GuidesProduct developmentWhat is the customer discovery process?

What is the customer discovery process?

Last updated

11 May 2023

Reviewed by

Sophia Emifoniye

Developing new products that delight customers is a common goal for many organizations. In a crowded marketplace, though, how do you ensure that your products will sell?

A product that doesn’t solve a real-world problem for the customer isn’t likely to succeed. In fact, many products fail simply due to a lack of a customer need.

The customer discovery process addresses this issue. Through the discovery process, companies seek to understand customer needs to create products in response to true market problems.

This guide explains what the customer discovery process is and how to make the most of it—all to create products that thrive in the marketplace.

What is customer discovery?

Customer discovery is a process used to deeply understand your customers' needs to create better products for them.

The origin of the term “customer discovery” is typically attributed to two Silicon Valley entrepreneurs: Steve Blank and Eric Ries. Both of whom are known for their work on ‘lean startup’ methodology.

One key aspect of the lean startup methodology is an early focus on customers. The core aspect of customer discovery is the same. Customers are brought in early to produce more predictably successful results.

Customer discovery is focused on actively deciphering—at an early stage—where a problem or market need exists. This ensures any products created are in response to this need.

Why is the customer discovery process important?

Research shows that many new businesses fail simply because a market problem hasn’t properly been identified. Research from CB Insights, for example, found that 35% of startups failed due to a lack of a market need. And according to a 2023 study by Embroker, 90% of startups will fail, with 10% failing in the first year.

By using the customer discovery process, a business can significantly reduce the chances of failure.

Through customer discovery, an organization can increase the chances of:

Understanding the customer need

To truly understand what your customers want from products, deep research is needed. Rather than relying on assumptions from the team, customer discovery ensures you understand the pain points for customers and how to solve them. You also identify whether a true market exists to ensure the team develops better, more relevant solutions.

Investing in the right product 

Product investment can be very costly for a company. Without customer discovery, there’s a much greater chance of investing in a product that doesn’t suit the marketplace. By bringing customers in at an early stage, the risk is reduced. There’s less chance of reworks or the product failing altogether.

Enabling iterations 

While your team may have a product idea, customer discovery can help refine and optimize the idea so that when it does launch, it’s more likely to delight customers. Customer feedback can help a team improve on their original idea while adding important aspects they may never have considered.

Validating assumptions 

It’s common for the design and product teams to make assumptions about what the customer will want and need. The discovery process can validate (or invalidate) ideas made within the organization to bolster the case for proceeding with production.

The four important phases of customer discovery

There are four critical phases of the customer discovery process. These are defining a hypothesis, testing the hypothesis, testing the product concept, and validating the product concept. 

These four steps help to ensure that the customer discovery process is as effective as possible. 

Phase one: Define a hypothesis

The first step in the discovery process is to define the problem that exists for customers and your proposed solution to it. Creating a hypothesis can ensure that the team is focused on the potential need and the possible solution for it.

To define your hypothesis, it can be helpful to use the following sentence as a guide:

Our proposed solution solves [insert problem] by [insert solution]. 

Some examples could be:

  • Our proposed solution solves [the problem dog owners face when wanting their animal to play with other dogs] by [providing an app that easily allows local dog owners to connect]. 

  • Our proposed solution solves [the problem of parents monitoring their infant's safety] by [providing a 24-hour video monitoring system that links to their crib]. 

  • Our proposed solution solves [the problem of managing multiple projects within an organization] by [providing an all-in-one platform to effectively manage and track tasks].

Phase two: Test your hypothesis 

Once the hypothesis is defined, testing whether it is true is important. To do this, it’s important to gather a set of people who you think may be potential customers. Once you’ve done so, some helpful questions to ask at this stage include: 

  • Do they really have this problem? 

  • Is this a problem your customers want to solve? 

  • Will they pay money to solve the problem? 

  • Are we making assumptions about our customers? 

  • Do we truly understand what our customers need? 

