Category: Customer discovery

How to Identify the Right Target Segment for Your Customer Discovery using Behavioral Segmentation

Shashank

Customer discovery is the process of identifying and validating the needs, wants, and challenges of potential customers. To effectively perform customer discovery, it is crucial to identify and target the right customer segments. In the context of behavioral segmentation based on the solutions users use to accomplish their intended outcome, there are four segments – users using direct competing products, users using indirect competing products, users using substitute competing products, and users who do not use any of the existing solutions to accomplish their intended outcome. In this article, we will discuss how to choose a target segment from these four segments for effective customer discovery.

Evaluate the Market Potential

The first step in choosing a target segment is to evaluate the market potential of each segment. This involves analyzing the size of the segment, the growth rate, and the potential profitability of the segment. The segment with the highest market potential should be prioritized for customer discovery.

For example, if the market potential for users using direct competing products is high, this segment should be the primary focus for customer discovery. On the other hand, if the market potential for users using substitute competing products is low, this segment should be deprioritized.

Identify the Intensity Pain Points

The next step is to identify the intensity of pain points of each segment. Pain points are the problems or challenges that customers are facing with the existing solutions. By identifying how these challenges with the existing solutions in each segment are translating into pain points, and how strong or week those pain point are, give some indication of opportunity gap.

Evaluate the Competitive Landscape

It is essential to evaluate the competitive landscape in each segment. This involves identifying the strengths and weaknesses of existing solutions and competitors. By understanding the competitive landscape, you can develop a product or solution that offers a unique value proposition and differentiates from competitors.

For example, if the competitive landscape for users using direct competing products is highly competitive, you can differentiate by offering a unique feature or value proposition. On the other hand, if the competitive landscape for users using substitute competing products is less competitive, you can focus on providing better customer support or pricing.

Analyze the Customer Acquisition Cost

Another crucial factor in choosing a target segment is the customer acquisition cost (CAC). CAC is the cost of acquiring a new customer. It includes the cost of marketing, sales, and other expenses associated with acquiring a new customer.

By analyzing the CAC of each segment, you can determine the profitability and viability of targeting a particular segment. For example, if the CAC for users using direct competing products is high, this segment may not be profitable to target. In contrast, if the CAC for users who do not use any of the existing solutions is low, this segment may be more profitable to target.

Determine the Target Segment

Based on the above factors, you can determine the target segment for customer discovery. The target segment should have high market potential, clear and stronger intensity pain points, a competitive landscape that offers differentiation opportunities, and a low customer acquisition cost.

For example, if the target segment is users using direct competing products, the product or solution should offer a better value proposition and differentiation from competitors. If the target segment is users who do not use any of the existing solutions, the product or solution should offer a clear and compelling value proposition that addresses their unmet needs.

Call for action:

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How to Craft a Winning MVP Without Customer Interviews or Market Surveys

Shashank

When developing a new product or service, one of the most important steps is identifying the problems or challenges that customers face with existing solutions. This information is crucial in determining the type and details of your Minimum Viable Product (MVP), which is the version of your product with just enough features to satisfy early customers and provide feedback for future development. While traditional methods of gathering customer insights, such as customer interviews and market surveys, can be helpful, there are ways to start identifying potential challenges with existing solutions even before starting these activities. In this article, we will explore how to get insights about hypothesis of challenges with existing solutions and how to leverage them to decide on the type and details of your first MVP idea.

Research Direct Competitors

One of the most effective ways to identify challenges with existing solutions is to research your direct competitors. By analyzing the products and services offered by your competitors, you can get a better understanding of the challenges customers face and the gaps that exist in the current market. Look at customer reviews, social media comments, and forums related to your competitors to see what customers are saying about their experiences with the products. This can help you identify patterns and common challenges that customers face, and use this information to develop your MVP with solutions that address these issues.

Another way to research your direct competitors is to analyze their pricing and packaging strategies. Look at the pricing of similar products to determine what customers are willing to pay for a particular solution. Additionally, analyze the packaging and features of competing products to understand what features customers value the most. This information can help you identify what features to include in your MVP to provide the most value to customers.

Research Indirect Competitors

In addition to researching direct competitors, it is also important to research indirect competitors. These are products or services that are not direct competitors but provide similar solutions to customers. By researching these products, you can identify additional challenges and gaps in the market that your MVP can address. Look for products that provide similar solutions or have a similar target market, and analyze their customer feedback, pricing, and features to identify potential gaps.

Research Substitute Competitors

Substitute competitors are products or services that provide a different solution to the same problem. For example, if you are developing a meal delivery service, a substitute competitor could be a grocery delivery service. By analyzing substitute competitors, you can identify additional challenges and gaps in the market that your MVP can address. Look for products or services that provide a different solution to the same problem and analyze their customer feedback, pricing, and features to identify potential gaps.

Research Non-Consumers

Non-consumers are potential customers who do not currently use any existing solutions to solve their problem. By researching non-consumers, you can identify potential challenges and gaps in the market that existing solutions do not address. Look for potential customers who are aware of the problem but have not found a suitable solution, and analyze their feedback to understand what challenges they face. This information can help you develop an MVP that addresses these challenges and provides a solution that is more attractive to non-consumers.

