As a startup, you’re building products or services that your customers want. So if you’re not building with their needs in mind, the success of your business is limited. That’s why your customers should be at the center of the product development process.
Unfortunately, there are startups that don’t involve their users in the process of launching their new products.
To succeed with launching products, it’s necessary to be developing them with them by your side. Let’s learn more about what customer-driven product development is when you should use this approach, the implications of what problems can happen when you don’t use it in your development process, and more.
What is Customer-Driven Product Development?
First, let’s define customer-driven product development so we understand what it means so we can use it in context. When you use customer-driven product development, you are consistently leveraging the innovative ideas that come from your customers and including them in your product development process.
So as your startup designs, prototypes, and manufactures a product, you’re using customer feedback in each of those steps.
A customer-driven approach to product development is different from the traditional product development methodologies. In these cases, the engineers and manufacturers are relying on their own knowledge and expertise during product development.
Using a customer-driven product development method involves listening closely to their customers before making big decisions or moving through the product development cycle.
How to Become more Customer-Driven in the Development Process
Including your customers in your product development process can at first seem challenging. It is a different approach to doing things that your team is probably not accustomed to working with. Here are two ways that product developers can weave their development process so that it is more customer-centric:
- Directly collaborating with customers. Recognizing that your customers known and involving them as early as possible in the process is key. This allows your engineers and developments to utilize the ideas that are collected from customers and minimizes trial and error.
- Review customer feedback. Another way that product developers can involve their customers in the product development process is by using surveys or other useful feedback tools. Analyzing this feedback and providing it to the product designers and engineers will enable them to use it to make design and engineering decisions.
What is a more traditional Product Development Process?
The traditional way of new product development isn’t really that different from a customer-centric approach from a process standpoint. You use the same type of process which includes these seven steps:
- Step 1: Ideation – To start the process of product development, you begin to generate and explore different ideas.
- Step 2: Product definition – This is the beginning of the product discovery. You are defining the product’s core functionality and understanding the potential revenue and market size.
- Step 3: Prototyping – During this stage in the process, you conduct market research, update the business plan, and start creating prototypes and an MVP.
- Step 4: Refinement – This is where the prototype gets more detailed in terms of design and is refined.
- Step 5: Validation and testing – During this stage, you test out the prototype to ensure that it works as expected. You test to see if the product is validated in the eyes of the customer.
- Step 6: Commercialize the product – These features are completed and execution begins. Your customer success team becomes involved and the product is launched.
As you can see, the customer isn’t part of the process until near the end of a traditional product development process. This leaves a higher possibility that the product could be invalidated by the customers, and will not see the light of day.
All that time, energy, and effort could be used up only to have to start the process over again.
Techniques and Strategies used by Customer-Driven Businesses
When using a customer-driven product development strategy to drive your business, there are some techniques and strategies that help ensure that you’re getting top-level product quality. Here are a few to employ to help guide its framework below:
Emphasize Speed
Everything these days seems to be moving at a faster pace. Keeping up with the competition can even affect your product success. Customers also want to save time so they want their products and services delivered faster.
We’ve seen more businesses take their operations online so the transactions can happen in real-time. Responding to customers fast when they have questions or concerns is a necessity. That is why startups should keep these points in mind when building for their customers.
Take Advantage of Customer Contact
Your products are driven by your customers and their expectations, preferences, and needs. Hence it is important you keep in touch with them. The link between your business and customers is your customer service.
Having a dedicated customer service line helps create this direct link. Using techniques that may seem trivial like obtaining customer feedback through service emails, customer survey forms that float on your webpage, and social media channels is integral.
Highlight Convenience and Flexibility
Your customers also look for products that offer convenience. For example, a startup may offer their product in different sizes so they can take it with them easily.
During the pandemic, we saw many restaurants make dedicated parking spots for customers who ordered take-out. A takeout customer would simply need to park in these designated spots and call or text the restaurant they were here.
Check out our Founders Community to discover more creative ways to build customer driver solutions.
Advantages of Customer-Driven Product Development
Using a customer-driven product development process offers startups many benefits. Here are a few to consider below, though this is not intended to be a comprehensive list of all the advantages.
Improved Product Quality
By using customer feedback and marketability research, the product’s form and function can be shaped by those factors. Nothing could be worse than launching a product that doesn’t work or look the way that your customers expect it to.
In addition, your product developers and engineers could gain new insights and ideas with a customer-driven approach. Those light bulb moments could help them with solving challenges and problems.