To answer these questions, data and information is essential. That means deep research into the challenges and wants of customers.

Phase three: Test your product concept

Once you’re satisfied that a customer need exists, it’s then important to consider whether your product concept truly solves that problem. A good method to do this may be to sketch out or even develop a prototype of your concept.

Some helpful questions to ask include: 

  • Does this product concept solve the market need? 

  • Are there better product concepts that would solve it better? 

  • Will this delight our customers?

  • Do we have data to back this up?

Phase four: Validate product concept

It’s helpful at this stage to test your product concept on customers. Showing your prototype or product to them allows them a say and ensures that customer-centricity is baked into the design. 

To do this, develop a metric that can decipher whether the prototype “passes” or “fails” its intended purpose. This should revolve around your original hypothesis or a solution to the problem you’ve since developed. 

Some helpful questions to ask include: 

  • What does this intend to solve?

  • Does the user inherently understand its use?

  • Can the user use the product without assistance?

  • Does the solution solve the user’s problem?

  • Are they willing to pay for the product?

Getting started with customer discovery 

There are many ways to gain feedback and data from your customers. This most commonly occurs through customer interviews, surveys, and focus groups

These three methods effectively get into customers' minds and gain critical information. 

How to do customer discovery interviews

Customer interviews are one of the most common and straightforward ways to learn about your customers' wants, views, and needs.

Customer interviews include a team member or neutral party discussing with a customer. The process offers the chance to discover new insights that might not otherwise have been uncovered.

Interviews can also help the team understand how your customers think and perceive products.

To conduct effective customer interviews, some best practice steps include: 

  • Ask open-ended questions To get deeper insights, ask customer discovery questions that allow participants to share more. Don’t limit yourself to “yes” or “no” questions. Continually ask “why” to dig deeper.

  • Offer a safe space Creating a relaxed rapport with participants will help you gain real thoughts, not hear what participants think they should say.

  • Clarify answers If there’s any ambiguity in what a customer said, follow up with further questions to ensure you truly understand.

  • Challenge your assumptions – It’s normal to have assumptions but to get natural responses, bring an open mind to discover how customers really think and feel.

Creating better surveys

Surveys are another common customer discovery method. Surveys involve asking potential customers a series of discovery questions to gain data and information. The data collected can then help inform teams on the next steps. 

Surveys are inexpensive to conduct—many free templates exist online—and they can be very fast to produce.

Keep in mind, though, surveys are only as helpful as their questions. To ensure the data is helpful, link your question back to the hypothesis. 

Survey fatigue is a real issue these days as well, so be thoughtful in how and when you conduct them. This will ensure you gain the feedback you need and your team is focused on the potential market need.

Best practice surveys include: 

  • Close-ended questions

  • Consistent ranking scales to avoid ambiguity

  • Questions that are relevant to the team’s end goal

  • A short series of questions to avoid overwhelming participants

Conducting effective focus groups

Focus groups are another popular research method and a helpful way to complete the customer discovery process.

In a focus group, a small number of people—usually eight or fewer—gather together to discuss products, pain points, preferences, and how they might engage with products.

Focus groups can help a team learn about a potential customer need, gain new ideas they may not have considered, deeply understand the customer’s point of view, and consider potential solutions.

Focus groups are run by a moderator or a person from the organization who can act neutrally. The moderator will set out a series of questions or topics for the group to discuss—this should revolve around the market need and potential solutions.

Best practice focus groups ensure:

  • Every person has their say

  • The group stays on topic 

  • That the issue and solution are deeply discussed 

  • Varying points of view are encouraged 

For a more in-depth look at focus groups, you can read our article about them here.

The best customer discovery tools to use

Advanced online tools can quicken the customer discovery process. For surveys, tools such as SurveyMonkey, which has millions of customers worldwide, offer an efficient way to ask your customers questions. SurveyMonkey offers a range of templates to set up and deploy surveys quickly. 

