What Is Customer Discovery?

The views expressed in this post are the writer's and do not necessarily reflect the views of Aloa or AloaLabs, LLC.

Businesses can not survive if they fail to understand their target audience. Customer discovery aims to identify your target audience and verify that your business idea has a market niche (and is worth pursuing) through user research. For a product or service to be effective and helpful, you must first identify whom you are trying to help. Startup founders always have at least a general idea of their ideal customers. However, you probably don’t want to bet thousands of dollars and hundreds of hours of development time on a “general idea” you think is right but haven't actually verified yet – that's the point of customer discovery!​​

If customer discovery is done correctly (and assuming you have a fantastic product idea), you'll be able to have data-backed confidence that your idea has the potential to be successful in the marketplace. Throughout this process, you will better understand your customers and thus be able to build effective products and services that will help your customers. Better product decisions lead to increased customer loyalty and repeat business which equals profits for your business in 2023! 

This blog will offer helpful resources to help you find customers and unlock insights from their feedback. With customer discovery, you can ensure your products or services are a hit with customers before investing in development – saving time and money. Now, let's dive in!

What Is Customer Discovery?

The term "customer discovery" was first termed by Eric Ries and Steve Blank in their Lean Startup Methodology. There, it states that customer discovery is the process of finding and understanding your target market before investing in development. Customer discovery is the first step in customer development which is overarching framework that prepares startups with the *best chance* to experience exponential growth.

Customer discovery is a scientific approach where you make hypotheses about your users and test those hypotheses through different forms of research. You should use customer discovery to verify underlying assumptions about your target market early in the business development cycle to avoid costly consequences down the road. When you develop a product, you are operating under the assumption that people are experiencing a particular problem that current solutions don't address effectively. 

You'll have to ask yourself: Are people actually experiencing this pain point you described? How would I know?

If you find that people are experiencing this problem, you should follow up with: Will my product make their lives easier, and would they want to use it? 

The customer discovery process will help you gather data to definitively answer those questions. When you talk to potential customers, you'll better understand what they actually need instead of guessing what you think they need. As one of the most critical steps in product development, it allows companies to make informed decisions about whether or not to invest time and money into developing their product. It also helps avoid costly mistakes and a better product that customers will love!

3 Essential Things To Know About Customer Discovery

Like any business framework, executing customer discovery is easier if you clearly understand the basics. 

1. Customer Discovery Should Be Approached Scientifically

Customer development involves setting up hypotheses, testing experiments, and assessing the results like the scientific method. By approaching customer research in this way, you can more accurately measure the impact of each experiment and adjust your strategy accordingly. To ensure consistent results from your experiments, you need a structured process for conducting customer research. Additionally, utilizing A/B testing – running experiments that compare different versions of the same idea – can help you find the most successful solution quickly and efficiently.

No matter how much preparation you do, it is essential to remain flexible and open-minded throughout the customer discovery process. Your initial hypotheses may be entirely wrong — and that's okay. If this does happen, take a step back and reassess where you are looking and the types of questions you are asking. Don't be afraid to adjust your strategy as needed to get the most accurate results.

2. The Customer Discovery Is A Four-Step Process

You can break the customer discovery process into four steps: identifying whom you are trying to help, defining research questions, gathering feedback, and analyzing the results. So let's break down each step and the types of project artifacts you should have by the end of the process.

Step 1: Identify Whom You Are Trying To Help

Identifying whom you are trying to help begins with knowing your user persona. From there, you can start formulating a problem statement that potential customers experience with a given situation. Consider the problem you are trying to solve and how you came across the problem in the first place. These tests involve talking to potential customers, understanding their needs, and learning if your product or service will be something they would use instead of their current solution. 

However, identifying the first group of people to test your product and provide feedback is the most crucial step in customer discovery. In most cases, asking friends, colleagues, family, and even strangers what they think is a great way to get feedback you can trust. Once you've exhausted your immediate network, think about where your target customers would see promotions. If you are developing a fantasy betting app for game shows like Survivor, you should post a feedback form to a Survivor subreddit. These folks are your early adopters, and they will give you invaluable feedback throughout your development process.

