Customer Discovery | In-depth Guide

Step 2: Identify a Persona

Objective: Define a Persona (i.e. a Target Customer) as narrowly as possible.

Persona is a fictional character that you define based upon your research. The persona represents a specific user type that might use your product/service/feature to address the problem as stated above. The persona should be  defined as narrowly as possible and attach as many characteristics to it as possible. Creating a persona will help you to empathize and recruit a user that exhibits the said characteristics so that you can better understand their needs, experiences, behaviors and goals. 

In order to identify a persona, you should answer the following questions:

• Who are the people/companies that have the problem that we should investigate/research?
• What are the problems that we think that they have?
• What are the possible solutions that we think would help them solve it?
• What are the common characteristics amongst these users/companies?
• Where are they located? 

You will need to identify and create many personas in order to validate the hypothesis. What is important to note, is that the hypotheses should be individually tested with each user persona in mind. If you group personas, you risk diluting the problem and as a result the solution. You cannot be everything to everybody. You need to start narrow before you can go broad. 

Step 3: Validate the Hypothesis

Objective: 

1. Conduct research to (dis)prove a hypothesis or form a new hypothesis.
2. Refine Product/Feature idea.

Leveraging a defined user persona:

• Recruit users/companies that match the characteristics of the user persona. The number of participants has to be statistically significant. 
• Direct research to understand the prospective customers’ needs
• Interview prospective customers:
• Ask them to describe the current process. Use open-ended questions like “Walk me through the steps…”, “What does a day-in-the-life look like?”, “If they could do it differently, what would they change?”, “How?” and “Why?”
• Explore past behaviors by asking, “Tell me about the last time that you…”
• Use the “5 Whys” to determine the root cause(s) for the problem your customer is facing.
• Practice the Mickey-Mouse principle. Two big ears and one small mouth. Listen at least 4 times as much as you talk. 
• Focus on learning and understanding rather than pitching or selling. This is not the time.
• Do NOT use leading questions. Do NOT interview for sentiment. Do NOT accept answers without probing further.
• Conduct competitive research to understand whether you can provide a competitive edge
• Develop high-fidelity design/prototype of the solution
• Present high-fidelity design/prototype and gather feedback from the prospective customers
• Determine how much are the people/companies willing to pay you to provide that solution
• Determine how many prospective customers will need this solution? What is the size of the target market?
• Enlist commitments from prospective customers to convert to committed customers

Key measurements in this phase include:

• Competitive Research
• How many competitors exist?
• What problems are they trying to solve?
• What solutions (i.e. features) do they have to solve the problem?
• What differentiates exist that separate your organization from the competition?
• Can you deliver a solution that drives significantly more value (e.g. at least twice as good) to overcome switching costs and resistance?
• Customer Research
• How many prospects have we talked to in total?
• How many of those prospects have shown interest?
• How many of those interested prospects have signed a Letter of Intent (LOI)?
• How many of those interested prospects have committed to a $ that they would pay us to solve that problem? (further defined as a committed customer)

Refer to our Customer Discovery Interview Questions Template

Step 3: Gate Check

Objective: Make a Go/No Go decision as to whether to proceed to the next phase vis-à-vis other opportunities

Key factors to consider:

• Cost: Estimate the cost and time to develop and implement the solution;
• Schedule: Estimate the time to develop and timing to align with customers’ rhythm of the business;
• SAM and SOM: Extrapolate Customer Research metrics to determine the Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM);
• LTV: What is the Life-Time Value (LTV) to be derived from this feature?;
• Moat: Does the feature strengthen the competitive positioning of the product? If so, how?;
• Revenue: Extrapolate Customer Research metrics to determine the Revenue associated with the SAM and SOM; and
• Plan: Outline plan for Phase 2 to understand Capital, Resource requirements and any Dependencies that impact the Cost/Scope/Schedule/Quality vectors.

Outcome:

• ROI: Calculate the possible Return on Investment (ROI)
• Prioritization Matrix: Prioritize vis-à-vis other opportunities
• Decision Record: Create a DR, update Decision Log and Product Roadmap

Step 4: Validated Product Idea to Minimum Viable Product (MVP)

Objective:

1. Develop a minimum viable product per the design validated in Phase 1
2. Evaluate whether the solution delivered the hypothesized value to the committed customers

Activities in this phase include:

• MVP: Transition from high-fidelity design/prototype 🡪 Develop and implement MVP
• Demos: Demonstrate the MVP during development and implementation to evaluate whether the design will deliver the intended value
• Usage: Evaluate customer usage after the research of the features (i.e. are they using it?)
• Value: Evaluate whether the solution is providing the expected value (i.e. are they happy?)
• Research: Refine research conducted in Phase 1 to further our understanding of the market
• Story: Outline the messaging that resonates with your ideal customer profile
• Stratify and Segment: Identify prospects that fit your ideal customer profile
• Channels: Identify channels to access your ideal customers at scale

The key measurements in this phase include can be broken into three groups:

• Development of MVP:
• How are we tracking to budget?
• How are we tracking to schedule?
• How are we tracking on scope?
• What is the quality of the overall solution?
• Product Research:
• How is the feature being used? 
• What features are being used?
• What features are not being used?
• Customer Research:
• How many committed customers fulfilled their obligations?
• How many committed customers that fulfilled their obligations gave a perfect testimonial?
• How many committed customers that fulfilled their obligations have begun using the system unassisted?
• How many committed customers that fulfilled their obligations required assistance and to what extent?
• Can you systemize the learning from the customer onboarding process?
• Market Research
• How many prospects have signed up on the waiting list?
• How many channels have been identified?

Step 4: Gate Check

Objective: Make a Go/No Go decision as to whether to proceed to the next phase vis-à-vis other opportunities

Key factors to consider:

• Internal: Consider the impact of the Development Vectors. Refine and revise the possible ROI outlined in Phase 1 by incorporating:
• Development Costs: to date + projected;
• Implementation Costs: to date + projected; and
• Sustainment Costs: projected.
• External: Based upon the Product and Customer Research, refine and revise the possible ROI outlined in Phase 1 incorporating:
• Desirability + Urgency: Consider the ability to shift the costs from company to customers based upon Desirability + Urgency; and
• SOM, SAM, LTV, Revenue: Refine projected revenue.

Outcome:

• ROI: Refine and revise the possible Return on Investment (ROI)
• Prioritization Matrix: Prioritize vis-à-vis other opportunities
• Decision Record: Create a DR, update Decision Log and Product Roadmap
• Plan: Outline plan for Phase 3 to understand Capital and Resource requirements

Step 5: MVP to Scale

Refer to the Go-To-Market (GTM) plan, by target customer, by channel.