution?
- Have I verified the business model?
If the answer to each question is yes, continue with your plans. If not, pause your plans and redo phase 2 and phase 3.
Customer discovery questions
Here are some questions to ask potential customers to discover their pain points and validate your solution:
- Are you willing to solve [problem] and why?
- How do you currently solve [problem]
- What do you love/hate about the process (for solving the problem)?
- How did you find out about [current solution/process]?
- How much do you pay for [current solution]
You can also gather demographic data (e.g., age, gender, income, role/title, etc.). And psychographic data (e.g., goals, interests, values, beliefs, personality).
Try to fit your interview within 15 minutes, or incentivize the survey (e.g., a free downloadable guide).
Are there customer discovery tools?
Customer discovery tools can make the process easier and faster.
Let’s take a look at some of the tools:
- SurveyMonkey is a user-friendly survey platform for creating and deploying surveys to your target audience. You can get feedback on a product idea from the target audience to see if it has any market.
- User testing has over a million testers to give you feedback on your service or product. You will understand how to boost user experience and customer satisfaction.
- Hubspot persona generator will take you through the steps of creating a hypothetical customer persona for phase 1 of customer discovery.
What do you do after customer discovery?
Once you have made a successful customer discovery, you can create the following:
- Problem statement( nature of client’s business problem evaluation)
- Creating functional and non-functional needs of the new product
- Sales revenue plan
- A business plan