Identify Patterns and Trends

After conducting research on your competitors and potential customers, it is important to identify patterns and trends in the data. Look for common challenges or gaps that multiple customers or competitors have identified, as these are likely to be the most pressing issues. Additionally, look for patterns in customer feedback, such as common complaints or suggestions for improvement. These patterns and trends can help you develop an MVP that addresses the most important pain points and challenges experienced by your potential users.

Once you have identified the most common pain points and challenges, you can begin to brainstorm ideas for your MVP. Start by thinking about the simplest possible solution that could address these issues. Remember that your MVP is not meant to be a fully-featured product, but rather a basic prototype that can be used to validate your assumptions and gather feedback from users.

One useful approach for generating MVP ideas is to use the “Jobs to Be Done” framework. This framework focuses on understanding the underlying motivation or goal that drives someone to use a particular product or service. By identifying the job that users are trying to accomplish, you can design an MVP that specifically targets that job and provides a solution that is aligned with the user’s needs.

Once you have a rough idea of what your MVP will look like, it’s time to start testing it with users. This is where the insights you gained from analyzing existing solutions can be particularly helpful. You can use this knowledge to create a list of potential users who are most likely to benefit from your MVP, and then reach out to them to gauge their interest and gather feedback.

At this stage, it’s important to remember that your MVP is not a final product. Instead, it’s a starting point for testing your assumptions and gathering feedback. You should be prepared to make changes and iterate on your MVP based on the feedback you receive from users. This feedback will be essential in helping you refine your MVP and make it more effective at addressing the pain points and challenges experienced by your potential users.

In conclusion, using insights about challenges with existing solutions can be a valuable tool for deciding the type and details of your first MVP idea. By analyzing existing solutions, you can gain a better understanding of the pain points and challenges experienced by potential users, and use this knowledge to design an MVP that addresses these issues in a targeted and effective way. Remember to keep your MVP simple and focused on addressing the most important pain points, and be prepared to iterate based on feedback from users. With this approach, you’ll be well on your way to building a successful product that meets the needs of your target audience.

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Why Actions Speak Louder Than Words in Customer Discovery

Shashank

Customer discovery is the process of gathering feedback from potential customers to identify and validate a problem and a solution for a product or service. While customer feedback is crucial in this process, it is important to note that actions and choices of potential customers are often more important than what they say. This is because people’s actions and choices are a better reflection of their true preferences and behavior, rather than what they say they will do.

For example, a potential customer may say they are interested in a particular product, but if they never actually purchase it, then their words are not as important as their lack of action. In this case, it may be necessary to dig deeper and understand the reasons behind their lack of action, such as pricing, product features, or timing.

One way to gather insights into potential customers’ actions and choices is through observation and experimentation. By observing how potential customers interact with a product or service, and experimenting with different features or pricing strategies, it is possible to identify what truly resonates with them.

A landing page MVP is a simple web page that is designed to test the viability of a product or service before investing in a full-scale launch.

To create an effective landing page MVP, it is crucial to understand the needs and preferences of potential customers. Customer discovery can help in identifying the target audience and the problem that the product or service is solving. This information can be used to create a landing page that speaks directly to the target audience and clearly communicates the value proposition of the product or service.

Observing how potential customers interact with the landing page can provide valuable insights into the viability of the product or service. By tracking metrics such as bounce rate, time spent on page, and conversion rate, it is possible to gauge the level of interest and engagement from potential customers. Experimentation with different landing page designs, messaging, and pricing strategies can also help in identifying what resonates best with the target audience.

The iterative process of customer discovery is particularly relevant when using a landing page MVP. By continuously testing and refining the landing page based on customer feedback, it is possible to create a more effective MVP that accurately represents the product or service and generates meaningful feedback.

In conclusion, while customer feedback is important in customer discovery, it is critical to also consider the actions and choices of potential customers. By focusing on experimentation, observation, and tracking progress, it is possible to refine and validate a product or service that truly meets the needs and preferences of customers.

The Empathy-Boosting Power of Noting User Appreciation

Shashank

When conducting customer discovery, it’s important to not only focus on what your potential customers say, but also on their emotions, attitudes, and behaviors. One way to do this is by noting something that you appreciate about each user you interact with. This simple practice can help increase your interest and empathy towards them, and ultimately lead to better insights and understanding of their needs and preferences.

Here are some ways that noting something you appreciate about a user can enhance your customer discovery process:

  1. Builds rapport: When you take the time to appreciate something about your potential customer, it shows that you value them as a person and not just as a source of information. This can help build rapport and trust, which is crucial for effective communication and collaboration.
  2. Humanizes the process: By focusing on the human aspect of customer discovery, you are less likely to see your users as mere data points or statistics. This can help you connect with them on a more personal level and better understand their unique perspectives and experiences.
  3. Increases curiosity: Noting something that you appreciate about a user can help increase your curiosity and interest in learning more about them. This can lead to deeper and more meaningful conversations, which can uncover valuable insights that might have been missed otherwise.
  4. Encourages active listening: When you appreciate something about a user, you are more likely to actively listen to what they are saying. This can help you pick up on subtle cues and emotions that can provide additional context and insights.
  5. Promotes empathy: When you appreciate something about a user, it can help you see things from their perspective and understand their needs and preferences on a deeper level. This can ultimately lead to more empathetic product design and development.

