Lesson: Customer Development with Steve Blank

Step #3 Validation: Test your MVP, sell to early adopters, and develop a scalable sales process

Let's take a look at the next step in searching for a business model and that's customer validation. By now to get to this step, we assumed you believe you have product market fit. Now you would say, "Okay. Now, I could hire people. Now I could run my million dollar Google AdWords campaign."

We say, "No, not really. We don't really think you have enough evidence to do so. We kind of hear you that you believe you do, so we're going to do this again but this time trying to get orders, users, or both, depending on what your business model say."

So phase one is you're going to get ready to sell. If it's a physical product you're going to develop sales collateral meaning the data sheets, price lists, and demos, etc. If it's a web and mobile product you're going to try to acquire and activate customers and you're going to build a high-fidelity minimum viable product, which is a fancy word for your website or mobile app will look like it's almost done.

Maybe the help files aren't there, etc. Maybe not all of the features but the core features that people will use. Then you'll get out of the building, physically or virtually and you try to get out and sell. See if you get users, payers, or both.

The other thing you'll be doing simultaneously with this is develop positioning, which is a fancy word for saying, "Okay. I now have a lot of customer feedback. How could I have best described this based on what the customers are actually telling me?" Because you'll ask, "So I explained it to you like this. How could I have said it better?"

If you actually listen to them, they actually would have said, "Yeah, you know, I ignored the first seven things you said but when said number eight that's when I really got interested and excited." So you're going to develop a both corporate or company product positioning and you're going to do this way before you ever spend money on external PR agencies by actually listening to your own customers.

Then in phase four, you're going to verify or repeat. You're going to see if you're ready to start scaling sales and marketing spending in customer creation which is the most expensive part of a start-up.

This customer validation stage actually gets you out and you pretend you have the world's largest Sales Force and you're ready to go. "Okay. I think it's really going to work because I've tested it in customer discovery."

Most of the time you find out, "Oops. I really didn't quite understand what those customers were saying." Then, instead of being out of business because you spent all of your money on Salesforce, Google AdWords campaigns, or customer acquisition, you now have the cash and time to simply go back from phase four and go back and pivot.

Say, "I clearly didn't understand something about my customer segment, features, customer needs, or how to do customer relationships, etc." So customer validation in its detail, again, has two tracks. One for physical and one for web-mobile. Get ready to sell, sell to early customers who we call early evangelists, develop positioning, and again, either pivot or proceed.