7 Steps to Great Customer Development

7 Steps to Great Customer Development

Article authors
Valeriy Starovoyt
Elena Rudenets

At the start of any IT project, stakeholders are attentive to the choice of technologies, programming language, and visual style, but a few undertake the same efforts to perform tests with their real target audience before market release. Thus, according to CB Insights research, 17% of new product failures are due to the poor UX of the product, and 42% faced no market need.

Customer Development is a methodology allowing to check the product for compliance with the customer needs before starting development. The blog article will run on how it differs from the other tools for checking new ideas, and in what cases investing to Customer Development will result in the greatest benefit for the business.

  1. What is Customer Development?
  2. Classic Interpretation vs Umbrella IT Experience
  3. When Does IT Product Need Customer Development?
  4. CustDev: Step-by-Step Guide
  5. Price and results

1. What is Customer Development?

Customer Development implies testing an idea or prototype of a future product with a target audience. A company may have lots of hypotheses: what users do want, which app interface they find usable, which channels will show the best results in attracting customers. It is impossible to predict everything even relying on many years of experience. These are not only the beginners who launch unprofitable products but the world giants as well. For example, one of Microsoft’s biggest failures was the Windows Phone operating system, which failed to withstand competition with Android and iOS that are more user-friendly and cover more functionality. Ping, a social network for music fans, was Apple’s unsuccessful project as it simply turned out to be of no interest to users.

At the start of a new project, business often makes a false step carrying out a complete development cycle, and then testing the resulting product on the market. A key feature of the Customer Development methodology lies in constant communication with the user from the very beginning of the project. The approach excludes the tunnel vision - when the company is focused on its own vision and does not consider the feedback of real users.

2. Classic Interpretation vs Umbrella IT Experience

Customer Development methodology originated in the 90s of the 20th century. For several decades, the term has been rethought, various approaches have appeared to the concept of Customer Development.

The first to define Customer Development was Steve Blank in his book “The Four Steps to the Epiphany: Successful Strategies for Startups That Win”, implying a methodology for developing business around the client, but not around the product. Later, Eric Ries referred to Customer Development as one of the cornerstones for the lean startup. The four Customer Development phases cover all stages of company growth: from communicating with the target audience and advancing hypotheses to bringing a product to the market and turning a startup into a full-scale organization.

The Customer Development model is the key to understanding what Customer Discovery is - which is namely the first phase of Customer Development. This is an analytical stage covering communication with the target audience in order to identify their pain points, the hypothesis to eliminate the pains, and the development of a Customer Journey Map.

During 10+ years in the commercial development market, we at Umbrella IT have come to our own understanding of Customer Development (or CustDev) in terms of IT projects. We create and verify the main journeys of the end clients, depending on their needs, excluding redundant and unclaimed functionality. Based on the information received, we build a layout of the future interface. Then we test it with the real users and improve it based on the test statistics and insights.

In recent years, the tendency has emerged to use CustDev to define separate tools that can be also used beyond a new product development. For example, you may have come across an opinion that CustDev abbreviation means an in-depth interview - a face-to-face talk with a target audience representative aimed to get as much information as possible about his/her experience in using the product or the service. In fact, the in-depth interviews can be applied outside of CustDev framework - for example, in the course of marketing research.

Another tool that is sometimes confused with Customer Development is A/B testing. Within its framework, several product variants are created and each of them is tested with a focus group. In case such options were originally developed on the basis of the user feedback, the value and accuracy of the test results increase significantly. 

Having analyzed our Customer Development vision, we offer to take a closer look at the practical application of the methodology.

3. When Does IT Product Need Customer Development?

The CustDev methodology is effective both at the stage of creating a product from scratch and when you pivot with the already functioning product. Here are a few cases to illustrate the situations when it is worth investing in Customer Development.

3.1. There is a product idea, but no certainty that it will pay off. 

We check

  • whether the target audience do have the specified pain; 
  • whether your solution helps to eliminate the pain; 
  • whether the customer is ready to pay for it ; 
  • whether the product development and maintenance will pay off.

