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Launching a new product or starting a business is exciting, but it can also be risky. The most common mistake entrepreneurs make is creating something without fully understanding their customers’ needs. That’s where customer discovery comes in, a process that helps you get to know your customers and ensure your product solves a real problem. But to understand customer discovery, it’s important to see how it fits into the larger framework of the Customer Development Model.
Developed by Steve Blank, the Customer Development Model is a systematic approach to creating and growing a business by focusing on understanding customers. This model is especially useful for startups, as it helps avoid the common pitfall of building a product that nobody wants. The model consists of four key stages:
This article focuses solely on customer discovery, the crucial first step that sets the foundation for all the other stages. Let’s dive into customer discovery and its key elements.
Customer discovery is the process of understanding who your customers are, what problems they face, and how your product or service can help solve these problems. Unlike traditional market research, Customer discovery is an ongoing, interactive process that involves direct conversations with potential customers to validate your ideas before moving forward with product development.
Customer discovery is key to building a product that meets real customer needs.
The process of Customer Discovery can be broken down different phases. We use the following 6 steps:
This step involves formulating your initial assumptions about the market, the problem you aim to solve, and the potential customers who may benefit from your product. These assumptions will serve as the foundation for the entire discovery process. You might start by asking questions like:
You translate these insights into hypotheses. It is crucial to ensure that your hypothes are:
Formulating good customer discovery hypotheses can be difficult. In practice, we often see assumptions that are formulated too vaguely. Here are some examples of what not to do.
We have taken care of the above examples. In our opinion, these are good customer discovery hypotheses.
Design good experiments to confirm or refute the hypothesis. We recommend using our experiment template for this.
Once you’ve formed your experiment cards, the next step is to conduct interviews with potential customers to validate or disprove your assumptions. The purpose of these interviews is to learn about their pain points, frustrations, and needs.
Effective customer discovery interviews can uncover valuable insights.
Avoid “crocodile behavior”—where you dominate the conversation. Ensure the customer speaks 90% of the time, allowing you to listen and learn.
After gathering the first customer discovery experiments it’s time for a pivot or proceed decission. If customers’ feedback indicates that your product solves a significant problem, you’re on the right track. If not, it might be time to adjust or even pivot your idea.
These are signs of an relevant customer problem:
If you can place a checkmark behind each of these points, then it is time to continue with the solution. If not it’s time to pivot. Maybe another found customer problem is worth solving?
This step is about formulating solution assumptions. Consider the following:
Be creative when designing your experiments. How can you test your assumptions quickly, effectively and cheaply? Ensure a good mix between ”saying & doing”. Both are important, ”saying” gives you good qualitative insights. But people don’t always say what they do. Support with ”doing” experiments provides a reliable picture of the demand for the solution.
In this step you carry out the planned experiments. Keep the pace high and work according to a structured process.
Based on the insights gained from your experiments, it’s time to make a critical decision: pivot or proceed. This step involves evaluating whether your solution effectively addresses the validated problem.
If the problem-solution fit is not yet clear, don’t hesitate to test again. Iteration and refinement are crucial for finding a solution that truly resonates with your target audience.
Many successful companies have used Customer Discovery to refine their products. To inspire you, we have highlighted a number of interesting examples:
Our first customer discovery example is Nespresso. In its early years, Nespresso aimed to expand its coffee machine sales into the horeca (hotel, restaurant, and café) sector. The company believed that professional kitchens would greatly benefit from its high-quality, convenient coffee machines. However, after conducting customer interviews with restaurant and café owners, Nespresso discovered that the perceived pain point of needing high-quality, easy-to-use coffee machines wasn’t as significant as they anticipated. Many establishments preferred traditional brewing methods and had specific needs that Nespresso’s initial offering didn’t address.
Why this is interesting: This example highlights how customer interviews can reveal that the identified problem or need may not be as urgent or relevant as initially thought. Nespresso’s findings led them to pivot their focus and refine their approach, emphasizing the importance of validating customer pain points before making significant business decisions.
Our second customer discovery example is Groupon. Groupon started with the idea of creating a platform for daily deals and discounts. However, early customer interviews revealed that the primary problem they identified—people wanting discounts but not having a convenient way to find them—was not as pressing as they thought. Instead, customers were more interested in a streamlined platform for discovering deals, not just finding discounts.
Why this is interesting: Groupon’s example illustrates the importance of validating the core problem. Through customer interviews, they discovered that the actual demand was for a comprehensive deals platform, leading them to refine their product offering based on real customer needs.
The last customer discovery example is Color. Color is a social photo-sharing app launched in 2011, aimed to create a platform where users could share photos with others nearby. The company believed there was a strong demand for a local photo-sharing experience, focusing on the novelty of real-time, location-based social interaction.
However, after launching and conducting interviews with users, it became clear that the core problem they were trying to solve—creating a localized photo-sharing experience—was not as compelling as anticipated. Users did not see significant value in sharing photos solely with those in close proximity, and the app struggled to gain traction. Many found the feature redundant with existing social media platforms.
Why this is interesting: Color’s experience highlights the risk of focusing on features that might seem innovative but do not address a pressing or relevant customer need. The feedback from users revealed that the assumed need for local photo-sharing was not strong enough to drive user engagement, emphasizing the importance of aligning product features with clear and significant customer needs.
I hope this article has answered the question, “What is customer discovery?” and provided you with valuable insights through our deep dive and customer discovery examples. Our exploration into this essential process is designed to inspire you to effectively understand and address customer problems.
In our Business Model Innovation projects, we embrace the Customer Development methodology to ensure a deep alignment with market needs. If you’re looking for assistance in applying these principles to your business, consider exploring our Business Growth Consulting Services. We’re here to help you navigate the customer discovery process and drive your business forward.
