What is Customer Development?

The customer development process is part of lean startup, helping startups accelerate the process of finding a niche market which can turn into a vertical startup business. The process has been refined by some of the brilliant master entrepreneurs of recent startup craze, where many startups are born. Lean startup suggests to stay the smallest team as possible and be most effective. One person entrepreneur doesn?t work too well in their system, because most of the founders are business people. So they suggest a minimum of two entrepreneurs to start a company, one takes care of technical details and the other deals with business and investors.

The next step is to find addressable market. For that, there are many templates to interview customers. Talk to customers and identify pain points. From there, comes a dollar figure. How much the customer is willing to pay for the service? What are other alternatives available for the service and the price? How long will it take to execute the business plan? When will there be revenue? How much money investors have to put in to start seeing revenue? What are the demographics of the customers? What is the cost of acquisition? How much money spent week over week to receive revenue to make up for the investment? What is the competition landscape? Is there a first mover advantage or their a chance to be a secondary complementary player in the market? How much resources needed to execute the business plan? What are the exit potentials? What are potential partners? What are potential investors? Is this a user acquisition model or a business acquisition model? Do I need surveys to gather more information? How many customers I need to interview? Is this a viral growth model or a spiral growth model?

By asking as many upfront questions, a detail examination of the business opportunity is examined. By doing regular customer development, you can find opportunity in any market. From customer development, early stage startups can pivot. In large stage startups and corporations, now they have entrepreneurship departments that are pivoting on customer development feedback and analytics data. Customer development helps analyze customer pain points and root cause can be established. Real startup pivots happen based on customer feedback.

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