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CUSTOMER DISCOVERYOr: How I learned to get out of the building and start making what customers desire
Steven Sherman – [email protected]
Startup Academy
October 29, 2014
INTRODUCTION
IntroductionWHAT
CUSTOMER DISCOVERY
Or: How I learned to get out of the building and start making what customers desire
Fundamentals of customer discovery as a market research and validation tool for early stage start-ups
IntroductionHOW
Awesome collaboration between multiple UM entrepreneurial programs
Academic and real-world experience from Customer Discovery Ninja team
Thank you:
Startup Academy
Master of Entrepreneurship program
IntroductionWHY
Goal:
Teach Startup Academy participants, MsE students, and other attendees the fundamentals of Customer Discovery to better validate their idea and build things people actually want.
IntroductionWHO
Steven Sherman
Co-Founder of Customer Discovery Ninja
Master of Entrepreneurship – 2013
Master’s in Energy Systems Engineering – 2012
Bachelor’s in Chemical Engineering – 2011
IntroductionWHO
Jack Dean
Co-Founder of Customer Discovery Ninja
Bachelor’s in Business Administration – 2011
@jackp_dean
IntroductionWHO
…the heck are you?
- One-line pitch
- One thing you want to learn tonight
IntroductionWHO
…the heck else is here?
- Make a new friend
- Take a picture together
- Tweet at each other
- Include: @jackp_dean and #customerdiscovery
INNOVATION + CUSTOMER DISCOVERY
What is Innovation?
What is Innovation?
“The process of translating an idea or invention into a product or service that creates value or for which customers will pay”
- businessdictionary.com
What is Innovation?
“The process of translating an idea or invention into a product or service that creates value or for which customers will pay”
- businessdictionary.com
Simply put:
The intersection of feasibility, viability, and desirability
Desirability
ViabilityFeasibility
Innovation
Desirability
ViabilityFeasibility
Desirability
Viability(Hustlers)
Feasibility
Desirability
Viability(Hustlers)
Feasibility
(Hackers)
Desirability
(Entrepreneurs)
Viability(Hustlers)
Feasibility
(Hackers)
Desirability
(Entrepreneurs)
Viability(Hustlers)
Feasibility
(Hackers)
What is Customer Discovery?
What is Customer Discovery?
A process used to discover, test, and validate one of your most important business assumptions – you have a specific product that solves a known problem for an identifiable group of customers
What is Customer Discovery?
A process used to discover, test, and validate one of your most important business assumptions – you have a specific product that solves a known problem for an identifiable group of customers
Simply put:
Finding out if people care about what you’re working on before you spend lots of time and money building it.
What is Customer Discovery?
Steve Blank
“Get out of the building!”
What is Customer Discovery?
Steve Blank
Father of Customer Discovery methodologies
Silicon Valley serial-entrepreneur and academic
Wrote the books on Customer Discovery and Development
University of Michigan student! (for one semester)
“Get out of the building!”
WHY CUSTOMER DISCOVERY IS SO IMPORTANT
Why Customer Discovery is so important
Why do new ideas and inventions fail?
Why Customer Discovery is so important
Why do new ideas and inventions fail?
“The number one reason start-ups fail is not because they fail to build what they set out to build, but because they spend too much time, money, and effort building the wrong product.”
- Ash Maurya, Author of Running Lean
Why Customer Discovery is so important
Why do new ideas and inventions fail?
“The number one reason start-ups fail is not because they fail to build what they set out to build, but because they spend too much time, money, and effort building the wrong product.”
