We live in a world where eight out of ten businesses will fail. Entrepreneurs are encouraged to dust themselves off after an idea fails and try again, repeating the process with a new concept, hoping that this one sticks.
But what if it was possible to minimize this risk, thereby boosting chances of success before even starting? If it’s very possible to verify that the idea is a good one before sinking time and money into it, why is it that this step often gets overlooked by many entrepreneurs and skipped entirely?
Let’s go back to elementary school for a minute and recall the good old Scientific Method. While you might not remember every single step of that process, you probably recall that “hypothesis” (read: “guess”) comes well before “conclusion”.
In fact, when scientists perform experiments, they are actually trying ruthlessly to disprove their own theories instead of looking for a way to validate their ideas.
So why should this be any different in our small business ideas?
This roll of the dice that most businesses endure was the inspiration for Steve Blank’s Customer Development Methodology. There’s plenty to learn about Customer Development (try here and here), but to sum it up this is simply about challenging your core business assumptions before charging ahead. We’re talking about learning and discovering before creating.
One of the chief tenets of Fizzle’s Small Business Roadmap is to treat your business as a hypothesis. That makes you the guy in the white lab coat carrying around a clipboard, and your business ideas nothing more than opinions.
Unfortunately, this isn’t Field of Dreams — the fact that you built it does not automatically guarantee they will come.
They might come, but they also might not. As Steve Blank said, this “if you build it, they will come” construct really only applies to what he calls “life and death products”, such as the cure for cancer. That’s because, when you’re curing cancer, you don’t have to worry about whether the market will adopt the product. If the cure works, people who otherwise would have died will instead live. If you build the cure for cancer, they will definitely come.
However, if you’re like the rest of us who are building a product or service outside the realm of life and death, you’ll have to contend with customer acceptance. Most businesses don’t figure out whether anyone will pick up what they’ve put down until they’re out of money, out of time, and subsequently out of business.
Let’s talk about how to avoid that fate: customer interviews.
““Build it and they will come” is a huge risk. Test your idea before wasting a bunch of time on it.”
The Five Step Process for Customer Interviews
The best way to validate (or invalidate) concepts and test a hypothesis before sinking resources into an idea is to talk with possible customers and create early adopters. But where do we even begin? Where do we find customers to interview, and how do we get them to want to talk to us? Even if they do want to talk, what do we ask? And once we have their answers, where do we go from there?
Here’s a five step process for interviewing customers, one you can repeat for different ideas and products as you evolve.
A quick disclaimer: interviewing customers does not give you license to stay stuck in research mode or change direction every other day. While this step has the power to shape your business, commit to taking action after you’ve tested your theories.
Step 1: Identify the problem you want to learn about.
In order to help a group of people, studying what roadblocks prevent them from finding success can point us to the biggest problems worth solving.
It pays to choose an audience and problem you care about or are invested in. In fact, many great products and services are given life by founders who encounter problems in their own lives and seek to create a solution.
For example, let’s say that you are an experienced fly fisherman who is disappointed in the price and available selection of pre-tied flies used for trout fishing. You suspect other fishermen might feel the same way, and might even be interested in tying flies as a hobby. But you’ve noticed there isn’t one place to go for materials and instruction, so you’d like to create a service that provides both.
Once you have your finger on a problem you hope to solve, it’s time to learn as much as you can about that problem before setting out to solve it.
Step 2: Find people.
When you’re on the precipice of your next great idea, you might find yourself bouncing the concept off any friends and family who will listen. When it comes to customer interviews though, we’re going to focus on individuals who might actually be in your target audience. If you’re not sure who that ideal customer is, here’s a free handy guide we built to help.
In the case of our fly fishing example you will want to have conversations with other fly fishermen, especially those interested in the craft of do-it-yourself fly tying.
One of the questions we hear from Fizzlers goes something like, “I know who my audience is, but I don’t know how to find them. How can I find people to talk to?”
