What do you think is the biggest challenge facing a startup? Is it funding or finding co-founders? Is it constructing a dream team of tech wizards or sales and marketing rock stars? Is it all about conceptualizing and building the winning product idea? How about the bureaucratic hurdles that startups have to overcome to get the business off the ground?
The Biggest Challenge Facing a Startup
I had the pleasure of listening to a talk by Kevin Dewalt at the Spring.Ph Launchpad event about Helpful Marketing and he revealed that the biggest challenge of any startup was none of the above. It is finding customers who will actually pay to use and benefit from your products.
Unless you’re able to find customers for your products, even if you have a bottomless vault of funding available or a solid of a team behind you, your product will be useless if there are no customers willing to pay for it. You won’t even have the beginnings of a successful product.
Thus, the journey to finding customers begins with the three most important startup questions:
1. Who is your customer?
2. What is their problem?
3. How does your product or service solve their problem?
The Customer Archetype
The first question seems so obvious and easy. All too often I hear startup founders pitching their business idea saying, “Our customers are everyone who _________…”
Fill in the blank with whatever that is.
Everyone who needs a date. Everyone who wants cheap airfare. Everyone who wants a reasonably priced hotel and so on…
Unfortunately, describing your customers using general terms such as “everyone who” doesn’t really work. Imagine launching a dating app — a dating application geared towards young teenagers will be inherently different from one that caters to females aged 35-45, recently divorced individuals, or men aged 50 and up. Your business idea, products and services will come out differently, as a result of addressing your target customer’s specific needs.
This all relates to the concept of the Customer Archetype which Erick Ries talks about in “The Lean Startup,” and Steve Blank also defines in his book “The Startup Owner’s Manual.” Both suggest that defining your customer entails making the customer profile as detailed as possible.
An effective approach is to describe your customers as if you were visualizing your best friend whom you know a lot of things about. From likes, dislikes, age, occupation, geographic location, income bracket, values, attitudes, lifestyles, and the list goes on. Describe them as vividly as possible. The more you know your customer in detail, the easier it will be for you to focus and find them.
Understanding the Customer Problem
Most of us in the startup community come from very technical backgrounds. Most are programmers rather than marketing professionals. When we think that we have a good product idea, we can figure out how to build it. As such, developing the product is the least of our problems. Why we are building the product is what usually stops us dead in our tracks.
The only reason for you to build a product is because it solves a specific problem and unless you can define that problem, you shouldn’t even start on designing the product. So the second question any startup needs to answer is: What is your customer’s problem?
If you understand your customer archetype, you should be able to verify whether the problem you need to solve really exists. All you need to do is ask those people who represent your customer archetype whether the problem you’re trying to address is indeed their problem or not. Another way is to find out if they’re willing to pay money to see it solved. If majority of them say “No,” then perhaps that problem doesn’t need solving.
Be precise in stating the problem. If you cannot define it in one or three sentences at the most, you don’t really understand the problem.
Developing the Solution
The third and most important startup question is about the actual product: How does the solution address your customers’ problem?
Knowing the answer to this is where the concept of MVP or Minimum Viable Product comes in. It’s very difficult to get an answer to this question just by talking about it. In most cases, customers have no idea or cannot even envision what your product is unless you show them how it works.
Ries shares that MVP is having a select few — ideally representing your customer archetype — test the unfinished product before you formally release it to the public. It’s a midway product check to know if you’re on the right track. To some extent, it’s like a soft opening or a free taste for the consumers to give their feedback and for you to have the ability to modify your product’s qualities. This will give you an idea on how much more work is needed on developing the product.
Validating the Customer
From successfully formulating the right answers to the three questions above, the next step is to take what you’ve learned and validate the customer. Expose your MVP to as many different potential customers as you can and see whether you’re getting positive or negative feedback. If around half of the respondents are willing to pay for your product on the spot, you probably have some finishing touches left to do; if less than half are not even amused with your product, then you may have to go back to the drawing board.
This means you don’t need to develop the entire product and have it completely functional to validate whether your target customer is correct.
So going through the rigors of answering the three most important startup questions somewhat puts you in a circle — from defining your customer archetype, understanding their problem, making an MVP of the solution and then validating the solution — before making a decision to invest in building the product.
I know that many startups see this process as counterintuitive. Believe me, I did too two years ago. But now, this process which we used to know as Vaporware is the basis for validating most of the ideas I’ve encountered both on my own and on the startups that I’m coaching. With an MVP, it is possible to do customer validation with something less of a complete product.
Master this process and you will find yourself on the right track towards building a successful startup.
Joey Gurango is the CEO of Gurango Software and the president of the Philippine Software Industry Association
Connect with Joey on LinkedIn
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