What is the Customer Development method?

The term Customer Development refers to a company development method which focuses on the end client. It is especially effective when used by start-ups, who are generally smaller than most established companies and more vulnerable to market uncertainty.

This particular business model was first theorised by Steve Blank over twenty years ago, during his study of emerging companies in Silicon Valley. Nonetheless, the principles he formulated have only been put into practice recently, mainly due to the ways in which modern businesses have evolved.

The fundamental principles of Customer Development

The Customer Development methodology aims to help companies develop solutions to suit market needs. The Blank model places the end client at the centre of everything and in his manifesto, he includes 14 fundamental principles which should be scrupulously followed:

• Bearing in mind that company premises cannot offer absolute certainties, it is crucial to look for new solutions elsewhere;
• Customer Development offers better results when combined with Agile development:
• Failure is not a disaster, but an integral part of research itself;
• By carrying out repeated attempts and modifications, the correct solution can be approached;
• It is advisable to use the Canvas Business Model, as no business plan survives initial contact with clients;
• Formulated hypotheses need to be validated through experiments and tests;
• It is essential to identify the type of market you intend to enter;
• It is essential to be aware that the rules governing a start-up are different from those for established companies;
• Reducing the length of development cycles to a minimum while creating a faster decisional method can make the difference;
• A passion for reaching objectives is fundamental;
• A start-up requires a different kind of professional to those in established companies;
• It is important to save as much liquidity as possible and not be afraid to spend it when and where necessary;
• Communication and sharing during the learning phases aid the start-up’s development;
• In order for Customer Development to be successful, it is important to involve all members of the start-up, including investors and founders.

Objectives to be reached when setting up a competitive start-up

The points listed above represent simple guidelines, which offer those following them greater awareness of the correct route to take. Building a start-up based on Customer Development requires knowledge, respect and the completion of four crucial steps.

The first is customer discovery, designed to identify potential clients through the verification of two hypotheses: the first involves the identification of the problem to be resolved through by the creation of the start-up and the other the identification of who might be facing this problem, via interviews and surveys to provide a general idea of public interest.

Once the solution proposed by the start-up has been defined, it is time for validation with the second stage, known as customer validation. This involves the presentation of a prototype (product, service, etc.) to be assessed by potential clients, to provide the company with a way of evaluating whether it meets their needs effectively.

The third step, known as customer creation, is the riskiest: its aim focuses on creating customer loyalty among a sector of the public, allowing the company to maximise its impact on the market. In order to do this, constant production of the solution on offer must be guaranteed, as well as improvements and innovation designed to maintain customer interest.

Once the initial idea has been transformed into a solid business, it is time to complete the last stage of Customer Development, through company building. During this step, the start-up is transformed into a company, while preparing to face a series of new challenges which are difficult but necessary for its success.

Many advantages can be obtained via the use of this methodology, which can be summarised as the ability to develop a profound knowledge of the market, pay more attention to investors and financiers, embrace steady growth and above all, improve company defences against entrepreneurial risk.

Translated by Joanne Beckwith