Customer Development Process

Posted on by Andy Boyd

The customer development process was developed by Steve Blank. The basic premise is that a startup company is not a “mini version of a big company”, it is an organization in search of a repeatable and scalable business model.

In simple terms, the aim of the process is to help startup founders, or in the case of intraprenuership, product managers, find/validate a problem, validate a solution, validate a market (opportunity), and develop a business around it.

Step 1: CUSTOMER DISCOVERY

Goal

  • There are no facts in the building, get out of the building, stop selling, start listening.  Start doing customer interviews
  • Test your hypothesis. Two are fundamental: problem and product concept

Exit Criteria

  • What are your customers top problems
    • What will they pay to solve them
    • Does your product concept solve them?
    • Do customers agree?
  • Draw a day in the life of your customer
    • Before and after your product
    • Draw the org chart of users and buyers

Step 2: CUSTOMER VALIDATION

Goal:

  • Develop a repeatable sales process

Exit Criteria

  • Draw your business model, financial model make sense?
  • Do you understand the sales cycle & sales roadmap?
    • ASP, LTV, ROI, ETC
    • Org chart, influence map?
  • Proven customer acquisition model?
  • Orders validating the business model

Step 3: CUSTOMER CREATION

Goal

  • Grow customers from few to many
  • Four customer creation activities
    • Year 1 objectives
    • Positioning
    • Launch
    • Demand creation
    • Note: Creation is where you “cross the chasm”

Exit Criteria

  • Different for each
  • Which startup strategy are you executing?
  • Positioning tested & complete?
  • Launch strategy match startup type?
  • Demand creation activities match startup type?
  • Year 1 objectives match startup type?

Step 4: COMPANY BUILDING

Goal

  • Management changes as company changes, become development, process, and mission centric
  • Sales growth will match market type

Exit Criteria

  • Does sales growth plan match market type
  • Does spending plan match market type
  • Does the board agree
  • Is your team right for this stage of the company?
  • Have you built a mission oriented culture?