Step 2: Define Your Research Questions

The next step is to define your research questions – what knowledge gaps do you have about your customers and their problems? Taking this step will provide a framework to guide your research process to be focused, time-efficient, and successful.

Here are some recommendations of questions to start your investigation:

  • What do I need to know about my customers to deliver an effective product or service?
  • What feedback do I need from customers to refine my business plan and make necessary changes?
  • How can my product or service help users solve problems in my industry?
  • Is there a need for this type of innovation?
  • What needs to be true for my product or service to be useful/effective?

Questions like these are an excellent way to narrow your research goals early, making the rest of the customer discovery process much more efficient. From there, you'll realize a more streamlined approach to gathering the information required to provide the best outcome for the goals of your product or service.

Step 3: Gathering Feedback

Once you've identified whom you will talk to, it's time to gather your data – customer feedback. Ensure each interview or survey is designed to uncover your needed insights while considering your customer's time and energy. Additionally, you want to gather both primary and secondary research from different sources to minimize bias in the data collection. Primary research involves talking directly with potential customers to get their opinion on your product or service. On the other hand, secondary research involves researching customer trends and behaviors through data mining or online surveys. And this information could be collected in various ways, such as sending them an email containing a link or a generated QR code that will lead them to a survey form.

When it comes to collecting feedback, Maze is a great user research platform that allows developers to share and validate their ideas with a targeted audience. It's essential to focus on quality over quantity – finding the right customer persona or your research is more important than having a ton of responses. It's also vital to ask relevant questions to determine matters to your customers.

Here are some example questions you can use:

  • How do you currently solve this problem or meet this need?
  • What would be most valuable to you in a product or service that addresses this need?
  • What would make your experience using this product or service better?
  • How did you feel when we did this?

Using these questions as a guide, you'll be able to get the insights you need without being overly intrusive. However, at this stage, it's best to avoid leading questions. Including leading questions will muddle your findings and can distort customer feedback. A leading question is a question that implicitly tells the respondent what they should say.

Avoid these types of questions when gathering customer feedback:

  • What do you think about the product or service?
  • Do you have any questions about how the offering works?
  • What are this product or service's biggest advantages and disadvantages over its competitors?

Instead, questions that have insight, behavior, feelings, or opinions are good questions to ask. These questions are called touchpoints and can help you see customer behavior in a new way. 

Step 4: Analyzing Results

After gathering feedback, it's time to analyze the results and uncover any actionable insights. Here, you'll get validation as to whether or not to move forward with the next step of your product plan. This step involves connecting what customers say and how it applies to your product or service. Again, actionable insights are key here – you want to uncover the most significant opportunities that could make or break your product launch.

Here are a few examples of actionable insights to watch for:

  • Recognizing competitors' weaknesses
  • Identifying potential new customer segments
  • Discovering what features customers consider essential
  • Gaining a better understanding of the customer journey and user experience
  • Uncovering customer pain points that can be addressed with your product or service

These insights will help you give customer validation and aid in making informed decisions about marketing strategies, product features, pricing, and more. Once you've identified those opportunities, it's time to implement them into your business plan. The most important thing to remember is not to put too much weight on individual responses and wait until you've aggregated enough data to see averages. You might compromise the product's identity if you make important product decisions based on a few strong opinions. Unfortunately, it's impossible to make everyone happy. Still, you need to ensure that there is enough of a market within that niche to be profitable.

3. Customer Discovery Is All About Connecting With Your Audience

Ultimately, the customer discovery process isn't just about gathering feedback — it's about learning how to connect with prospective customers. So often, this is the hardest part of business strategizing as it requires an in-depth understanding of customer traits like their interests, lifestyle, and hobbies. However, by taking the time to talk to and listen to customers, you can create meaningful relationships that will help you build a successful product or business.

As Rob Fitzpatrick stated in his book "The Mom Test"

"Rule of thumb: You should be terrified of at least one of the questions you're asking in every conversation."