Result: the irrelevant ideas filtered out.

The idea of ​​Take My Card app appeared in response to the pain we personally faced: at large-scale conferences, you may run out of business cards in bad time, and this will significantly complicate your business networking activities. While carrying numerous business cards in your pocket or bag is simply inconvenient. We started working on the app that allows to scan a business card and automatically add data to your Contacts. However, the CustDev series showed that no one scans business cards during a conference - people prefer to do it after the event, in a relaxing atmosphere. Moreover, if upon acquaintance, a person takes a business card, scans and returns it to the owner - this can be perceived as a breach of etiquette. Therefore, we changed the priorities in the app positioning and focused on providing the virtual business card through shortcuts, widgets and Siri. Now the application allows the user to create business cards and send them to any distance using one device.

3.2. Company positioning has changed: the site / app is not representative of the up-to-date offer and attracts a non-target audience

We check:

  • who belongs to your current target audience;
  • whether you talk the same language with them;
  • what a potential customer wants to get in the end;
  • what content is lacking for making decision;
  • whether the product inspires confidence.

Result: the site/app is brought into accordance with the actual target audience expectations

The Customer Development methodology helped us to update our corporate website under the client-oriented approach: to display the current services, projects, and cases, to redesign the website structure so that no section is left out by the users. We worked out in detail the target audience profiles and user journeys,  built site layouts, accordingly. Then we tested them with our real target audience: CTO, Project Managers and Product Owners representing Mail.ru, Deloitte, Yandex.Money, Gloria Jeans, Leroy Merlin, Setters, and other companies. The Customer Development process resulted in lots of insights – for instance, how to make the description of our services more valuable for the potential customer. We gave the developers a ready-made prototype of the site, tested and adjusted based on the user feedbacks to be developed further on.

Curious to learn the story of our client-oriented site?

Despite the fact that the customer discovery plan is effective for solving all of the above problems, it may be excessive. For instance, in case the value for your customers has already been defined and you want to improve user satisfaction by making incremental changes to the product, you may manage it with one tool only, like A/B testing.

Our task in one of the cases was to increase the downloads and the profit from the product monetization of Life Lapse app. The proposed hypothesis was that the time-lapse technology that had helped the application to reach the top in App Store, became less popular giving way to stop-motion. In that case A/B testing was enough: we analyzed the user behavior in the application and identified the growth areas. The assumption that the stop-motion technology is more in demand proved true: the users were more interested in moving stationary objects, photographing them at every point to make a video with the illusion of movement. Therefore, we added more relevant features, as well as integrated with Instagram and changed the business model to freemium. The logical result: the Client received a steady increase in downloads and doubled profits.

4. CustDev: Steps-by-Step Guide

It takes 4 weeks at Umbrella IT to cover all Customer Development phases from an idea to the interface layout to get them ready for development. Find below the Customer Development step-by-step guide and insights gained within 10+ years of work.

4.1. Engaging team 

The most effective Customer Development team includes:

  • Product Manager who acts as the only point of contact between the Client and the team and forms a focus-group of target respondents;
  • UI/UX Designer who improves the clickable prototype of the future app in iterations with Figma;
  • Business Analyst who is responsible for preparing the scenarios and conduction the testing. This is the Business Analyst who deals with target audience profiling and the primary Customer Journey Map (CJM), prepares the situation context and plays out the scenarios with the respondents. The data received are used to improve the final CJM.

Starting from the first day, the project is under supervision of our experts with experience of 200+ projects.

4.2. Collecting and analyzing information

The activities start with collecting and analyzing the data received from all stakeholders involved. Having determined the target audience together with the Client, the Business Analyst divides them into segments and prepares several user profiles, or portraits of a potential consumer of goods or services. They may differ in social and age data (profession, interests), behavioral characteristics (social networks they use, the way they make purchases), decision-making criteria (how they choose a seller, whom they consult with). A representative of each profile visits the site or application with a specific goal and a set of tasks in mind to be solved.

Important: the more details we give for each target audience segment, the more accurately we define their needs to build the structure of the site/application so that it meets the expectations of users.

