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GuidesProduct developmentWhat is customer development?

What is customer development?

Last updated

23 May 2023

Author

Dovetail Editorial Team

Reviewed by

Eliz Ayaydin

While customer development might seem like an obvious concept, there are layers of complexities for businesses to facilitate it effectively. 

Customer development is a framework to decide whether or not the new offering, product, or service meets the customer's actual needs

It's typically a critical process for startups but can also be necessary for existing businesses looking to explore new offerings. 

Companies can execute customer development with a customized approach, which usually includes a strategic business model design and robust data analysis.

Keep reading this comprehensive overview of customer development to learn more. 

Why is customer development important?

Because your customer development effort helps you gain valuable insight into improving your company offerings, it's essential for your company's growth and success. 

Customer development is also important because it provides you with metrics you can use to introduce new products. 

It also allows you to effectively monitor the changes in your target audience and adapt accordingly. With this data, your business will uncover growth opportunities. 

Businesses that don’t engage in proactive customer development become stagnant in their segments, fall behind their competitors, and lose market share.

What are examples of customer development?

Whether you use customer surveys or questionnaires with open-ended questions, you can follow these examples of customer development:

Dropbox

Initially, this popular software solution struggled with marketing: Dropbox was solving a problem customers didn’t realize they had. 

Using customer development methods, the Dropbox team discovered word-of-mouth was the most resonant way to connect with their target audience. 

They quickly changed gears and restructured their marketing approach, focusing exclusively on existing customer experiences rather than traditional marketing channels.

Groove

Groove is an online helpdesk software provider that struggled to retain its existing customers. 

Groove triumphed after exploring customer development methods—including the CEO getting in touch with customers to gather in-depth feedback through one-on-one conversations.

It improved its second-tier onboarding, marketing messaging, and aftersales customer service. It also made customer learning an ongoing process.

What are the benefits of customer development?

If you're still not convinced that a robust customer development strategy is a must-have for your business model, consider these benefits:

Saves time and money in the long run 

Instead of rushing to market with a new idea, customer development allows you to gauge your product's effectiveness, helping you project and predict success based on data. 

In the long run, you can avoid investing significant resources and wasting time on a poor-performing product. You can also boost your bottom line by doing your customer-facing homework first.

Removes biases and focuses on solutions

Big ideas breed excitement, but they can also foster assumptions and biases. 

Customer development analysis allows you to remove any emotional connection to your offering by validating solutions that solve real customer problems. 

Remove the rose-colored glasses and focus on whether your product resonates with your target audience. 

Achieves product-market fit faster

Customer development strategies ensure your offering is a great market fit faster than prematurely launching and waiting for results. 

Use customer development to validate your product first, so you can prepare for growth and success with achieved market fit.

The negative aspect of the customer development process

While customer development is a useful process for many reasons, it's not a one-size-fits-all solution. It presents some cons worth considering:

It will take longer to go from concept to market

If you take the time to facilitate customer development first, you'll delay your timeline to launch. 

Doing due diligence on your market viability and customer pain points from start to finish could add a few weeks or more to your process. 

It's not a once-in-a-lifetime kind of deal

Engaging in customer development doesn't guarantee the success of your product launch

It’s a tool for gathering the necessary data that informs your go-to-market decisions. If your company misinterprets or executes it incorrectly, results can be deceiving, misguiding decisions.

Since customer development is an ongoing, iterative process, it requires continual investment.

Who is involved in customer development?

Within your organization, you need to identify the team members who are best suited to facilitating your customer development initiatives. 

Typically, marketing and product managers are great leaders in developing customer-facing questionnaires, talking to customers, and analyzing responses. 

Your customer service teams can help validate front-line responses, too. 

Getting out of the office and collecting information from customers face-to-face is most valuable for customer development. 

Ultimately, you'll want executives and decision-makers to decide how to apply the customer development process insights. 

When is the right time to start the customer development process?

Customer development processes are most effective during the product development phase. 

When you start working on your new offering, including these processes can give your company a better understanding of its customers and market.

Customer development can also help improve existing products. While it's more difficult to implement later, it's better to have some knowledge than none at all.

What is the customer development process?

When you're ready to establish a customer development process, follow these four steps to ensure the best results and successfully build a series of unbiased analytics. 

Create your customer development process with these stages in mind to squeeze every benefit out of your efforts:

Customer discovery

Through this process, you discover your customers' pain points. Further, you'll interpret those key problems and look at solutions. 

This step involves surveying your audience to gather feedback about their precise needs, opinions, and preferences. You can use their responses to determine what they're really looking for in a new product, service, or engagement.

Customer validation

During the customer validation process, you'll confirm whether your offering generates consumer interest and serves as a viable solution. 

With customer pain points in mind, you'll evaluate how well your solution addresses them. You'll also determine if your solution is ready to sell and scale. 

If your offering does not generate interest, your teams revert to the customer discovery phase.

Customer creation

You'll start building awareness during this stage of the customer development process. 

At this point, you're ready to activate your marketing and sales channels to generate demand. 

Must-haves include: 

  • High-impact marketing

  • Ensured scalability

  • Verified profit margins

  • Projected business growth with your new product

Company building

Company building is the next step, which involves solidifying your company processes and teams so you're ready to implement customer development into future projects. 

You might determine that additional staff and segmented departments are necessary to follow through on product launch and execution. 

Streamline internal procedures and operations to allow your company to deliver on your offerings efficiently.

Common pitfalls

Avoid these issues to ensure your processes are efficient, effective, and results-driven:

  • Lack of clarity

  • Confirmation bias

  • False positives

  • Sampling bias

  • Loss of momentum

  • Premature scaling

The most common pitfall is being so excited about your product that you skip steps or skim over the customer development steps. 

Teams often fall in love with big ideas and rush to launch before discovering if they satisfy a customer need.

Before you launch a new product or change an existing offering, do your homework and tap into the valuable data that customer development can offer. 

As you explore implementing customer development efforts in your business model, consider these common questions:

FAQs

Who are the best people to do customer development?

Lean on your marketing managers and product managers first. They will have the best understanding, knowledge, and tools for connecting authentically with your target audience. 

They'll also know most about existing customer needs and if your new product will benefit them.

What is the difference between customer development and product development?

While your customer and product development strategies work seamlessly together, they're different. 

Product development efforts focus on the deliverables. Customer development efforts focus on the customer dynamics that inform product market fit.

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