Customer Development. It all starts here. This is a four-stage process that allows the entrepreneur to find out what their potential client is actually looking for in their product or service.
- Customer Discovery. This is where the entrepreneur interviews 100 or 1,000 potential clients, and asks the question, “If there were three things you could correct in your business, what would they be?” The entrepreneur will surely find a pattern they can work with.
- Customer Validation. This is where the entrepreneur goes back to the potential customer (after discovery of the problem) with a Minimum Viable Product (MVP), and says, “I heard your pains and this is what I created to correct those pains. Is this something you would be interested in if created?” When the customer’s eyes light up, you know you have something.
- Customer Creation. This is where you start building the awareness, or the GET-KEEP-GROW methodology, as you work through the Business Model Canvas (BMC). Once completed, the nine boxes in the BMC will give you a clear and concise business model in which to operate and grow your company.
- Company Building. You now are no longer a start-up, but a full-fledged company ready to expand and iterate as needed to grow. You have a sales department, marketing department, and business development department all working together in order to build and expand the company.
Now, these steps may seem obvious and even academic at best, but it would blow your mind to know how many panels I’ve sat on in my 15-year career, asking these simple questions to the pitching entrepreneur, only to be faced with blank stares and the infamous, “I don’t know.” How does one build a company without talking to at least 500 or even a 1,000 potential clients?
Example of Customer Development. Several years ago, I started a new chain of Italian restaurants. I brought my mother-in-law over from Rome, Italy to do the cooking. I love my mother-in-law’s cooking, but I had to go through the customer discovery and validation process outlined above before opening. I found a broken-down restaurant that had gone out of business. I placed a picnic table in the center of the restaurant, and invited 15 people every night for dinner over a six-week period of time. At the end of dinner, I would have them rate the food. The data I collected was amazing. For the first three weeks, almost all the potential clients said the food was too strong; my mother-in-law was not cooking to the American pallet. As we iterated the recipes, the votes started getting better and better. When we hit a 90% approval rating on week six, then, and only then, did I create and design the menu. We opened the doors 10 weeks later to great fanfare. It would have been a disaster if we hadn’t fed and tested almost 500 people before opening the doors.
For more information about starting a company or new product development, please feel free to contact me at dmuir@muirandassociates.net