Customer discovery, in simple terms, is the process of discovering who your real customers are, or are likely to be.
We say who your 'real' customers are, because your assumptions about who will buy from you and why are most likely wrong. It is both common and natural for us to trust in our understanding of things even when our understanding is not based on data. Nearly all owners report that their initial market or client assumption were partly or mostly wrong. Because of this, the discovery process is one of the most important things you can do to increase your odds of success. Most startups fail because they create a product or service for a market that doesn't feel the need for the product or service; this leads to slow adoption and low sales, which causes the company to use up it's cash reserves to sustain day-to-day operations. If the company cant quickly find it's real market (those that buy), it is on the way to failure.
THE CUSTOMER DISCOVERY PROCESS
There have been many good articles and papers written about the best ways to do customer discovery. A quick search will yield many worthwhile results, so we aren't going to dig into those details now. Instead, we would rather give you an overview of the discovery process and make it easy for you to get started. We have found that actually talking with potential customers & partners is the most important part of the process, even if you don't get all the details right.
Partner discovery is the same process, just for partners.
1. Establish a hypothesis
2. Identify your assumptions
3. Craft your questions
4. Conduct interviews
5. Review & revise
1. Establish a hypothesis: Determine what piece of information you need to know from a customer or customer group that, if you knew it, would provide you with a clear path forward towards a key goal. This often involves determining what clients truly value or what problems they are willing to pay to have solved for them. Then rephrase that needed information into a hypothesis. An example could be: We believe (hypothesize) that entrepreneurs who are planning a first-time business will value educational business planning software more than software that produces fancy documents but doesn't really educate the user.
2. Identify your assumptions: You have them, the challenging part can be determining which firmly held beliefs about customer behavior that you hold to, are not backed by customer provided data. If it not backed by data it is an assumption, no matter how reasonable it may sound or how emotionally (or financially) you are invested in the idea. You must be brutally honest with yourself in this process or you will end up asking the wrong questions.
3. Craft your questions: Write a series of open-ended questions that will get potential customers to tell you the real deal behind the needed information that you currently only have assumptions about. Do not include your assumption in the question; ask other questions that get them to tell you about what you need to know. An example could be: "If you had to list the top 3 things about your work that you like the most and the least, what would they be." Hopefully one of the things they dislike most is a problem you solve, or one of the things they like the most relates directly to a benefit you provide.
4. Conduct interviews: Go out and talk to people that fit into the customer group you had in mind when you crafted your hypothesis. These should be actual conversations, not surveys or data gathered from reports; you want to hear and see them as they respond to questions. Take notes! Write down their answers when possible.
5. Review & revise: After you do your interviews, review your notes and pull out the new data you have gathered that you can base decisions on. If you aren't getting clear data that replaces your assumptions and proves or disproves your hypothesis, revise your questions and/or target audience.
6. Do it again: Periodically revisit your questions and ask new customers or customer groups the questions as you enter new markets or add features & benefits to your offerings. making this a habit & natural part of your conversations will help you stay in tune with what your clients want and are willing to pay money to get.