THE BLOG
11/12/2013 09:26 am ET Updated Jan 23, 2014

What is Customer Development and Why Should Entrepreneurs Practice It?

What exactly is customer development?

Developed by serial entrepreneur Steve Blank, customer development is the practice of gaining customer insights to generate, test, and optimize ideas for products and services through interviews and structured experiments. Customer development is used to help build products that customers want and avoid spending time and money on products customers don't want. It can be used to identify problems and new startup ideas, to test ideas, and to optimize ideas and existing products.

In an age, where technological advancement has made it easier than ever to build a product, the question is no longer whether a product can be built, it's whether or not it anyone actually wants it. Customer development helps us learn about our potential customers. For example, what problems they have, how they understand those problems, and what's really of value to them. You can make some educated guesses based on experience, but actual customer feedback may surprise you. I've been repeatedly amazed and surprised by how often I think a product idea will be of such great demand to a customer because of it's obvious value proposition, only to find out that customers don't really care about the offering.

The job of an entrepreneur in a free-market economy is to relentlessly serve customers. It's to provide more value to customers than competing or comparable activities, and to do it in a way that generates a profit. Customer development helps us do that effectively.

The 3 Biggest Reasons to Practice Customer Development

So you have an idea. You're super excited about it and you think you will make a ton of money from it and it will change the world. You have a vision and you want to bring it to life.

Customer development is hard. Going out and talking to customers is time consuming and requires you to step out of your comfort zone. You understandably don't want to be proven wrong. Below are three of many more reasons to practice customer development.

Avoid spending time and money building something no one wants

It can take a lot of time and money to build a business. Life is short and money is kind of important, so you don't want to waste either. By doing some customer development to test your idea, you can avoid spending a lot of time and money on something that no one wants. You can then move on to a higher return opportunity or improve your idea to something that customers do want. Customer development is hard and takes a long time. You know what takes longer and stinks more? Spending a bunch of time and money on a business with no potential!

Gain insights to help you build the most valuable product possible

Customer development can be used to optimize an idea or an existing product. If your initial idea is not something that people want, customer development can help you hone your idea to one that customers do want, or to find another problem that's worth solving. In my article on SinglePlatform, the Founder explained that his initial hypotheses were only about 50% correct, but by doing customer development, he was able to make improvements to the proposed product to a point where customers paid him before the product was built.

Get startup ideas

Customer development is commonly associated with and used to test ideas. However you can also use it to get new startups ideas. You can get ideas simply by asking the right questions listening effectively. By doing so, you can learn what people's challenges and pain points are and what they need.