- Ash Maurya, Author of Running Lean
Simply put:
Most new products and services fail because not enough people desired them
The team wasn’t able to empathize with their customers
Why Customer Discovery is so important
An example: Webvan
- Online grocery delivery business founded in 1999
- One of the most electrifying new start-ups with an idea that would potentially touch every household in US
- Raised over $800 M, backed by experienced venture capitalists
Why Customer Discovery is so important
An example: Webvan
- Online grocery delivery business founded in 1999
- One of the most electrifying new start-ups with an idea that would potentially touch every household in US
- Raised over $800 M, backed by experienced venture capitalists
- Went bankrupt in 2001
- Largest dot-com flop in history
Why Customer Discovery is so important
An example: Webvan
- Online grocery delivery business founded in 1999
- One of the most electrifying new start-ups with an idea that would potentially touch every household in US
- Raised over $800 M, backed by experienced venture capitalists
- Went bankrupt in 2001
- Largest dot-com flop in history
- What happened?
- Not a failure of execution – failure of customer understanding and empathy
Why Customer Discovery is so important
“Build it and they will come”
Why Customer Discovery is so important
“Build it and they will come”
Only true for life and death products – cure for cancer, nuclear fusion, transistor computer, etc.
Much more risk in feasibility and some in viability, not customer desirability
Why Customer Discovery is so important
“Build it and they will come”
Only true for life and death products – cure for cancer, nuclear fusion, transistor computer, etc.
Much more risk in feasibility and some in viability, not customer desirability
Not true for most other products – software, consumer, web, etc.
Issues are customer acceptance and market adoption
HOW TO GET THE MOST OUT OF CUSTOMER DISCOVERY
How to get the most out of it
How do you “do Customer Discovery”?
How to get the most out of it
How do you “do Customer Discovery”?
Best practice:
In-depth one-on-one in-person interviews with your potential customers to understand their problems, motives, desires, dialect, purchasing power, etc.
Emphasis on learning and discovery before execution
How to get the most out of it
How do you “do Customer Discovery”?
Best practice:
In-depth one-on-one in-person interviews with your potential customers to understand their problems, motives, desires, dialect, purchasing power, etc.
Emphasis on learning and discovery before execution
A special kind of torture:
- Talking to strangers
- People are already busy and hate being sold things
- It’s very likely they will destroy your vision for a company
How to get the most out of it
How do you “do Customer Discovery”?
Bad practice:
Most entrepreneurs substitute this primary research with easier alternatives that aren’t nearly as effective: market reports, friends and family, pitching solution, surveys, etc.
How to get the most out of it
How do you “do Customer Discovery”?
Bad practice:
Most entrepreneurs substitute this primary research with easier alternatives that aren’t nearly as effective: market reports, friends and family, pitching solution, surveys, etc.
Trying to avoid
A special kind of torture:
- Talking to strangers
- People are already busy and hate being sold things
- It’s very likely they will destroy your vision for a company
How to get the most out of it
Let’s try it!
How to get the most out of it
Let’s try it!
Who is brave enough to interview me, Customer Discovery style?
(This will likely be very awkward)
How to get the most out of it
Observations?
Learn anything?
How to get the most out of it
Proper interview techniques are an art, not a science.
The best way to get better at Customer Discovery is to practice.
You can also read up on ethnography and many resources online
One of our favorites: www.customerdevlabs.com
How to get the most out of it
1st Rule:
Do not talk about your idea
How to get the most out of it
2nd Rule:
You want to have a conversation where your potential customer does most of the talking
How to get the most out of it
3rd Rule:
Minimize questions about future behaviors
How to get the most out of it
4th Rule:
The more real examples and stories you can hear about, the better
How to get the most out of it
5th Rule:
Always ask “WHY?”
How to get the most out of it
6th Rule:
Understand how they’re currently solving their problems
How to get the most out of it
Let’s try it again!
How to get the most out of it
Let’s try it again!
I’ll give a quick demonstration
Who is brave enough to interview me, Customer Discovery style?
(This should be slightly less awkward)
WHAT ARE SOME OTHER BEST PRACTICES
Best Practices
In-person is ideal
Do it with two people – one to guide the interview, the other to take notes
Founders must do it!
