Your brand is a promise to your customer. As a conscientious marketer you are aware of this, you know that consistently communicating and upholding this promise is paramount, but you also realize that each customer is unique and may be buy for myriad of reasons. Understanding why people buy gives you the opportunity to understand what implicit promise lie at the heart of your relationship with that customer.
Example: You promise customers you’re the low cost provider of a service. Your marketing and positioning paints this picture, your communications, your actions, everything you do, reinforces this promise. But there may be other reasons that people buy. Maybe they are fed up with their existing provider nickel and dimming them or making accounting “errors”. They are switching not just for a better rate but because they want a more forthcoming provider. Making the switch to you, as the low cost provider, carriers with it this additional implicit promise. So what happens when you need to increase prices? Even if you’re still the low cost provider, if you don’t handle the communications around your price change properly, you’ll be breaking that implicit promise. However, if you understand that customers have this implicit promise you can craft your communications on the price change to not only reinforce your promise of being the low cost provider, but do it an an open and honest way, to preserve that implicit promise,
Take away: Understand why people are buying and understand what promise your brand or product is making to your customer. Then consider those promises in your communications and your actions. Brand loyalty is about building trust, and you build trust by keeping your promises.
There are four steps in Customer Development. The first is Customer Discovery where you identify who your customer is and what pain point you’re going to solve.
A good brand is a promise to customers and positions you relative to alternatives and competitors. But what kind of promise are you going to make if you don’t know who your customer is or how you will truly solve their problems? And how can you position yourself against the status quo or competitors if you don’t know who they are? I’m not saying you shouldn’t care about your brand early on, just don’t obsess over it, yet.
The next step, Customer Validation, is when you start putting money towards marketing, making it a natural time to revisit your brand. This insight resulted after a great conversation with my colleague Paul over rebranding. It especially makes sense if it’s something you’ve been putting off because you were too busy doing what you’re supposed to be doing in an early stage startup, finding product market fit.
Can you start aggregating or creating useful information about your industry? Can you compile it into a monthly newsletter? Can you offer options to tailor content to your subscribers and at the same time better understand which customer segments they fall into? Can you personally reach out to people in specific segments or send out surveys to learn from them?
Congratulations, you’re building an ever growing custdev pipeline, not to mention a proprietary marketing channel.
Having recently joined an education technology startup my focus has been on finding a “repeatable and scalable business model” that makes us profitable so we can spend our energy building the world’s best learning experiences. I’d like to share that journey with you.
The approach I’ve been following is called Customer Development or CustDev for short. The term was coined (to the best of my knowledge) by Steve Blank and if you’re interested I recommend his new book, The Startup Owner’s Manual, as it boils down a lot of entrepreneurial business theory into a practical and structured process.
So what is CustDev? I explain it to my business friends as: “validating one’s business model through customer research” and more colloquially as: “increasing the likelihood of your business succeeding, by asking potential customers if you’re building a company they would do business with”. Here is a graphical overview I made of the Customer Development process:
Customer Development has four steps which are divided into two categories: searching for the business model and executing the business model. As an early stage startup you’re probably still searching, and as such will likely be joining me at the Customer Discovery step. To get you oriented here is a quick overview of the different steps:
- Customer Discovery translates company vision into a series of hypotheses which are then tested.
- Customer Validation proves the business model you’ve come up with in step 1 can scale into a profitable business.
- Customer Creation ramps the business model into production with a focus on sales.
- Company-Building codifies business process into procedures and marks the graduation from a startup to a big company.
The Customer Discovery process walks you through defining assumptions about your business model, testing these hypotheses by speaking with potential customers, and then measuring your success by having you face the realities of your business model’s viability. You’ll then either move on to Customer Validation or realize you still have more to learn and go back to start the Customer Discovery process again, but this time armed with new found insights.
Dave McClure shares his experience working with startups. Watch the video and follow along with the embedded slide show below.