Once again, this is where it pays to be a member of your own target market as you will have a handle on where fly fishermen congregate online, what they are reading and how to find communities to tap into.
If you are not a part of your own audience you can still study those problems, but at minimum you will need to find someone to point you to the places where your potential customers are hanging out.
If you’re still having a hard time tracking people down, consider these 95 ideas for finding customers for some inspiration.
Targeting individual customers to interview with the hustle & sell method will likely yield quicker results than creating a general survey posted on your Facebook page. Consider using social media to find people actively discussing your topic, then simply ask whether they’d be willing to Skype with you for 5-10 minutes about [insert your topic here] (example: tying flies for fishing.)
Step 3: Figure out what you’ll ask.
It’s tempting to think that this is the most straightforward part of the process because you just need to know what people think of your thing. “What do you think of XYZ Product Idea?” and “How much would you pay for it?” seem like obvious choices.
But as it turns out, the two questions you are most tempted to ask carry you further away from actually learning about the problem to be solved.
That’s because those questions are about your idea, and not really about your customer’s reality. As soon as your idea comes up your temptation will be to sell it, to pitch all the amazing features, to convince the customer why this product is a great idea (“it is a great idea, isn’t it?!”)
In this light, the term “validate your product” can actually be a little misleading. While you are going to validate (or invalidate) your product, it won’t be happening during this conversation itself. Instead, you are studying your customer’s environment to figure out whether your hypothesis holds water.
So remember: you are not talking about your idea during your customer interviews. By dissolving the pressure of making your customer like your idea, you can relax, listen and really learn. Here are some tips for your line of questioning:
- Imagine your questions will start broad and become narrow, just like a funnel. In our example we suppose you will have conversations with other fly fishermen. Begin with a question that provides context for the conversation but doesn’t hit on the problem head on, such as “As a fisherman, what do you find frustrating about flies?” (This article provides specific guidance as you craft an opening question that is specific enough to explore your niche, but broad enough to allow the conversation to wander a bit.)
- Form questions that will encourage your customer to describe their current reality. As the potential customer starts to describe his or her frustrations, the goal is to learn as much as possible about the current state of affairs. Use a tactic like the “5 Whys” to keep the prospect talking and insure you’ve gone as deep as possible to define a starting point.
- Shift to questions around the customer’s ideal state. After gaining a clear understanding of where the customer currently stands, we can shift to encouraging him or her to define a more ideal state. If he or she could wave a magic wand, how would the circumstances change? What would be different?
- The gap between “current” & “ideal”: You are here. Your prospect’s job is to paint a clear picture of their current reality and perfect scenario. Your ultimate job will be to bridge that gap between the two with your product or service. This is a one-two punch because not only have you learned a tremendous amount about your customer’s reality, but he or she is now vocalizing how much value that “ideal” state would bring. From a sales perspective, you’ve already started priming the prospect to adopt an early version of your someday solution.
Pro Tip: Look for Information on Facts, Time & Money
As you seek to figure out what stands between the customer’s current and ideal states, the framework of “facts, time and money” can help keep the conversation on track. As your “funnel” narrows, questions in these three buckets can help deepen your understanding of the problem:
Facts – Using questions like “can you tell me more?”, “can you expand on that?” or a simple “why is that the case?” will encourage the potential customer to keep talking. People don’t tend to spill everything on the table at once, particularly when chatting with strangers, so using fact-based questions can uncover lots of nuggets of information buried beneath the surface.
Time – These types of questions serve two purposes: you’ll learn about the amount of time a problem has existed (which may indicate the level of frustration a customer experiences), and you’ll also see how frequently (or seldomly) the problem crops up for a user. “How long have you been dealing with XYZ?” or “when was the last time that happened?” will yield time-based answers.
