How the Customer Development model works

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The lack of demand for the product by the target audience is the reason for the failure of many startups. To determine the relevance of a product or service before market launch, product managers use the Customer Development (CustDev) method, which allows you to test a prototype of a future product on potential consumers. How Customer Development helps to create products that will be bought, we will consider in this article.

What is Customer Development

The founder of this approach to creating a successful product, service or business is American entrepreneur Steve Blank. The name of the Customer Development method is translated from English as “customer development”.

The methodology involves a deep study and understanding of customer needs, the search for hidden motives and patterns of behavior. The purpose of this approach – Bringing the product closer to the needs of buyers, to their ideas about the usefulness of certain products, help in creating products suitable for the target audience.

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How the Customer Development model works

Blank, the author of the “customer development” model, identifies 4 stages of Customer Development:

4 stages of Customer Development

  1. Identifying customers (customer discovery). Before starting product development, it is necessary to collect information that will help to better understand potential consumers and test the first hypotheses. At this stage, you need to determine: who is your client, what problems he has, how your product will be able to solve them, through which channels the sale will take place, what resources the team will need to achieve the goals, who can provide assistance in development, how much production will cost, etc.
  2. Customer confirmation (customer validation). At the second stage, the MVP (Minimum Viable Product) is developed, that is, the first working version of the product with a minimum of functions that should be sufficient to solve the user’s problems. With the help of MVP, customer response is tested, whether they are willing to pay for value, the readiness of the new product to enter the market and the workability of the solution are also determined. The task of this stage is to get an answer to the question: does the product meet the needs of customers and why should they buy it?
  3. Scaling of the client base (customer creation). After the product has the first buyers, you should increase the audience and start selling. To do this, you need to decide on positioning, create and implement a marketing strategy, announce the product and create demand for it. You should also build a sales plan and show the product to a target audience that is not yet familiar with it, talking about the product or service with the help of publications in the media that potential consumers read. The main task at this stage is to ensure that as many people as possible buy the product.
  4. Building a company (Company building). At the final stage of Customer Development, the product turns from an idea into a full-fledged business. By this point, it becomes clear who are the consumers of the product, what is their problem and how to solve it. The product has regular users who are willing to pay for it. At this stage, the goals and mission of the company should be formulated, the basics of market behavior in relation to customers, partners and competitors should be prescribed, and the foundation of purposeful development should be laid.

Each stage of the CustDev model is a cyclical process. It is necessary to regularly return to previous stages to receive feedback from existing customers or potential consumers, periodically make the necessary changes to the product. When using this method, it is important not to be afraid of mistakes and not to proceed to the next stage until a positive result is obtained from the previous one.

Read also

What is the Jobs To Be Done concept and what is it used for

MVP vs RAT: difference in approach and examples of successful implementations

Advantages of the Customer Development model

We analyzed how Customer Development works. Using this method allows you to achieve the following goals:

  • Saving time and money on product processing, as the research allows you to test hypotheses about the needs of CA, its problems and their solutions through receiving feedback from potential customers. Due to this approach, the company achieves the desired result from the first time, you immediately create the product you really need.
  • Customer Development allows assess the demand for the product and its development prospects even before investing money. Investors willingly invest money in such a product because they see the results of target audience research beneficial to them.
  • Using this method reduces risks in the development process of a new product and when updating an old one. A developer can anticipate consumer reactions to changes and make corrections to the product before receiving negative feedback from customers.

With the help of the CustDev method, startups can understand what the consumer wants and create successful, in-demand products. The model makes it possible to adapt the product to the real market even before the beginning of mass production.

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