Another option is Typeform. In addition to free templates which can be quickly embedded on-site, Typeform also designs for people. Typeform forms and surveys are created with enjoyment in mind, so your customers will even enjoy answering them. 

Analyzing data from surveys, customer interviews, and focus groups to then understand and act on that information can be challenging. Dovetail solves this problem. With Dovetail, it’s simple to store, collate, and uncover insights all in one place, helping you bring your customer into every decision.

What do you do after customer discovery?

Once your customer data has been collated and insights have been discovered, acting on that information is essential.

Some questions that can be useful when assessing the data include:

  • Is the original hypothesis correct?

  • Is proceeding with the product solution a smart investment?

  • Do we have all the information we need to go ahead?

  • Will we delight our customers with this product?

  • How can we pivot to offer something better?

Keep in mind: customer data is only useful if you use it to drive decisions across the business, to better your product offerings, and to have your customer at the center of all that you do. It’s critical for the entire company to understand the process and to build products on the findings.

FAQs

What are the five best practices for customer discovery?

Some of the core best practices for customer discovery include:

1. Discovering a market need 

2. Defining a hypothesis with both the need and proposed solution 

3. Completing customer research (customer interviews, focus groups, and surveys) 

4. Analyzing all data and information to uncover insights 

5. Acting on the insights gathered to produce products that delight customers

What are the five customer life cycle stages?

The five customer life cycle stages are awareness, consideration, purchase, retention, and advocacy. 

  • Awareness – This is when the customer first becomes aware of the company. This may have been through advertising, SEO, word-of-mouth, or social media. 

  • Consideration – At this stage, the customer is considering whether they may use the brand's products or services. This is where a customer will think about competitors in relation to the brand and the brand in relation to their personal wants and needs.

  • Purchase – If the information they’ve gathered satisfies them, the customer will then make a purchase.

  • Retention – While a customer may make a purchase, retaining customers is the critical goal for most businesses to ensure growth and profitability. 

  • Advocacy – Customers who particularly like a brand will advocate for them. This might include leaving online reviews, positive word of mouth, and comments on social media.

What is market vs. customer discovery?

Customer discovery is an aspect of the product discovery process. Customer or product discovery covers the customer discovery process—of understanding customer needs in relation to a product—and then also looks at possible solutions. 

In contrast, market discovery involves the broader market landscape a product lives in. It involves expanding the research from product users to potential users or audiences, perhaps untouched. It may also extend to the behaviors of markets themselves.

Both defining and testing solutions for customer needs are parts of product discovery. Ultimately, market discovery is a broader process than customer discovery.

What is product discovery vs. continuous discovery?

The product discovery process is designed to help product teams to innovate new solutions and features that address customers’ needs.

Continuous discovery, on the other hand, is a constant process applied to the innovations once already in the market. They assess customer needs and proposed solutions to continually iterate on existing products.

Get started today

Go from raw data to valuable insights with a flexible research platform

Start freeContact sales

Editor’s picks

Design process 101: How to get started

Last updated: 23 March 2023

An essential guide to product marketing

Last updated: 29 June 2023

What are release notes?

Last updated: 8 April 2024

11 essential product management tools

Last updated: 23 May 2023

How to become a product design engineer

Last updated: 27 June 2023

How can I become a product designer?

Last updated: 27 March 2023

Stakeholder interview template

Last updated: 26 May 2023

How AI can transform product management

Last updated: 10 August 2023

Related topics

Patient experienceResearch methodsSurveysMarket researchCustomer researchUser experience (UX)Employee experienceProduct development

Product

ChannelsMagicIntegrationsEnterpriseInsightsAnalysisPricingLog in

Company

About us
Careers13
Legal
© Dovetail Research Pty. Ltd.
TermsPrivacy Policy

Log in or sign up

Get started for free


or


By clicking “Continue with Google / Email” you agree to our User Terms of Service and Privacy Policy