Money – Finally, questions like “how much has that cost you?” or “how much have you spent trying to find a solution?” will help you understand how motivated customers are to solve this problem. If the answers are anything like “none” or “zero”, consider whether this potential customer has the means (read: cash) or motivation to solve the problem even if a solution existed.
Bonus: The answers to these questions can be an enormous help in crafting your sales materials down the road as you’ve spent some time in your ideal customer’s head. The psychology behind buying decisions tells us that most people buy based on emotion and later justify that with reason. Using the “facts, time, money” framework, we have covered intuitive and logical ground.
Step 4: Conduct the interview.
Once you have the problem to be studied, some potential customers to interview and a solid grasp on the questions to be asked, it’s time to have the conversation. This is the part where many people feel a little nervous, so if talking to complete strangers is not your idea of a party then you’re not alone.
Here are a few things to remember that will make the conversation itself a little easier:
Don’t try to sell your thing. You might get a potential customer who is absolutely lying down on your couch, spewing their frustrations about the problem you know you can solve. As tempting as it is to hop right into sales mode and describe your solution, don’t take the bait. There will be plenty of opportunity to test your product with your early adopters once you have your minimum viable product, but your objective for now is to fully grasp the problem before solving.
“Conversation”, not “game of twenty questions”. Few people enjoy a barrage of questions, particularly from someone they don’t know. The questions are intended to guide the conversation, so use them without allowing them to take over.
Freaking listen. Perhaps the most important tip of all, and the easiest to skip: listen to what the person on the other side of the table is really telling you. It’s natural to get caught up thinking about what you’re going to say next when nerves take over, but the trouble is that as you formulate that next thought in your head you miss what the other person is saying. Actively focus on listening without ulterior motives and feel yourself relax into the conversation.
Step 5: Debrief, iterate & implement.
The information you have collected will shape your product or service into the best minimum viable product it can be. By understanding your target customer’s current state and their “perfect world”, you now know what product features matter and which don’t, along with what customers might pay for and what could miss the mark.
How do I know if my idea has been invalidated?
If many interviews are conducted and it seems no potential customers are motivated to pursue a solution, it’s possible that the problem is not worth solving. If the customer does not mention the problem and you are the one who has to introduce it, this is a sign that the problem just isn’t pressing enough — and that means they aren’t going to use your service, no matter how many cool features it has.
If your idea is invalidated, don’t panic; instead, think about how much time and energy you saved before building a doomed product. Then, go back to your notes. Has a different problem to be solved emerged? Can you pivot and form a new hypothesis to test, now that the first one has been disproved?
“Goal #1 for your first product is a small number of features that will create “earlyvangelists”.”
The reason for creating the simplest version of your product to start out with is simple: you minimize time and money creating bells and whistles that customers may or may not care about. Early on, not every person in your target audience will love this minimal version of your product — in fact, it’s your visionary customers who will get it in the beginning. With this in mind, it’s really the future of your product that you’re marketing in the beginning stages.
These early adopters are people who have the problem you’ve studied, are aware of that problem, and have the means to pay for a solution should one present itself. As you interview potential customers, capture their contact information and keep track of prospects who could test your MVP and become earlyvangelists.
Customer interviews provide invaluable insight in the early stages of product development, but they are also extremely helpful when you want to improve on an existing product or understand why your customers join or leave you. The worst thing you can do at any stage is to treat your business hypotheses as facts, so it’s time to don your lab coat and start studying. Get out there and start talking to your customers!
The Top 10 Mistakes in Online Business
Every week we talk with entrepreneurs. We talk about what’s working and what isn’t. We talk about successes and failures. We spend time with complete newbies, seasoned veterans, and everything in between.
One topic that comes up over and over again with both groups is mistakes made in starting businesses. Newbies love to learn about mistakes so they can avoid them. Veterans love to talk about what they wish they had known when starting out.
These conversations have been fascinating, so we compiled a list of the 10 mistakes we hear most often into a nifty lil' guide. Get the 10 Most Common Mistakes in Starting an Online Business here »