Before you develop a marketing strategy, carve out what features to add to your products, or set up a sales funnel, you need to uncover who your customers are. What’s more, you need to ascertain if the problem you intend to solve is worth their time.
This is where the customer discovery process comes in. It removes a good chunk of guesswork from your prospecting and validates the product-market fit.
Overview: What is customer discovery?
In simple terms, the purpose of customer discovery is to help companies uncover who their customers are and whether the problem they want to solve is appealing to the customer.
Customer discovery is one of the stages in the Customer Development Process.
The customer discovery process is designed to help startup companies test assumptions by obtaining feedback from customers.
The main objective of the process is to define your customers by turning primary assumptions into hypotheses. These can be about who your consumers are, the problem you’re solving for them, and how they will purchase from you.
Generally, the customer discovery process is about applying a basic scientific approach where you identify a problem, gather relevant data, formulate a hypothesis, and test that hypothesis via interviews with your prospective customers, among other methods.
The application of the scientific method allows you to validate your assumptions and ideas, get a deep understanding of your customers’ motivations and needs, and establish a reliable customer model by:
- Observing and identifying a market need or consumer problem
- Establishing a hypothesis about a solution to the customer problem, which is the business idea
- Performing an experiment for hypothesis testing
Why is customer discovery important?
When properly implemented, the customer discovery process can validate your assumed product-market fit with real evidence. This ensures there’s going to be interest in the solutions you’ll offer, which then makes it easier for your company to drive sales and provide good customer experience down the line.
Below are a few other benefits your business can get from customer discovery.
1. Better product development efficiency
Customer development gives you a better grasp of your customers’ wants and needs. This enables you to create solutions or add product features that make sense given your customers’ dynamics.
2. Greater investment potential
The customer discovery process helps you obtain evidence of demand within your target market and learn your capital requirements. This allows you to invest in product development efforts with the highest potential for driving revenue.
3. Break assumptions
Your assumptions about your market, customers, their problems, and the solution you’ll offer aren’t necessarily true. They need to be validated through research and tests, which is why the customer discovery process is critical.
Once your assumptions are validated, you can make well-grounded business decisions. It becomes easier to catch your audiences’ attention, lead them deeper into your sales pipeline, and enhance your revenue.
How does customer discovery help with your customer acquisition strategy?
In its earliest application, the customer discovery process was designed to help startups create products that people want. This helps generate more sales leads and close the deal with customers later on.
Today, the customer discovery process helps companies identify the right customer segments and targeted leads, learn what they want, and build products that align with their needs and problems.
This reduces potentially costly mistakes, helps your business focus on developing your Minimum Viable Product (MVP), and strengthens your customer acquisition efforts.
The 4 steps of the customer discovery process
Customer discovery includes a systematic process that involves taking note of initial hypotheses and testing them via conversations with market players and potential customers. Below are four steps that break down how you can accomplish this.
1. Establish a hypothesis
Come up with a hypothesis that outlines both the problem and your proposed solution. An easy way to lay this out is to complete this statement: “My idea addresses (the problem) by (your solution).”
Be as specific as you can. After all, an excellent hypothesis should solve one problem with one solution.
For example, a better and clearer way of stating the hypothesis, “My idea addresses (my customer’s content needs) by (providing content writing services),” is by saying, “My idea addresses (the hefty fees startups pay for producing articles) by (providing affordable writing services).”
The first hypothesis is vague and confusing since it doesn’t specify the problem. After all, “content needs” can mean a lot of things. The problem could be the cost, the time it takes to write the content, or the inconvenience, etc. It doesn’t even specify what type of content is being discussed.
The second hypothesis is better. It clearly states the problem, which is the cost. It also mentions who’s experiencing the problem and specifies the content type.
2. Specify your assumptions
Defining your hypothesis means making a few assumptions about your idea. This includes:
- Assuming the issue you’re addressing is a real problem your target customers are facing
- Assuming your proposed solution can actually solve the problem
- Assuming your target market has this problem
- Assuming your target market and customers are willing to pay to get your solution
An excellent way to outline all these assumptions is to create a customer persona, or a hypothetical profile of an ideal customer.
Be specific by giving your customer persona a name, a career, hobbies, age, interests, perspectives, etc. A buyer’s persona will help you map out the customer journey and aid your lead generation efforts.
Use the HubSpot Make My Persona tool or other apps that let you build personas that best represent your ideal buyer segments hypothesis.
3. Ask the right questions
After identifying the people most likely to be interested in your products, start asking them questions. Ask open-ended questions that will lead them to tell you about the ideal solutions to their problems. Consider asking questions like these:
- What is your current way of solving (insert the specific problem)?
- How does this method work for you?
- What is one thing you could do to improve your experience with solving (the problem)?
- What do you dislike about the method or process?
- What is the hardest part of solving (the problem)?
Asking these kinds of questions will give you unadulterated information about your customers’ dynamics, which play a crucial role in helping you formulate products or solutions that would resonate with them.
To centralize your customer data and make your customer discovery process more efficient, use CRM software, which stands for customer relationship management. The software allows for seamless customer information sharing and management, improves your consumer retention, and increases customer equity over time.
4. Assess and refine
During the customer discovery process, be sure to obtain (and store) as much data and information as you can. You will need it to refine and improve the process as you run through it again until you achieve satisfactory results.
It might be frustrating and time-consuming to go back to step one and tweak your original idea, but it’s better to do it during the early stages than after you’ve poured boatloads of resources into product development and marketing based on the wrong assumptions. In the end, your product won’t sell, and all the money you invested will go down the drain.
Start uncovering the benefits of the customer discovery process
Customer discovery can be a long and tedious process, but the benefits far outweigh the cost and resources you spend, which helps you offer optimum customer value.
With customer discovery, you gain a better understanding of your idea’s viability and whether you’re forcing a solution into a market that doesn’t need or want it. This, in turn, helps you create products and solutions that establish a solid foundation for the customer life cycle.