The Four Stages of Customer Development


There is a lot more to attracting new customers to a product or business than just producing catchy ad campaigns or creating search engine optimized websites.  If you want your product to be successful, you have to keep your focus on the customers at every step of the way.  These are the four stages of customer development.

1)      Customer Discovery

The first stage of customer development is customer discovery.  At this stage of customer development, your goal is to find out as much as you can about your potential customers, ideally before you even start developing a product.  Figure out what your customers want, what is missing that your product can give them; find out what “problem” in your customers’ lives your product can solve.  Whether you are reinventing the wheel or just bringing an already popular product or service to a new audience, it is important to find out what your customers want so that, when you present your product to them, you are giving them something they have been asking for instead of trying to talk them into paying for something they don’t need.  Research the market to see what a competitive price would be for your product.  Conduct some focus group studies to see how potential customers respond to the prototype of your product.  If the response is very negative, it might be best to scrap the product and start the process over from scratch.  Even if the response is positive, consider the criticisms your focus group has given and use them to modify your product according to the wishes of its target audience.

2)      Customer Validation

The customer validation stage consists of putting together a preliminary sales roadmap of short term and long term goals and also of a small scale product launch.  At this stage, your aim is to sell the product to a small but, ideally, enthusiastic group of customers known as “EarlyVangelists”.  The idea is to make the EarlyVangelists feel like they are trendsetters and that it is a privilege for them to have access to the product before everyone else does.  Another aspect of the Customer Validation stage is to present your product and business model to analysts.  At the end of the phase, you should take into consideration the response of the EarlyVangelists and the analysts.  Based on their response, you may decide to abandon the campaign or to modify the product or business model based on their response.

3)      Customer Creation

This stage consists of a major advertising campaign to accompany a larger scale launch of the product.  At the start of the Customer Creation phase, you should choose a market type, ideally based on the results of a market type questionnaire, and make a detailed plan of your objectives for the coming year and how to achieve them.  For a product launch and advertising campaign this big, you will need to hire a public relations company to help you promote the product.  At the end of the Customer Creation phase, assess the success of the product launch and modify your strategy as needed.

4)      Company Development

The last phase of customer development is the Company Development phase.  At this stage, you attempt to expand your customer base into the mainstream.  It is also important at this stage to develop a mission-centric management culture at your company.  You should continue to innovate, pay attention and respond to customer demand, and always assess your progress.  At this stage, you also set a department mission statement and codify the roles of all the people in each department for each project.

Would you like to know more about each stage? Here are some articles you might find useful:

-          Why Do I Need Problem/Solution AND Product/Market Fit?

-          Strategy Is Important… But If You Really Want Success, Focus on Execution!

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