In 1982, a 31-year old American named Scott Cook came up with a radical idea: what if people could keep track of their household finances with their personal computers? He left his secure job at Procter & Gamble and, instead of doing an elaborate market analysis, Scott bought two phone books. He began calling the numbers listed in the phone books to ask people how they managed their personal finances and common problems they encountered.
From the insights he gathered during those phone calls, Scott founded Intuit, a business and financial software company. Now employing over 17,000 people, Intuit’s 2022 sales topped over $12.7 billion. Those two phone books – and the results they provided – sure paid off.
How can your organization follow in the footsteps of Intuit’s success? By leveraging customer insights gathered through Customer Discovery. Customer Discovery is the process of understanding who your target customers are and what problems they have that are worth solving. It goes beyond market research and allows you to connect directly with potential customers. Are you curious about the value of Customer Discovery and do you want to know what it can do for your organization? Then keep reading!
The importance of Customer Discovery
As its name suggests, Customer Discovery is an investigative process. It’s a fact-finding mission to discover what “you don’t know you don’t know” about your customers and their pains. Customer Discovery involves talking to people and observing how they interact with your organization, and how your organization fits – or does not fit – in their lives. It’s about leaving the echo chamber of your office, testing assumptions and gathering valuable insights.
Customer Discovery has a lot of added value for you and your organization. It’s a fast and cost-effective way to gain an in-depth understanding of potential customers’ lives and their unmet needs. You can save hundreds of hours of unnecessary programming or building unwanted prototypes simply by getting better insights from customers early on. This will help you test your underlying assumptions. Your early contact with customers through Customer Discovery reveals which core assumptions your value propositions are based on and which need further testing. Ultimately, Customer Discovery can lead to fundamental changes in your organization’s value propositions and reveal which issues need to be addressed as you continue to work on solutions.
In recent years, Customer Discovery has been popularized by Eric Ries’ lean startup methodology and Steve Blank’s Customer Development Model. Organizations such as Intuit, Toyota, Dropbox, Groove and IDEO have used Customer Discovery to develop successful new business models and value propositions. Toyota even has its own name for the concept: ‘genchi gembutsu’, a command that can be translated as “go out and see for yourself”.
You will probably be wondering how Customer Discovery works in practice. It is a five-step process. Let’s walk it through together.
Step 1: Hypothesize
Before conducting interviews, create a list of who you think your target customers are. This list will provide a basis for selecting potential interviews and captures your initial understanding of your customer base. Think broadly about your customer segments; beyond the buyer to include decision-makers, recommenders, influencers, and end-users.
Next, write down your key assumptions about those customers’ problems. Try not to hypothesize yet about potential solutions – focus instead on the unmet needs and problems faced by your potential customers.
Step 2: Customer observation
Go out and observe customer groups identified in the Hypothesis step, noting behavior and patterns. Whenever possible, observe customers in the environment where the problem occurs that you think you can solve for the customer. For example, if you are a logistics company hoping to streamline home moving for customers, you could observe people (with their permission, of course) as they pack up the content of their old home, organize boxes, find people to help them, load and unload trucks, etc.
Step 3: Discovery preparation
During this step, you lay the groundwork for successful Customer Discovery interviews by formulating your goals. Ask yourself: what do I want to find out? This includes determining what questions you’d like to ask, scheduling set interviews and planning when and where to conduct additional interviews. You can identify potential interviewees within each customer segment by using your customer segment list you created in Step 1.
Step 4: Customer interviews
With your interviewees identified and interview guide in hand, you are ready to go out and talk to your potential customers. Whenever possible, interview people
in the environment where the problem occurs. This contextual environment will allow you to ask the customer to demonstrate their current processes and show you any challenges and barriers.
Step 5: Analyze
During this last step, you investigate existing research and published experiences related to your customer groups. Source data and existing research on your customer segments and identify which organizations can tell you more about your customer groups. This desktop analysis can also investigate non-traditional sources, such as social media and other online platforms.
We briefly took you through the process of Customer Discovery. Now it’s time to get started yourself! At Stay Future Proof we have a lot of experience in conducting Customer Discovery and we are happy to help you with this. Contact us now to see how we can help you.
Do you want to know more about Customer Discovery and what it can mean for your organization? Then read our extensive Customer Discovery Guide here.