You will only be able to create a product that truly resonates with your target customer if you ask difficult questions and are open to learning new things. At its core, customer discovery is about understanding what customers want, need, and expect from your business.

Benefits Of Customer Discovery

Now that you know what customer discovery is, how the process works, and what type of information to watch for, let's talk about the benefits for business. Right off the bat, we know that understanding your customer is vital to creating a successful product or service. Still, there are many additional advantages to customer discovery. Some of the most notable benefits include:

1. Gaining Insight Into Industry Trends And Customer Needs

You can gain valuable insight into industry trends and customer needs through customer discovery. This will help you stay ahead of the curve and create more effective products or services that better meet customer demands. Additionally, it shows you how to build trust with customers by listening to their voices and taking action on their feedback. You'll also gain a solid idea of how your customers react to business interactions.

These interactions include:

  • Social media engagements
  • Emails
  • Marketing Efforts
  • Cold calls
  • Customer support calls

While these are the common forms of customer interaction, they are by no means the only ones. Anything that requires a response from your customer is valuable data to capture.

2. Continuously Improving Through User Feedback

Your customer discovery process will not only help you gain valuable insights into industry trends and customer needs but also allows you to improve your products and services. As stated above, the data gathered during customer discovery can be used to develop new features or adjust existing ones to meet customers' needs better. Knowing precisely what customers are after will help you create better products and services that meet or exceed their expectations. This way, you can ensure that your business provides the best customer experience.

Giving your customers the best possible experience then creates the possibility of them becoming brand advocates and repeat customers who recommend your business to friends and family. These repeat customers and brand advocates will, in turn, create value for your business, helping you achieve and maintain market dominance.

3. Establishing Trust By Understanding Customer Needs

Creating a product or service that meets customer needs leads to a high level of trust and authority for your business. When customers have a good experience with what your business offers, they're more likely to keep coming back for more. In many cases, happy customers also bring in referrals that generate a healthy list of potential leads. From there, you'll have a cycle of customers with whom you can continually build relationships and gain even more feedback.

4. Differentiating Your Offerings From Competitors

The ability of a business to differentiate itself from its competitors is one factor that makes it successful in a highly saturated and competitive industry. Usually, the differentiating factor starts with a strong value proposition. Applying the concepts of customer discovery, you can better understand what your competition is offering and how customers perceive them. You'll also get critical insights into what makes a minimum viable product. The information will help you identify the best way to position yourself in the marketplace, enabling you to stand out from the competition and gain more customers. One of the best ways to solidify your differentiating quality or unique selling proposition is to include it in your company's mission and vision statement. Here are a few key definitions to keep in mind for a quick rundown.

  • Value Proposition: A statement describing why a customer should purchase a product, service, or technology from you rather than your competitors.
  • Mission Statement: Your company's purpose and direction. It explains what sets it apart from its competition and why customers should do business with you instead of another organization.
  • Vision Statement: A company's guiding star sets the direction and long-term objectives for the business. It should include a description of what your customer service team will be trying to achieve and how you will measure success.

Together, these three aspects form the core of your business strategy. They will help you achieve long-term goals and profits that ensure business continuity and development in the long run.

5. Reducing Risks Associated With the Product Launch

Product launches often cause significant stress because of potential losses or failure. However, properly executing and applying customer discovery will help reduce risks associated with a new product launch. You can get an accurate market picture before your product launches if you collect real (unbiased) customer data. This way, you can ensure that what you're offering is up to par with customers' expectations and that they won't be disappointed using it.

Key Takeaway

Overall, customer discovery is a critical component of any successful business strategy. It's also a powerful tool for businesses of all sizes to gain insights into industry trends and customer needs. Appropriately applied, customer discovery can help you create better products or services that meet customer demands and position your business as an authority in its industry.

We hope our guide has helped you better understand customer discovery and how to use it to benefit your business. To make sure that your team is effectively gathering and utilizing customer data, contact our experts at Aloa today! We'd be happy to help.

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