The first step in building a product people love is to identify a problem that some group of people have. Solutions to clearly defined customer pain points make for the most compelling value propositions. You don’t need to start with a “startup idea.” By learning what problems people have you can begin to formulate solutions.
“Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas.” – Paul Graham
This post outlines a process for identifying problems and getting your customers to give you startup ideas.
Start with a customer segment
Starting with a customer segment you want to serve, as opposed to a specific product idea, has both strategic and personal advantages. Here’s how starting with a customer segment can be helpful:
1. Building relationships to test startup ideas can be as hard as generating ideas.
Cycling through solutions ideas is faster than finding customers and meeting new people. Your time will not be wasted if you focus on figuring out how you can help a given customer segment rather because. When you do customer development focused on a certain customer segment, you increase your chances of eventually being able to find something that works.
2. Customer development takes a long time and building a successful business can take a really long time.
In growing a company, you will inevitably be spending a lot of time with your customers. If you don’t like the customers that you’re spending a lot of time with, you’re probably not going to be very happy. Conversely, if you enjoy the time spent with your customers, you will probably feel more impassioned and energized. Being more impassioned and energized can lead to higher productivity and effectiveness.
Below is some advice on how to decide on a customer segment you want to serve.
How to choose a customer segment
There are a few factors to consider when deciding which customer segment you want to serve.
1. Relationships and access.
If you you have existing relationships, or at least access, to your customers, finding people for customer development interviews will be a lot easier. When the time is right, customer acquisition will also be a lot easier. If you don’t have access to the customer segment you want to serve, starting and building your business will take longer, and potentially more money, because you’re going to have to get access first.
The more you enjoy spending time with your customer segment, the more enjoyable your business will be. I also believe having more passion will make you more successful.
3. Propensity to buy.
Some customer segments are less likely to adopt new technologies than others. For a business to business product, some industries are more likely than others to adopt new technologies. Some customer segments have higher budgets than others. Some customer segments take longer to decide and actually purchase than others which can mean longer sales cycles.
4. Market opportunity.
If you goal is to build a massive company, you’ll want to be in a large market. Consider what your growth goals are to help decide which market to serve.
Identify a problem: Ask the right questions
By asking the right questions and listening effectively, you can learn about customer pain points and generate startup ideas to solve those problems. Focus on asking open-ended questions that get the customers talking about their problems as much as possible.
Examples of questions you can ask to get customers to tell you about their problem include:
What are the top 3 challenges you face in your job?
What are some unmet needs you have?
What’s the hardest part about being a [demographic you’re serving]?
What tasks take up the most time during your day?
What product or service do you wish you had that doesn’t exist yet?
What could be done to improve your experience as a [demographic you’re serving]?
One way to learn about problems worth solving, is simply to be observant to what people complain about. Wiley Cerilli, Founder of SinglePlatform used this technique to get the startup idea for SinglePlatform. Be observant of your own behaviors and processes and be conscious of what’s hard or time-consuming. You can also look for solutions that people are “hacking together” themselves. If they’ve taken the effort to make something themselves, such as a spreadsheet, it’s a sign that it’s an important problem for them.
You don’t need to start with an idea to start a business. With the right customer development tactics, you can learn what problems people have and how you can solve them. Starting a customer segment can be highly effective way to start a business. Customer development is commonly used to test startup ideas, but it can also be used to generate startup ideas.
Mike Fishbein helps startups through mid-size companies with capital raising, mergers and acquisitions and strategy. He also teaches a Skillshare class on capital raising and can be reached at twitter.com/mfishbein.
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