Before you can develop your idea into a viable business, you should first make sure your business actually solves a problem, a concept known as product market fit. Consider that 50% of new businesses fail within the first 5 years and nearly 40% of those that fail cite lack of product market fit as a reason. In the video workshop linked below, Max Mirho from Entreprenerd explains how to employ the customer discovery process to make sure your business will help customers in the real world.
What is Customer Discovery?
Most business ideas are born as a response to a problem that isn’t being solved or isn’t solved sufficiently. But what if your ‘problem’ wasn’t really a problem? What if you just had one bad experience? How do you go about figuring out what the real problem is?
Enter customer discovery. Simply put, customer discovery is finding an audience that you think shares the same problem, and then asking that audience specific questions to see if they have identified your idea as a potential solution. This process allows you to test the hypothesis you conceived to solve the problem in question.
The key point here is that the information you learn from potential customers may or may not agree with your original hypothesis. If the evidence doesn’t support your original hypothesis, you’ll have to check your ego at the door and be open to pivoting to a different solution to solve the problem you identified. The good news is, these potential customers will often give you the solution around which you’ll design your product/service.
Why Employ Customer Discovery?
Many entrepreneurs tend to skip the customer discovery step, and end up wasting time, money, and energy attempting to solve a problem that doesn’t exist. It might be the coolest product in the world, but if it isn’t useful to anyone, no one will want to pay for it. So how do you go about finding the problem?
Find your Audience
First, you’ll want to identify your target audience, or the people you think will have the most to say or know the most about the particular topic or problem you are going to inquire about. Once you’ve identified the target audience, you can begin to plan how to engage them. If you need assistance identifying your target audience, the Tarrant Small Business Development Center has experts that can help you.
What Questions Should you Ask?
Asking the right questions is key to getting the information you need. It is important not to ask leading questions like “would you buy my product?” or “how much would you pay for it?” What you’re trying to do is find out if you’ve identified a real problem and identify solutions that people will pay for, NOT whether they think your idea is good or bad. Here is a list of questions that you should ask to identify solutions from your target audience:
- Tell me a story about the last time you (fill in the problem your business is solving here).
- What’s the worst thing about that problem?
- How do you solve it now?
- What don’t you like about your current solution?
If people identify your proposed solution then you’re on the right track! They’ve supported your hypothesis and you should move forward with your idea. If your idea was not mentioned but people identified other solutions, you may need to rethink your approach.
Getting Customer Feedback
Now that you have a script for asking the right questions, it’s time to start interacting with your potential customers. It is important to get as much feedback as possible, so Max recommends talking to at least 10 potential customers, ideally more than 20. Below are three ways to discover the information you need.
Surveys are an easy way to get some initial feedback from potential customers. The good thing about surveys is that they can reach many people very quickly. The downside is that you can’t ask any follow up questions or get any kind of connection or organic feedback from the user.
Another way to drill down to your main problem is to do a focus group or group interview, where you can have more organic conversation that’s more personal than a survey. Group interviews can be beneficial in that you can dig deeper on responses or ideas in real time. However, not everyone speaks up in group settings, and there’s also the risk of “groupthink” where individuals are swayed by the larger group.
The tried–and–true, best method of customer discovery is one–on–one interviews with your target audience. These give you the interviewer the freedom and flexibility to ask follow–up questions and really delve into the pain points users have experienced so you can get the full picture of the problem. What’s more, customers will often provide a great solution to the problem or at least give you a blueprint or a starting point. The drawback to one-on-one interviews is that they can be time consuming, but it’s usually worth it when you get valuable information.
Successful Companies Pursue Customer Discovery
Customer discovery is one of the most important early steps that an entrepreneur can take to set themselves up for success. Although it might not be the most glamorous of processes, interacting with real potential customers and getting their insight and feedback into the real problem that needs solving will save every entrepreneur time and money, and will ultimately lead to effective product market fit.
This post is a collaborative effort by Marco Johnson, Sparkyard Network Builder, and Trent Barron, student intern at HSC Next.
About the Author
Marco Johnson is the Sparkyard Network Builder, a position funded by the UNTHSC. He is a Fort Worth resident and Global Citizen whose professional journey has led him to exotic, faraway locations including Eastern Europe, Central Asia, sub-Saharan Africa, and the planet Neptune to name a few. He is skilled in entrepreneurial ecosystem building, impact investing, international agricultural development, private equity finance, and fine-tuning Weber carburetors. He is a Virgo and his spirit animal is a Tesla coil. All thoughts, views, and comments are his own and do not reflect the thoughts, views, or comments of The University of North Texas Health Science Center.