One of my HaggleWire co-founders and I got “out of the building” this morning to work the Customer Discovery phase of the Customer Development process as first defined by Steve Blank. (See Essential Resources for a more complete list of references.)
As a repeat entrepreneur, I have experienced the value of talking to potential customers before building something (see Entrepreneurial Rebirth, Part 1), but I had forgotten about the raw thrill it is to talk to someone about how my passion might be able to help them with their passion. What a rush!
Our prospect–let’s call him John–runs a busy shop selling products and services to consumers. This is a classic bricks & mortar retail operation like found in every community. As is the case for most consumer-focused businesses, Saturday is a peak-traffic day at John’s shop, but we managed to get his attention for a couple of chunks of time totaling about 30 minutes. (He’s a generous guy; my partner knows how to pick ‘em.)
Setting Expectations–Almost Too Late
When we tried to set the tone of the conversation by mentioning that we chose him to run some ideas by because one of us is a happy customer and we noticed he is already interacting with consumers on a couple of the ratings sites like InsiderPages, he immediately assumed we were there to sell him advertising.
I just committed all of my co-op advertising dollars for this year on <legacy phone book ad provider trying to join the 21st century>.
We quickly retraced our steps, assuring him that we were not there to sell him anything and that our concept did not involve advertising. This worked, but he was immediately pulled away to do business for about the next hour.
Elevator Slap
When he returned, we summarized our basic idea with an elevator pitch approximating “Our idea is to create a web site which will be an online marketplace where merchants compete for consumers’ business.”
In reply to my question of “Does this idea resonate with you?” he said
“I have no idea what you are talking about, but I do know that I get 10-12 deals a week right now from <SomeVerticalSight>, and I don’t have to do any work to get that business.”
He added:
“Don’t expect me to go use some web site to pitch for business. I barely know my e-mail address, and I rarely use the Internet.”
Pivot Time
Regrouping quickly, we asked him to describe the process he uses to respond to telephone calls from customers interested in his products and services. After some give & take Q & A’s with us, it was apparent that his process to clinch a deal from an inbound phone call followed a repeatable pattern. Tapping what we had originally thought was our “2.0″ feature wish-list, I asked him:
“What if we provided a service which could respond automatically–using your quoting rules and pricing–to requests consumers make on a web site. This would mean you would not have to spend time on the phone for those deals, and —”
He cut me off with
“I’ll give you X percent of each of those deals.”
MVP Marching Orders
One interaction does not Customer Development make, but I can tell you that the “X” from the quote above is a meaningful number, so we feel confident that we defined a value proposition for at least one member of our target audience (i.e., merchants, the market segment which will pay the bills). We now know what to build as our first iteration of a “minimum viable product.”
As we concluded our visit, John agreed to actively work with us in the coming weeks to validate our prototypes and help us refine our offering. We offered to cut him a sweet deal for a while in exchange for helping us do all this, and we floated out of his shop on our entrepreneurial high.
Some Lessons Learned
We had prepared a set of questions for this meeting, but we assumed we would need to be flexible about how the conversation evolved; we obviously nailed that one. Here are our take-away lessons from today’s Customer Discovery session:
- Shut Up, but Listen Actively – It was only by repeatedly engaging John, but letting him speak most of the time, that we kept ourselves positioned to shape the conversation.
- Be Flexible – We were intruding on John’s busiest time, so we cheerfully invested about two hours of time–and morphed our questions quickly–in order to mine this priceless feedback.
- Keep Focused – We may have landed our first customer (that jury is still out), but our objective was to uncover what value proposition–if any–our idea had for this prospect. We were prepared for that answer to be “none,” and getting that answer (not a customer) was our primary goal. Every question we asked was focused on that goal.
Next
During the next week or so, we will be building the first iteration of our MVP for “review” with John. I use “review” (with quotes) because John already told us that he will not use a web site, so we will actually be showing John the outcome (i.e., the direct benefits to him) of our prototype. (Who would have thunk that a real customer would be focused on the business benefits above the kewl technology, eh?)
In Part 2 of this series, I’ll share the highlights of that process. Stay tuned.
