Customer Development Systems... #70

Dedicated to Business Owners World Wide

In this article you will learn

• What is a Customer Development System

• The end goals of any Customer Development System

• Why it is important for small businesses

• A 4 step Framework for Customer Development Systems

What is a Customer Development System?

Customer Development Systems (CDSs) are used to help businesses grow, prosper and succeed. These systems allow businesses to define and develop their product / service. Everything is centred and achieved through customer feedback.

Customer development systems allows you to;

• Discover business assumptions

• Test business assumptions

• Validate business assumptions

• Pinpoint the problems a business solves for their customers

These assumptions include;

• Whether a product solves a problem for a specific group of users

• If the market is large enough to support such a product

• Whether or not the business can scale to meet demands

It is an often times overlooked yet a critical business strategy.

Reach your target audience and validate your market/customer assumptions. Build around insights directly from your customers.

The End Goals for Customer Development Systems

The CDS end goal is to help a business earn additional value (for example revenue or profit) from retained customers.

How?

By ensuring that a product matches the need of the market and target audience. The main aim is to prove that a product solves specific problems. Only then can you create successful channels to interact with target prospects.

• Defining your target audience

• Understanding their problems

• Validation of Product hypotheses

• Validation of Market hypotheses

• Guide Customer Experience

Defining your target audience

Your target audience is the specific group of consumers most likely to want your product or service. These are the people who should see your marketing communications (read more) . Target them. A target audience may be dictated by age, gender, income, location, interests or a myriad of other factors.

Identifying your audience allows your business to focus marketing efforts and money on the groups that are most likely to buy from you. You want generating business leads in an efficient, affordable and cost effective manner. CDS Systems allow you to do this.

Understanding their problems

How can you provide the most value to your customer (read more)? By solving their problems. How can you solve their problems when you don't understand their real problems? When you truly understand your customer (read more) you can be of most use and value. CDS systems help you gain this crucial understanding and insight.

Validation of Product hypotheses

Product validation is the process of testing your idea with potential users to get feedback on the product's viability. This way you can lower the risk of wasting money and time on development.

Validating a product hypothesis requires gathering feedback from your target group. You can use various hypothesis validation techniques, e.g. user testing or interviewing potential users.

Validation of Market hypotheses

Market validation is the process of presenting a concept for a product to its target market and learn from those prospective buyers whether or not the idea is worth pursuing.

Some examples of vital assumptions to test could be: There's demand in the market for this product. Our target demographic will want to use the product. The product will solve the needs of its users.

Guide Customer Experience

Another goal of a Customer Development System is to help manage the customer experience. It can help guide first contact with the new prospect through to the first order for product or services, with ongoing management and maintenance (read more).

Why it is important for small businesses

There are many benefits of having an effective customer development system integrated into your business. This includes;

• Gaining unique insights

• Improving service

• Use data to make the right investments

• Determine when customer needs have changed

• Helps to develop new products

• Generates data to analyse competitors

• Drives adjustment strategies

• Guide product decisions

• Quickly adapt to market changes

• Evolve to meet the needs of your clients

• Continually look for and implement better ways to serve your customers.

• Avoid becoming stagnant

• Remain relevant to specific customer needs

• Save time and money in the future

A Customer Development System will enable you to run a more efficient business. It will help guide you and stay one step ahead of the competition.

Customer Development 4-step framework

This framework involves finding and verifying a business model that will be repeatable and scalable. The aim is to generate a stable income so your company can grow and scale.

1. Customer Discovery

2. Customer Validation

3. Customer Creation

4. Company Building

Customer Discovery ➡️ turn your idea and vision into a set of business hypotheses regarding your target audience, monetization model, value proposition, channels, etc.

Customer Validation ➡️ verify hypotheses and use this data to build a viable and scalable business model.

Customer Creation ➡️ grow your customer base from few to many.

Company Building ➡️ evolve and scale into a functional fully-fledged company.

Key Points to remember for Customer Development Systems

• Your assumptions are not facts. Test everything

• Failure is part of the search

• Design experiments and test to validate your hypotheses

• Make continuous iterations and pivots

• No business plan survives first contact with customers

• Agree on the market type. It changes everything

• Start-up metrics differ from those in existing companies

• Fast decision-making, cycle time, speed and tempo is important

• Pair customer development with agile development

• It’s all about passion

Customer Development Systems provides you with a strategy for reaching out to your customers, matching your offer with the right market and turning your company into a fully-fledged organisation.

Business is fundamentally knowing about people and their wants, desires, behaviours and beliefs.

What’s more the formula for increased growth and profitability revolves around a set of common sense principles that have continually proved to be successful throughout the ages.

Yes the world is in constant flux so tweaks and adjustments are always required, however the basic foundation of business growth and success always holds true.

Whilst busy working in their business many owners find difficulty in setting aside enough time and resources to work on their business. You have probably heard the saying that you have to work on your business as well and in your business. Unfortunately, this often falls way down the huge list of business owner’s priorities, with devastating consequences.

You don’t have to go it alone. Sometimes you just need a plan in place to map out the steps ahead. Knowing you are going in the right directing will give you the resolve and conviction to continue. Totally different from wondering around aimlessly with that hopeless feeling of being lost, without guidance and direction.

Offer solutions tailor made for your company, whatever you size, whatever your budget.

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