4.3. Customer journeys 

With the comprehensive information about potential buyers on hand, you need to trace their journey from the first point of contact with your company to visiting the website/application. Your buyer's journey is important, as it makes it clear what are the first things the site visitors pay attention to, which sections they look for, which functions are vital for them to make a decision, and which ones can be kept for later. Being aware of all the “stops” on the way to purchasing your product/service, you can make each one more valuable for the buyer.

There can be several options for the user journey, and the task of the Business Analyst is to select the most probable ones with the highest priority. The chosen journey is went through in detail with your stakeholders, and namely, to form a set of sections and content blocks that are necessary for the users to clear up the issues on the way to their final aim. 

4.4. Interface layout

Based on the potential buyer’s journey a Product Designer creates interface layouts. For the users to achieve their main aim (as found out at the stage of the target audience profiling) we create layouts of up to 5 screens. Then they are prepared for testing in a focus group: the layouts are completed with the maximum true-to-life content and connected into a clickable prototype.

If the layouts already exist, we check them for compliance with the customer journey and determine the scope to be improved.

4.5. Selecting respondents

In parallel with the development of the layouts, the Analyst forms a list of testing participants. The success of Customer Development largely depends on how closely the respondents match the customer portraits we have worked out.

Depending on the specifics of the project, we work in partnership with the Higher School of Economics. The staff of the HSE UX Laboratory specializes in the cognitive psychology of the user of digital interfaces and technical devices.

4.6. UX testing and optimization

Each testing participant gets an idea of ​​the circumstances under which he gets acquainted with your company/product and the purpose pursued during visit to your website/app. For example, to learn the general information about the company before meeting with a company representative or to place an order. Testing runs according to the agreed CJM.

Key principles of testing:

  1. The respondent gets acquainted with the site/app and navigates between its sections until achieves the aim. The respondent is free to visit the sections of the site in any sequence and an unlimited number of times.
  2. During testing, the participants may freely comment their actions and impressions. The interviewer keeps a record of everything that happens on the screen, records the characteristics of behavior and the emotional reaction of the respondent.
  3. If a test participant behaves in an unusual way (for example, skips a website section and then quickly returns, or tries to click on non-clickable labels), the interviewer specifies what caused this behavior.
  4. When a participant believes that he has achieved the target goal, an interviewer asks the questions about the product prepared in advance. Several questions refer to the general impression of the site/application, while others relate to the presented content.

The Business Analyst further assesses how the respondents interact with the layout: whether their behavior matches the Client's expectations, what was missing, what turned out to be unclear, which solutions they liked or disliked.

4.7. Next iteration and summing up the results

The next testing iteration is conducted following the implementation of corrections. At the end of each iteration, we make adjustments to the prototype based on the received statistics and insights. Building on the three iterations findings, we provide conclusions on the business hypothesis verification. A hypothesis is considered to be working and ready for implementation/A-B testing, only if it obtains more than half of positive feedback.

A prototype ready for development is handed over to the Client along with the materials of the study (Customer Development report + attachments) and the conclusion about the viability of the hypothesis.

It is worth considering the fact that even if the hypothesis has not been verified, your Customer Development investments have filtered out the irrelevant idea and ineffective solutions in time, thereby saving expensive development resources and significantly reducing the time to the commercial success of the project.

Price and results 

The Customer Development and UX design service price is $7000.

The results we achieve for business: 

  • 80% demand matching: a future website or app structure meets the client expectation;
  • 70% savings in development: the irrelevant ideas are filtered out in the pre-development phase, a ready-made interface layout created in Figma is sent for the implementation;
  • increased loyalty: up to 2x increase in conversions, up to 40% traffic growth, up to 30% decrease in bounce rate, up to 2x increase in session duration* on the website or in the application due to the relevant content, services and cases written in the target audience parlance.

    *These averages are collected as a result of series of CustDev followed by the introduction of improvements in internal and commercial projects. 

Follow the Customer Development strategy guide or refer to the experienced professionals and launch user-demanded products only.