Lesson #3: Customer Discovery

Customer Discovery

By now, you have identified the type of hardware startup you’d like to build. You’ve also sketched out the basic idea of your product and have started to refine it. Now it’s time to sculpt it some more: shave off the bits that you don’t need, and build on things that make your hardware product different and attractive to customers. But how do you know which aspect of your idea should stay and which should go?

This next step involves rigorously testing your idea and developing it in parallel to match your learnings. It’s often referred to as customer discovery. This is a phase of the refinement process that should be approached with an open mind. Some facets of your idea which you are convinced is a key feature might not be the case once you start getting into conversations about your product.

The strategies, processes, and techniques outlined in this section will heavily borrow from Silicon Valley serial-entrepreneur Steve Blank and Rob Fitzpatrick, author of The Mom Test. We highly recommend reading up on their methodologies, which we will link to at the bottom of the lesson!


What is customer discovery?

Watered down to its basics, customer discovery is a way of improving a product’s success by developing a better understanding of the consumers. As a cornerstone to the Lean Startup Movement, it anchors the rapid iteration and deployment cycle of a new product to real, validated feedback from potential customers.

This is an incredibly important practice, especially for hardware startups. Unlike software development where continuous iteration takes little overhaul and cost, hardware by nature is comprised of “chunky” stages: design, prototype, manufacture, deploy. There’s very little wiggle room to physically test and learn from the product, or to accurately gauge whether or not your consumers will react the way you anticipate—that they would actually buy it.

Doing the ground work now to figure out what your customers are like and how they think will ensure that you avoid being one of those startups that builds something that nobody wants in the end.

So how do I do customer discovery?

A great launchpad to start you on your customer discovery journey is Rob Fitzpatrick’s The Mom Test. Its subtitle, “How to talk to customers and learn if your business is a good idea when everyone is lying to you”, should give you an idea of how misleading some conversations can end up being. Because people are (generally) nice; much like your mom, they don’t want to hurt your feelings, or they often try to say what you want to hear, especially when you are pitching a business idea.

In order to have good, insightful, non-biased conversations, The Mom Test outlines these key components:

  1. Avoid pitching: Don’t mention your idea, or what your product is today.
  2. Ask about specifics of their past and present experience, and not generic opinions about how they would act in the future.
  3. They should be talking (and you should be listening) 90% of the time.

But before anything, do some prep work so that you’re never caught off guard. Rob Fitzpatrick recommends figuring out three big questions you want to ask in every conversation. Always have these ready. They’ll most likely change over time as you learn more about your market segment, but having this at the top of your mind helps keep you on track and lets you handle spontaneous conversations.

Avoid misleading data

1. Deflect compliments.

Compliments are fool’s gold. Everyone will say them and they are all worthless, until they are validated. Only facts and commitments have worth. Immediately ignore all compliments and get back to asking good questions about your customer’s life today. Refraining from pitching your idea helps to avoid receiving compliments.

Again, people are simply nice and they don’t want to hurt your feelings. Don’t feel good when you receive a compliment. Unvalidated compliments have little correlation to the likelihood of them buying your product.

2. Anchor the fluff.

These are statements like, “I usually”, “I always”, “I never”, “I would”, “I might”, etc. Anchor them by asking specific questions of their past and present experience: “When did it happen last?” “Did you try to fix it?” “How did you try to fix it?” Often, you’ll find that there is nothing substantial underneath the fluff (ie. this problem only comes up once a month and is not really significant pain).

Perhaps the most dangerous of all the fluff is, “I would definitely buy/use that!” It can trick you into thinking everyone loves your product. But it’s meaningless unless they actually pre-order/commit with money. People are often overly optimistic of what they’ll actually do in the future.

3. Dig beneath ideas.

People will ask for features: “Do you do X?” Always follow this by asking why they want this, how they are coping now, why it matters. Deeply understand their motivations. They will reveal their ultimate goal and how important it is to their buying decision (deal-breaker or nice-to-have?). The same goes with strong emotional signals — dig beneath them to validate.

Other tips

  • Never expose your ego. Don’t ask for honest feedback and reassure them that you can handle it. People usually won’t be honest because they don’t want to hurt your feelings or because they want to believe in your entrepreneurial spirit. In contrast, people can’t lie to you if you only stick to specifics about their present and past experience.
  • Let them show you their mental model of the world. Don’t correct them or dictate how it looks for you. Even if you have an answer to one of their concerns or objectives, let them talk because you are getting valuable insight into how your customer thinks.
  • Most people love to complain. They will have lots of problems they don’t care enough about to fix but will happily tell you all about them. It’s your job to qualify these. Make sure that they really care about a problem before zooming in to ask more questions. Don’t get excited when someone starts talking about a pain- Ask about the magnitude of the pain and get excited only if it’s big.
  • Ask at least one question that can change or invalidate your whole business. This is your “terrifying question”.
  • Learn to love bad news.

Where do I find people to talk to?

This all depends on the buyer persona you have defined in our previous post. Who is the product for? Are they young/old? Female/male? What’s your product’s pricetag like? Is it consumery? Techy?

You should have a pretty good idea of where your consumer likes to hang out. Whether these are shopping malls, parks, hobby stores, meetups, etc., target these places and actively get into as many conversations as you can.

How to know if it’s working

In addition to obvious good signs like pre-selling before building, there are other signs of a good, valuable meeting:

  • Facts. Concrete, specific facts about what they do and why.
  • Commitment. They are demonstrating their seriousness by giving up more time (another meeting), risking reputation (an introduction to someone else), money (pre-sale), or requesting more info (growing mailing list).

How to know if it’s NOT working

  • If all you come back with are compliments like, “They love our vision”, or “they’re really excited”. These are not facts.
  • People are saying “yes” a lot but are not paying or committing in an way
  • You weren’t scared of any of the questions you asked.
  • The responses you get from 20 conversations are all over the place. This indicates your market segment is too broad and you need to focus on your buyer persona more.

Resources

Homework for next week

  • Come up with your set of three questions that you’ll always have in your backpocket.
  • Decide on your “terrifying” question; the question that will invalidate your whole business.
  • And if you’re feeling eager, draft out a flexible script with prepared responses for common questions.

Next week, we’ll cover what level of polish you need before approaching your customer and debunk the widely-believed myth of having a fully-working prototype. Watch this space!

Lesson #1: What Type of Hardware Startup Do You Want to Build?
Lesson #2: Exploring Ideas

https://docs.google.com/forms/d/1YXjfEg8Ljs1Y5IdwYK38HwyOEUqhKUeCiZ-QSGuOuB0/viewform?embedded=true

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