The Reason They Will Do Business with You
As I stated in my previous article, many people start off in business because they have a great idea. Having a great idea is a good start, but you need to make sure it’s something a customer needs and wants. You need to validate that they need it and want it enough to pay you. That’s the purpose of Customer Discovery.
Business is all about solving problems. You must offer your customers cost-effective solutions to problems they want to solve. If you don’t, you’ll waste a lot of time, energy, and money pursuing an idea that will ultimately fail.
Customer Discovery…Validating the Need
So how do you make sure your ideas are valuable enough that they will be profitable? You must talk with your customers, or potential customers, to gain a good understanding of their needs. It’s one thing to have a great idea that you believe in, and it’s important that you are passionate about it. But you have to make sure that it will make enough difference for a customer that they will spend money to have it.
It’s called Customer Discovery and it is a lot of work, but a critical step to assuring that your idea offers enough value to succeed. I’ve met so many people whose business ideas have failed because they skipped over this important task. Nothing has frustrated me more than to have a new founder tell me that he or she knows that there’s a need for their idea, but they can’t show me a single customer who agrees and says they will pay for it. They ultimately fail because their idea didn’t solve a problem that the customer thought was important enough.
Do you actually have a great idea, or are you the only one that really loves it?
This is the real question you are trying to answer with Customer Discovery. Are you too much in love with your idea? Have friends and family members told you it was great just because they didn’t want to disappoint you? Talking to real, potential users/buyers is the only way you will really know.
So what do you talk with them about? Well, you don’t try to sell them on your idea. Instead, you ask enough questions to understand things from their perspective. You need to get a good understanding of how your idea will make a difference for them, and whether they see enough value that they would be interested.
Questions to be answered
When I am working on a new idea, there are several questions I try to get answered:
- Does a real problem exist that needs to be solved?
If it’s only a “nice to have” idea, it will be difficult for customers to justify the expense.
- Is the problem big enough to justify the cost of solving it?
Even if there is a problem to be solved, it may not be large enough. You need to make sure you can charge enough to be profitable, and still have a price the customer can justify for the benefit they will receive.
- Will there be significant additional costs or work on the part of the customer that could impact the feasibility of my idea?
In my software business, we developed some pretty large applications. In many cases, they required our customers to make major changes in their workflow and procedures. Often the labor involved in implement the new solution was more costly for the customer than our software was.
- What is my idea competing with?
It may be another product or service. However, in many cases it may just compete with an alternative way of solving the problem, or even doing nothing at all because the pain is just not that bad.
- Is the idea clearly superior to the alternatives?
If it’s not a better solution than other options, why would the customer be interested? (A quick Google search will often help you find out about your competition.)
How to Get the Answers You Need
Start by getting committed to finding out if your idea is as good as you think. In order to do that, you need to find out if paying customers have a problem your idea will solve, and if so, would they be willing to make the investment to solve it. Here are the basics you should focus on:
- Get it set in your mind that you need to talk with a lot of people.
And I mean talk. You need to have a dialog. As you talk with people, new ideas will come up that you will want to discuss further. If you consider using a survey, plan to have follow-up conversations to explore the responses. Be sure to use open ended questions and focusing on what the customer has to say.
- Start by talking to people that are not potential key customers.
You want to save the more important conversations until you’ve had an opportunity to refine what you have to say and know that it will resonate well with a potential customer.
- Don’t try to sell your idea!
Remember that the goal is to better understand the customer’s needs. Focus on asking questions, not on trying to convince them of anything.
- Explore other ideas that come up.
Most of my friends that became successful in business made their money from something other than their initial idea. They listened closely to their customers and were led to a bigger opportunity than what they had originally envisioned. In my own case, I started SOFTRITE to develop custom software. Some of our most profitible projects however, came from providing IT services. As I listened to customers, I heard of problems that needed to be solved that we were in a good position to handle for them.
- Do you have a viable idea?
Ask if your solution is something people in their position would be interested in and be able to justify spending money on.
Setting up the Customer Discovery Meetings
People are often quite helpful when they know you are looking for their advice and guidance. I’ve found this to be particularly so if it is someone you already know, or if you have been referred to them by someone they know and trust.
When performing Customer Discovery, keep these things in mind as you approach people about your idea:
- Before contacting someone about a meeting, plan out what you want to say. Keep it short and concise.
- As you contact them, let them know that you have an idea you’d like to get their input on.
- Tell them that you want to get the perspective from someone in their position to see if your idea would have merit. If you were referred to them by someone else, tell them that the other person felt like they would be a great person to talk to.
- Make it clear, that you are not trying to sell them anything.
- Respect their time, tell them it won’t take long. I usually ask for 15 minutes. If the conversation is going well when the time is up, I ask if they could spare a little more time, either then or at a later date.
- Plan your questions in advance and have them written down. You want to be well organized when you meet and not waste any of their time getting off track (unless they take you there).
So, How Many Conversations Do You Need to Have?
You need to have enough conversations to fully understand the customer problems your ideas solve, and to know what it will ultimately take to get the customer interested. Your original idea will likely change and/or get refined, so you will have to have even more conversations. Just keep in mind, that Customer Discovery is crucial to validating your idea and preventing failure. Try to do it as soon as possible to avoid the possibility of going down the wrong path with your idea.
Hi, I’m Denny
I spent most of my career starting and working in my own small businesses, including over 35 years running SOFTRITE Technology. After semi-retiring in 2014, I started to concentrate on mentoring entrepreneurs and those who want to start a business and teaching classes on small businesses for SCORE. more info…