How do Customer Development and Product Management fit together? (2014)

There’s still a lot of confusion around how to define and how to use customer development and product management.

“Isn’t customer development just product management?”

Customer development is a task that some product managers do.  But customer development is not the secret to creating a great product.  Let me repeat that, because I’ve heard many people claim this: Customer development does not create great products. It’s also not true that if your organization has product managers (or user researchers or market researchers), you’re already doing customer development.

Customer development isn’t usability testing, or focus groups, or dutifully recording “voice of the customer” suggestions and putting them into a backlog.  Those are all activities that people do when they already have a product and customers.  Customer development is a risk mitigation tool.  A perfectly acceptable outcome of customer development is to decide not to build that product or decide not to sell to those customers.

“You don’t really need product management if you do customer development right.”

I’ve heard some Lean Startup adherents go so far as to make this claim.  No, no, no.  Product management has been a necessary discipline for decades, and it’s not going away now. Customer development does not replace product vision. Talking to your customers does not mean asking them what they want and writing it all down. It also doesn’t mean that you can talk to customers and somehow, magically, from all of their words, a product will appear. That’s like thinking you can buy boards and drywall and a nailgun from Home Depot and end up with a freestanding house.  Someone needs to draw up the blueprints, get the permits, and oversee the contractors.  That’s what product managers do.  They’re the ones with the discipline to take all of that information and decide which pieces to act on.  It requires prioritization, or “saying no a lot”.

“Customer development is fine for startups with no product or customers, but we — Big Enterprise Company — can’t mess around like that.”

Oh! Who has the biggest risk Customer development and product management are two complementary tools.  Used together, they provide a competitive advantage to any products company. Customer development is not the secret to creating a great product.  Let me repeat that, because I’ve heard many people claim this: Customer development does not create great products. Customer development is primarily a risk mitigation tool. It replaces that uneasy guesswork of assuming there is a market for your idea based on:

  • analyst reports
  • what your competitor is doing
  • the opinions of the highest-paid executive in the room

You start customer development with a hypothesis, which you are trying your damnedest to disprove. If you go in trying to prove that you were right, guess what? That’s exactly what you’ll find. Instead, if you go in with a high degree of skepticism and a commitment to pushing beyond “yes/no” answers and vague “sounds like a good idea” statements, and still find that people are yelling/anguishing/laughing/cheering over your problem statement, then you’re safe to continue.

At this point, we move into what most of us have traditionally known as product management - envisioning requirements, prioritizing, identifying constraints, pricing, working with engineers to get the thing built. Of course, the product manager who is also a practitioner of customer development doesn’t stop getting feedback after that initial phase — they continue talking with prospects and customers to refine and to collect more detailed feedback as the product emerges.

Customer development is also an opportunity identification tool.  If you’re a product manager in a more mature organization, you are less likely to be looking for a whole new problem to solve or a whole new product to create — your company already has customers and product lines. It’s easy to think, “these people are already our customers; we don’t have anything else to sell them: what’s the point?

The point is, even customers who are happily paying you may not be using the product the way you expected them to.  They may love your product — but also wish they could do X and Y.  They may not even realize that they’re doing something that is time-consuming or expensive or resource-intensive — where you could save them time, money, or people by introducing a new feature or way of using your product. In traditional product organizations these opportunities usually come through VOC (voice of the customer) feedback.  But customers are often unable to articulate what they need, especially if it’s something they don’t even realize is a problem.

The active “pull” of customer development interviews, as opposed to the passive “push” of VOC, gets richer feedback (and guarantees that you aren’t being unduly influenced by your “squeaky wheel” customers.

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All Customers Are Not Created Equal (Large Enterprise Customers, Existing Customers)

With existing customers – whether they’re individual consumers or multimillion-dollar organizations – you have the burden of existing expectations and ongoing relationships.  Whatever happens in your customer development interview, you’re going to have to answer their phone calls or emails tomorrow.

That doesn’t have to be painful – in fact, customer development will often strengthen those relationships.  But there are some things to keep in mind if you want to maximize how productive your conversations are.

