Customer Development – the Australian way (Part 1)

For the last two months, we have been running a very successful pilot with HopShopper, our digital loyalty card platform. We deployed to 8 cafes and food outlets around Sydney CBD and, in all honesty, it’s been going better than we expected.

After going through the exercise of designing, developing and deploying our first product in the marketplace, we decided that it was time to take a step back and re-evaluate what we have learned and where we will go from here.

This is where it gets interesting. We decided that it was time to implement a proper customer development approach to our product and started going through the motions. Steve’s book is a gold mine, and his worksheets made it so much easier for us to get ready for this process. Getting some members of the team across the cust dev line took a bit of time, but the timely arrival of “The Entrepreneur´s Guide to Customer Development for Tech Startups” made this a relatively painless process. This ebook provides an awesome way to introduce people the concepts around cust dev. Highly recommended!

We kicked off with preparing for first customer contact, came up with a list of people to talk to, called them and organized the meetings. This initial step turned out to be a piece of piss, but only because we had already spend a lot of time building relationships with shop owners and marketing managers. Offering to give something back (in terms of knowledge, information and insight) does bring a lot of people across the line, so use it.

The longest part of the process so far has been coming up with the problem presentation, as it requires quite a bit of research, thinking about our product and general pondering about life and the universe. But, we managed to pull it together, and it made sense to us. Would it make sense to our customers?

As it turns out, after our first three interviews, it did make sense to our customers! We are planning to do a few more interviews this week and then another 3-5 next week. Already, I’m seeing a huge amount of value coming out of this process. We can already see our consumers segments more clearly, which in turn forces us to re-evaluate our complete business model based on which way we eventually choose to go.

The funniest thing about the whole process is interacting with our customers, who are all in retail. I’ve lived in Australia for about 5 years now, but I still get amazed by the level of honesty, bluntness and general laid back attitude. My favorite so far is “Mate, this shit will definitely work here in the city, but I’m not sure about how it’ll go out in woop woop”. Woop woop, for all of you not familiar with Australian slang, means “in the middle of nowhere”, “in the boonies”.

Coming back from woop woop to reality, we have also started to do a bit of fishing in terms of pricing. Since these interviews are not sales pitches, our customers are quite open and transparent about their expectations in terms of pricing. We found these two of Steve’s pricing questions to be a great way to “break the ice” and start talking about dollars and cents:

1. If we gave you our solution for free today, would you implement it. (Getting a No is a huge red flag. Luckily, no red flags for us.)
2. If we charged you , would you use it?

We did get a few “mate, that’s way too expensive” comments, which is great feedback. Especially considering the fact that it was followed by “$xx seems like a much more reasonable amount for it”.

Next steps

As I said, we are going to do more interviews, then look at what we have learned from the process so far and formulate our proposed solution through a set of screenshots/wireframes/use cases. We will be going back to our customers to validate our proposed solution and use that feedback to tweak it to the point where we are ready to do our first soft sales pitches. I’ll keep you posted. Exciting times ahead!