One of the more intriguing dynamics in startups and business in general, is customer communication. Customer Development is, of course, all about talking with customers to test fundamental business hypotheses, match product solution to customer problem, and in general, learn as much about them as possible in order more efficiently and effectively market and sell to them.
The tension comes from learning when to ignore your customers and when to take heed. Custdevguy reminds us that customers have their own agenda, which might not coincide with your own. Steve Blank reminds us that Customer Development is not just collecting web metrics and it's not about focus groups. I've written before that Customers own the pain, Founders own the vision, meaning that as an entrepreneur, you must tailor your vision to solve the customer's pain. That is the objective of speaking with your customers.
Sean Ellis perhaps says it best, describing the process as "honing in" on the "signal" that is the core value proposition of your product to your customer. What's valuable about this description to me, is that rather than looking at what you need to ask each customer, it provides a high-level perspective on what your objective should be and how to get there. It's talking to enough customer and asking whatever questions necessary to hone in on the core value of the product.
Success and Cognitive Bias
One thing that often strikes me about conversations regarding start-up success is the pervasiveness of the narrative fallacy and hindsight bias.
We can go to Wikipedia's entry on Taleb for a definition:
Narrative fallacy: creating a story post-hoc so that an event will seem to have an identifiable cause.
Allow me to illustrate. What caused YouTube to grow at phenomenal rates in 2005/2006, eventually leading to a $1.65 billion acquisition by Google in 2006?
Note: One of the more difficult aspects of customer development is understanding when to listen to customers/prospects and when not to. When should you rely on intuition and when is the customer right, if not always? Steve Blank's oft quoted clarion call to "get out of the building" demands that you listen to customers, but not that you necessarily heed what they say! You may have the wrong customer for your business. You may have the right customer who emphasizes the wrong root cause to a problem. As I tweeted the other day:
maybe your product focus should be what your current customers don't ask for or what your lost customers wanted.
I invited "CustDevGuy," author of the "Fake Screenshot/LOI" customer development case study, to write up a continuation of that story, which illustrates an easy trap to fall into when interacting with potential customers. Here's his story:
This guest-post is a follow-up to my original Case Study posted at the Lean Startup Circle. (Thanks Brant for lending me your digital soapbox.) I wanted to further flesh out an important insight that came out of conversations about my ongoing Customer Development experiences as well as address a common fallacy that keeps popping up in conversations and email threads with regards to what Customer Development is and isn't. The fallacy being that customers will simply hand over the Holy Grail (read: Product/Market Fit) if you go and chat a bit with them.
Continue reading “Seller Beware: Customers Have Their Own Agenda” »
In Andrew Chen’s recent post, “Does every startup need a Steve Jobs?”, he discusses IDEO’s “product framework for Desirability, Feasibility, and Viability.” Chen’s descriptions of business-, engineering-, and design-focused product perspectives reminded me of the work on companies’ “driving force” popularized by Michel Robert in his series of business strategy books. Understanding your “driving force” is critical to understanding what products to build and who to build them for. The driving force helps shape technology choices, importance of design, market segment, and business model as well as company culture, growth plan and exit strategy.
The basic point, is that while all companies employ technology, sell products or services, employ technology, market to specific segments and use certain distribution methods, one factor dominates (or should dominate) the others in terms of business strategy.
one component of the business is the driving force of the strategy — the company’s so-called DNA. This driving force, in turn, greatly determines the array of products, customers, industry segments, and geographic markets that management chooses to emphasize more or emphasize less
Here is a subset of driving forces Robert discusses:
Three beautiful words. When used together, one of the most wonderful — if not most underused — phrases in our lexicon. Am I being hyperbolic?
Modern culture dictates that we claim to know, so we spend a lot of time knowing stuff. We expend much effort displaying our expertise. If we personally don’t know something, we rely on designated “experts,” who tell us they know (despite their unimpressive track record). We know where the stock market is headed. We know how countries will respond to “liberation.” We understand the ins and outs of other cultures. In relationships, we do not hesitate to state unequivocally the others’ thoughts, intentions and motivations. At some point in the past, we have “known” the world is flat, the sun revolves around the Earth and that spontaneous generation exists. Collectively, we know both that “God Exists” and that it doesn’t. We know that the people in our tribe are more intelligent, moral, and civilized than in theirs. Of course, they say the same thing.
I don't know who is more exasperated, entrepreneurs flummoxed by marketers or me, upset that another entrepreneur has been flummoxed by marketers!
People, language is for communication and marketing terms, abused as they are, fall somewhere within the scope of language. To communicate you need to learn the terms. To practice marketing or to hire a marketer you need to grasp some basics. Please.
Marketing Help Rule 1.
(<> means "not equal to")
Blogging <> PR <> Brand <> SEO <> Logo <> Advertising <> Tagline <> Messaging <> FaceBook <> Positioning <> Twitter <>Lead Gen <> [Enter mktg term here]
Marketing Help Rule 2.
Trust me, you don't need all the marketing tactics listed in Rule 1.
Marketing Help Rule 3.
The right marketing tactics for you, right now depend on WHO your prospective customers are and WHAT stage your company is in.
Marketing Help Rule 4.
All Marketers have a core competency (or two). Regardless, (almost) all Marketers will sell (almost) all marketing services.
Marketing Help Rule 5.
You need marketing to grow your business. And more likely than not, you need or will soon need help marketing. Admit it.
For a moment, forget everything you know or think you know or have heard about marketing. Start with a clean slate.
Now imagine you are a new customer of a particular product or service. You just finished buying. You are a bit giddy: Continue reading “Entrepreneurs: Know Thy Marketing!” »
Guest post at VentureBeat, The hidden secrets of market research
The last time I checked, the world’s population was around 6.8 billion. If only 0.1 percent were to visit your website… and if you were to convert only 1 percent of those to paying customers… and they each paid $2 for a Thneed, for example, then revenues would be over $135M. (And everyone knows you could get way more than 2 bucks for a Thneed, which everyone needs!)
I recently blogged about 4 anti-lean startup archetypes. These are people who, in my opinion, are at first blush, unwilling (or unable) to adopt Eric Ries' lean startup principles, and specifically, Steve Blank's customer development methodologies.
The four are:
- The renaissance salesperson - He or she can sell a sno-cone to an Eskimo; they don't need no stinkin' customer development.
- If you build-it, they will come Engineers - Our product rocks, therefore we win.
- Madison Ave marketers - All we need is some advertising, PR, branding -- mix in a little social media marketing, and you're good to go!
- The "you don't get it" entrepreneur - If you don't see the billion dollar win the CEO sees, you simply lack the vision. See?
I think I've met one of each in the last week. Continue reading “5th Anti-Lean Startup Archetype – We Already Do It” »