Large enterprise customers

  • Expect anything they see to look ‘good’. This doesn’t mean that you need to show a working app — trust me, big company folks are plenty accustomed to being sold products by PowerPoint deck — but it does mean that you should spend a few hours or days turning your Balsamiq wireframes into visuals that are simple, specific, and polished-looking.   Don’t use lorem ipsum (fake text), take the time to write the actual text that a customer might see.  Don’t use clip art.  Correct your typos.   If you don’t, you’ll immediately take a credibility hit.
  • Need a memorable narrative. These folks are constantly being pitched.  They don’t trust lists of features. They tune out jargon like “best-of-breed”.  What they’ll remember is a story. Tell a story that shows that you understand their business and their day-to-day work: “Let’s say you have a sales rep, Jill, and here’s what Jill does each day when she…”
  • Might be offended by “no”.  Companies who pay out million-dollar purchase orders often expect that money to buy them some clout.  This means that saying “no” may end the conversation abruptly (or cause them to escalate a complaint up to execs, pronto). It’s critical to show that you are listening and understanding their concerns.  Then use some careful wording to say ‘no’ without saying ‘no’.
  • Are often pleasantly surprised by being asked “why”. All enterprise customers have been burned by hearing “yes” and then finding out that that “yes” has a lot of exceptions or additional cost.  Having someone who actually listens, and asks thoughtful questions, may shock them into revealing a lot more about how their business works.
  • Offended by being told what to do. A multimillion dollar widget-making company does not want to hear from you that they’re making widgets wrong.  Be humble.  Showing off or trying to pull rank will fail.  Acknowledge that the customer is the expert, and you’re the one trying to understand.  (Note: this is always good advice.)
  • Have a lot of stakeholders. The end-user is probably not the buyer.  The decision-maker is probably not the implementer.  You will need to talk to a lot more people in order to validate your assumptions.   You will also need to approach them in different ways (the way marketers perform due diligence or assess your credibility is usually very different from how the IT department does it.)

Existing customers

  • Are really easy to get in touch with. There’s a perception that customers “don’t want to be bothered”, and I don’t know where this comes from.  This has never been my experience!  As long as you’re clear that you’re not trying to sell something, current customers are usually eager to talk to you.  Remember, they have already invested a lot of effort in learning your product – it’s in their best interest for you to thrive as a company.
  • Their top priority is their current product/service. Have you ever been to a concert where the artist kept playing all the songs from his new album instead of the greatest hits that you wanted to sing along with?   Start by answering their existing questions, and make sure you learn as much as possible about how they’re using your current product or service.  Once you’ve covered that, they will be far more receptive to answering questions about potential new use cases or products.
  • Hate change. Hold off on the mockups for as long as possible.  You want the customer to recognize that they have a problem first, before you threaten them with something new and different.
  • Need reassurance that you’re not going to de-prioritize or drop their current product. If they think that answering your questions might cause you to stop working on your current product (remember, the one they have already invested effort in learning), it’s going to be a short and pointless conversation.  You can cut this off before it starts by immediately reassuring them that their current product is safe, that this is early/exploratory research.
  • Are biased by what they’re already using. They have strong opinions on the solutions they want, and are highly motivated to push those solutions instead of talking about the problems.  I can’t emphasize this enough.  What they’re using, works. They’re already paying you for it.  Talking about changes, upgrades, redesigns, improvements – all of these raise customer hackles.  You must focus them on describing their existing behaviors and tease out their problems.

It can sometimes feel awkward to ask existing customers for a formal interview.  Luckily, you don’t have to.  I recommend piggybacking on your existing customer touchpoints.  Account managers can observe and ask “why” questions during their scheduled calls.  Customer support staff can continue a conversation beyond the initial request.  Social media managers who are already monitoring tweets and comments can spot good customers to interview or subjects to follow up on.

Find this post useful? I’ve written much, much more in my new book, Lean Customer Development.
You should get Lean Customer Development now!