Overall, noting something that you appreciate about a user can be a powerful tool for enhancing your customer discovery process. It can help build rapport, humanize the process, increase curiosity, encourage active listening, and promote empathy. So the next time you interact with a potential customer, take a moment to appreciate something about them and see how it enhances your understanding and insights.

Do you want to create a side project that connects with your audience on a deeper level? Our ebook, “Transcending Self-Interest: How Embracing a Higher Purpose Can Drive Successful Traction for Your Side-Project,” shows you how empathy for your users or customers can play a vital role in building a purpose-driven startup.

The Untapped Market: Non-Users as Potential Customer Segment

Shashank

In the world of business and product development, it’s common practice to identify target audience segments based on their behaviors, demographics, psychographics, and other characteristics. However, there’s a segment of users who often get overlooked or ignored – those who do not use any existing solutions to accomplish their job or desired outcomes. These users are important to consider as a potential target audience segment for several reasons.

Firstly, these users represent a potential untapped market. By not using existing solutions, they are likely experiencing pain points and difficulties in achieving their desired outcomes. If a new solution can effectively address these pain points and make their job easier, they could become loyal customers and advocates for the product. This segment may also be less price-sensitive, as they don’t have a current solution to compare the price to.

Secondly, these users may be more open to innovation and disruption. By not using existing solutions, they are already demonstrating a willingness to try something new and different. If a new solution can effectively demonstrate its value and benefits, these users may be more willing to adopt it compared to users who are already using an existing solution.

Thirdly, these users may provide valuable insights into the flaws and limitations of existing solutions. By understanding their pain points and struggles, new solutions can be designed and developed to address these issues and provide a better user experience.

One example of a target audience segment who do not use existing solutions is the “unbanked” population. These are individuals who do not have access to traditional banking services such as checking accounts, savings accounts, and loans. In the United States, there are over 6 million unbanked households. In developing countries, the number is even higher.

For this segment, traditional banking solutions are not accessible or viable options. This has led to the rise of alternative solutions such as mobile banking, prepaid debit cards, and peer-to-peer lending platforms. These solutions have been successful in reaching the unbanked population and providing them with financial services that they previously did not have access to.

Another example of a target audience segment who do not use existing solutions is the “DIY” or “maker” community. These are individuals who enjoy creating and building things themselves, rather than purchasing pre-made solutions. This segment is passionate about innovation and creating new solutions to solve their own problems.

For this segment, traditional off-the-shelf solutions may not meet their specific needs or requirements. Instead, they prefer to build their own solutions using open-source software, hardware, and tools. This has led to the rise of communities and marketplaces such as GitHub, Thingiverse, and Hackster.io. These platforms provide the DIY community with resources and tools to create their own solutions and share them with others.

When considering these examples, it’s clear that target audience segments who do not use existing solutions represent a significant opportunity for new solutions and innovations. By understanding their pain points, motivations, and behaviors, new solutions can be designed and developed to effectively address their needs and provide a better user experience.

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Customer Discovery Questions That You Must Know About!

Shashank

Customer discovery is a process of learning about your target customers, their needs, pain points, and preferences. By conducting customer discovery interviews or surveys, you can gain valuable insights into what motivates your customers, what challenges they face, and how you can better meet their needs.

Here are some example questions you can use in your customer discovery process:

  1. What is your biggest challenge in relation to [your product/service]?
  2. Can you walk me through your typical day? Where does [your product/service] fit into your daily routine?
  3. What made you interested in [your product/service] in the first place?
  4. What would make you choose [your product/service] over a competitor’s product/service?
  5. How do you currently address the problem that [your product/service] solves?
  6. How much are you willing to pay for [your product/service]?
  7. Can you tell me about a time when you tried a similar product/service? What did you like and dislike about it?
  8. Have you recommended [your product/service] to anyone else? If so, why did you recommend it?
  9. Can you describe your experience with [a specific feature of your product/service]?
  10. How would you describe our product/service to someone else?

These questions can help you gain a deeper understanding of your customers, their needs, and preferences. When conducting customer discovery interviews, it’s important to actively listen and ask follow-up questions to clarify and expand on the customer’s responses.

In addition to these questions, you may also want to consider asking questions about your target customers’ demographics, psychographics, and behavior patterns. This can help you create a more accurate and detailed customer profile, which can inform your product development, marketing strategy, and customer acquisition efforts.

Overall, customer discovery is a critical part of building a successful business. By asking the right questions and actively listening to your target customers, you can gain valuable insights into their needs and preferences, and use this information to create products and services that truly meet their needs.