Founder reporting bad news = pivot
Someone else reporting bad news = firing
Best Practices
Avoid friends and family – naturally biased
No surveys – good for scaling findings but too narrow for initial discovery
Best Practices
Avoid friends and family – naturally biased
No surveys – good for scaling findings but too narrow for initial discovery
No market reports – good to find large trends to leverage but not a replacement for in-depth interviews
Not a focus group – good for fine-tuning a product, not for initial discovery
Best Practices
Customer Discovery interviews give you the best marketing copy –the words of your customer
“WHY?” answers are especially good for framing your unique value proposition
Best Practices
Customer Discovery interviews give you the best marketing copy –the words of your customer
“WHY?” answers are especially good for framing your unique value proposition
Findings can destroy your vision – be humble, pivot when necessary
Much less expensive (time and money) than building something that doesn’t solve a real problem
Use lessons learned with investors – build traction with real world data; help prove your vision isn’t a hallucination
Best Practices
Audience Customer Discovery stories
Questions and Answers
SHORT BREAK
CUSTOMER DISCOVERY NINJA:A TOOL FOR CUSTOMER DISCOVERY BUILT USING CUSTOMER DISCOVERY
Customer Discovery Ninja
Customer Discovery Ninja
Our Story:
Working on a few ‘start-up’ projects
Knew importance of Customer Discovery
Bugged all of our friends and family enough
A problem!
Needed more people to talk to
Customer Discovery Ninja
Our Story:
A hack!
Interview 100 customers in 4 hours
High quality, unbiased interviews for Customer Discovery
Big learning curve and rough user experience using the hack
Pieced together solutions that could be done better
Customer Discovery Ninja
Our Story:
An idea!
Live, on-demand customer discovery interviews for start-ups built on the hack but with a much better UX and value-add tools
But do other people have this problem?
Would we be building a desirable product?
Customer Discovery about…Customer Discovery!
Customer Discovery Ninja
Our Story:
Before we built anything, reached out to our network of entrepreneurs and start-up founders to better understand their market and customer research problems
Customer Discovery Ninja
Our Story:
Before we built anything, reached out to our network of entrepreneurs and start-up founders to better understand their market and customer research problems
Heard things like:
- “I’m stopping people at the mall and it’s awkward.”
- “Customer Discovery is time intensive and there is a limited window for it during the week.”
- “I spend a good chunk of time trying to interview more people.”
Heard enough evidence to build an MVP
Customer Discovery Ninja
Our Story:
Used the MVP to conduct more Customer Discovery interviews about market / customer research and associated problems
Recruited early adopters from the interviews
Some people were begging to start using it
Worked closely with early adopters and used this early feedback to refine the product further
Focused on “nailing it” then “scaling it”
Customer Discovery Ninja
Demonstration: Customer Discovery Ninja
Customer Discovery Ninja
The deal for you:
Just moved from alpha to beta, still private invite
Provide email address Early access
Get 5 others to sign-up 50 free interview credits with early access
www.customerdiscovery.ninja
CUSTOMER DISCOVERY STORIES
Customer Discovery Stories
Status Owl
www.statusowl.com
The Overdose
Change of Mind
Jack Dean
GET OUT OF THE BUILDING!
Get out of the building!
Innovation = Desirability x Viability x Feasibility
Customer Discovery = “Get out of the building” and understand your customer and their problems before you waste time building something nobody wants
For most start-ups, market risks are much greater than technology risks
Get out of the building!
Customer Discovery Rules
1 – Do not talk about your idea
2 - You want to have a conversation where your potential customer does most of the talking
3 - Minimize questions about future behaviors
4 - The more real examples and stories you can hear about, the better
5 - Always ask “WHY?”
6 - Understand how they’re currently solving their problems
Get out of the building!
Suggested readings:
www.customerdevlabs.com
Get out of the building!
Customer Discovery Ninja deal for you:
Provide email address Early access
Get 5 others to sign-up 50 free interview credits with early access
www.customerdiscovery.ninja
Questions – [email protected]
Jack - @customer_ninja