Something you probably don’t know about me is that I have tried launching a B2B SaaS some time ago and I am currently working with the team on getting another one off the ground.
In my first attempt, I googled various terms on “how to get started” and this SaaStr article along with Alex’s take on customer development caught my attention. Once I knew what customer development was and tried it, I became a fan of it for life…
To both of my endeavors customer development has been crucial in shaping everything.
In this article, I want to share why customer development is crucial to every business (especially SaaS), how to do it, what I learned from doing it and what will happen if you don’t do it.
Definition of Customer Development and Why It’s Important
In simple words, customer development is understanding thoroughly your potential customers through the process of interviewing them. Once you understand them, you need to build a solution that solves their problems.
In essence, it’s the inside experience you’d get if you were doing their job.
For me, it’s about understanding what they are doing at their job, what their team looks like, their corporate ladder, potential office politics, if they have an assistant, kids, everything you can.
It’s also about *assessing* whether your SaaS solution is potentially viable or not…
The reason I highlighted the word “assessing” is because you can never be sure if you have a valid business or product people will pay for, until you actually do it. Through interviews you can merely get an assessment, an estimation based on your personal insights and way of thinking.
It’s better than going blind, but nothing is set in stone.
Customer Development is hugely important and it’s a step you better not avoid, whether you are launching a SaaS or you have an established one.
That’s because once you have done a great job at customer development, nailing your product’s value proposition, overcoming objections both verbally and through your product, building out your marketing plan and pretty much everything becomes much easier.
For my second SaaS it took me 2 afternoons to write the copy for the website’s pages. It was very easy to write the copy once I knew who exactly is our target customer (not just a vague job title).
It’s also a catalyst for creating a very robust product that can be iterated into an enterprise solution and end up in making lots of sales.
If you don’t know your customers inside out, you might be making a product that is moderately good for everyone, but all of them can live without you.
Not a good position to be in…
How to find your first 20 interviews
Based on Jason’s SaaStr article above, if you are just starting out the rule is to start with 20 customer interviews.
Jason says this number in order to see if you can get 20 people to interview in order to have a chance of success (a level of market penetration so to speak). I also found that the number 20 is indeed a pretty good number to get started.
The first 5 interviews will give you the most insights and they will help you improve your interview questions.
The other 5 will give you 5%-10% more insights and probably confirm what you already know.
And the other 10 are mostly about details that you might have missed or uncovering clever practices some businesses are following while others don’t.
One key element that I didn’t know at the time, is to segment your interviewees based on company size and job title.
First interview only one specific job title and only then move on to the next segment. Make sure that company size is taken into account as well. A lot of things change from small to mid to enterprise/big chains.
Alex from Groove interviewed every customer who would talk to him and that’s the best way to go about it if you have an established SaaS and haven’t done customer development for a long time (or ever).
This is something that the CEO/Founder needs to do and it can’t be done by another employee, at least at first.
If you haven’t an established customer base, you get these interviews by sheer hustle. Here is how I did it in my first SaaS attempt:
I) LinkedIn InMails: I got a LinkedIn premium account and searched for the right profiles based on location, industry, company size and job title.
Then I started sending them InMails with various angles asking them for 5-10 minutes of their time to answer some of my questions for a product I was developing or for a study I was doing.
What was key here was that I told them that I could either call them or just send them the questions in written format.
Most of them chose the written format. As I have said in the past, doing calls just because is the difficult thing to do, isn’t always the best too.
Give them that option.
If you want, you can check how to do cold outreach like a pro here.
II) Reddit: I joined relevant boards where my target customers were hanging out and made a post on each one asking for 5-10 minutes of their time to fill out a questionnaire and asked to leave a comment everyone who was interested.
Then, I messaged each one of them and sent them a link to a Google Doc with the questions.
What was interesting was that Redditors gave me slightly different insights/suggestions than LinkedIn’s members…
There goes another point to different traffic sources, bring different people with different psychologies.
These were the 2 sources that brought me the most interviews. The rest flopped or brought only a couple tops.
To give you a timeframe of what to expect, I got these 20 interviews completed in a 1-1.5 month period.
Yeah, it takes time…
Customer Development Questions to Ask (and how to come up with them)
Coming up with customer development questions to ask is very easy.
You simply start out with a handful of core questions, like “how do you handle this situation”, “do you think that could be improved” and pretty much everything that you can’t find on Google.
You can also ask on Quora a general question first, so you can get some first insights and show your interviewees that you have done your homework.
When they start answering your questions, you can make additional questions based on their answers and see emerging patterns at your 5th interview or so.
Always remember that you can’t ask your potential customers what’s their problem and what they need help with. You need to listen to them and then think what you could improve, how and ask them if something like that would make sense.
Customer Development Mistakes To Avoid
While doing early customer development, I also made some stupid, yet important mistakes that I won’t make again.
Here are some of them:
I) During early customer development, do not ask for money, an LOI or “would you pay for a solution like this?“.
If you don’t have a live product that works and people can log in and use it / play around with it, they simply won’t give you any form of validation (especially $$).
You might build something that in the end doesn’t convert as you’d like. This is a risk of the trade, you can’t mitigate it.
II) Try to build a core feature/functionality of your product and give that for free to the interviewees who want it, forever.
If they want more, once you develop the product, they can buy the whole solution or just keep their free account in exchange for helping you with their interview.
III) Jason Lemkin says it’s better to get 20 interviews to show that you can get some traction by sheer hustle.
Although it’s good, I believe having someone with connections in the space and bypassing the cold outreach can have the same or better results (with a cost of course).
If I had to choose, I’d almost always choose the latter.
IV) Not doing customer development at all.
Going blindly into product creation without early or late customer development is a bad foundation to start or a bad practice to do accordingly.
The reason is because you don’t and you never will know your customers well enough to serve them in the best possible way.
You might grow somehow big, but you will never figure out who exactly you are targeting and the product will be a reflection of this lack of strategy.
On a side note, if early customer development shows that we have to kill our idea, so be it.
In the end, customer development can be an unfair advantage for SaaS startups that do it and keep doing it, because they will know perfectly their customers, exactly who to target, where to find them and how to best serve them.
This can become very powerful especially as you grow and start competing with companies who don’t do it.
The customer development process is a great exercise in itself that will uncover a lot about the founders, the product and the first marketing strategies to invest in.
This was the last post for summer. I hope you found this guide useful and start engaging with your customers in a meaningful way.
I will be back with a new post in late August and I hope you have a great time until then. If you are an email subscriber, check your email for a small gift for being a loyal reader of WeeklyGrowth.
Until then, happy holidays!