Reduced Cost and Resources
Your startup can keep costs lowers by using a customer-driven product development approach. There will be far fewer materials that are wasted on failed prototypes or end products that your customers did not receive well. With less waste and having a faster time to market, your startup can also enjoy a higher ROI.
Save Time
The product development process is very extensive and time-consuming. By building with a customer-driven process, you won’t be going back to the drawing board as often, particularly in the design process. Your engineers and provide developers will not spend as much time creating prototypes that aren’t up to your customer expectations. The entire process is faster and more efficient due to the teamwork between the development team and the customer.
A Story from StreamYard and Customer-Centric Approach
To best describe and show an example of what it means to be customer-driven, let’s talk about a company called StreamYard. Cofounders, Geige Vandentop and Dan Briggs founded SteamYard in 2018. Its live stream platform enables creators and broadcasters to have their video feeds automatically distributed to platforms like YouTube, Twitch, Facebook, and LinkedIn.
The company spins out features for its platform at a rapid rate that continually improves its service offering. Each time these features are released, they work out of the box. The audio and video quality is high. This is unique as other browser-based platforms struggle in this area.
Geige Vandentop shared how customer feedback shaped the features and capabilities that StreamYard works on to make its product better for its customers.
A common thing that we saw getting requested was people wanting to easily do what they would specifically refer to it as like intro and an outro videos. So screen sharing works well but it’s sort of clumsy to have to pull another screen and share it and bring it in when you’re trying to just do a simple short intro or outro video like maybe 15 to 30-second clip. So we added a feature where we call them overlays.
We added the ability to upload mp4 files as an overlay and that allows you to sort simply like to click your video overlay and it’s easy to play a 15 to 30-second intro or outro video so lots of people are doing really great job branding their streams that way.
On The Startup Story podcast, Geige also shared how before he wrote a single line of code that he conducted extensive market research and user testing to validate StreamYard. The co-founders emphasize keeping StreamYard a customer-centric as possible. They take this to the extreme of going on live streams every week with their customers.
Their business rapidly grew in 2020 with the onset of the Covid-19 pandemic. As live events were being canceled, StreamYard became a solution to how brands could continue to engage with their customers online. Their success leads to the sale of business this year to Hopin for roughly $250 million in cash and stock.
Check StreamYard: How to Host a Live Stream Show on Facebook or YouTube.
How to Create a Customer-Driven Product Strategy
Changing to a customer-driven product approach doesn’t happen overnight. A startup that has been using a product-driven product development process needs to change its strategy.
Even if your startup has sought customer input after the product exists, you’re still missing the benefits and potentially creating a product that has no relevance to the customers it’s supposedly for. Getting customer input before defining the product requirements is important because it will enable your team to determine what the right problems are that need to be solved and as a result, making the right solutions.
To start inducing the customer’s voice into your product strategy, here is the step by step approach you can take:
Step 1: Begin with customer development. Set aside time to conduct customer development in a specified area. Utilize this time to ask open-ended questions to current and potential customers about their pain points. Your goal is to determine what their biggest problems are.
Step 2: Quickly put together a strawman. You don’t need to over-engineer this step. Having a kickoff working session that gets everyone on your team together to brainstorm ideas. This strawman strategy should give you a general direction of where to go and shouldn’t take more than a few weeks to develop.
Step 3: Identify and test your hypothesis. Whether you have one hypothesis or several, write all of them down. If you don’t have any evidence from market analysis to support these beliefs, then you need to test it. The way to do this is to test them with actual customers. It’s important to listen actively and learn. When asking questions, you should avoid any that tries to push certain ideas or lead them down a specific path.
Step 4: Get the team together to formulate a product strategy. Now that you have some data, you can get the team back together to unpack it all. This is an iterative process so you should keep an open mind. This step should take less than two weeks so that you get back out in the field as fast as possible to keep learning.
Step 5: Develop a Minimum Viable Product (MVP) and test it. Now you’re taking everything that you’ve learned and putting it together into a product. Creating the first MVP is always the hardest as there’s always the desire to build a more complex, complete solution than you need at this stage.
But it’s important to create the MVP at a fundamental level to be able to test if the product actually fits into the use cases in your customer’s life. It also helps determine if the value proposition of the product is one that resonates with them. Being fast is important so start small with something like a paper prototype type or landing page that can be completed in a few days. Then it can be quickly tested quickly, adjusted, then tested again, etc.
Step 6: Get together and iterate more. Every time that you have some new data, you’ll want to get everyone back together to figure out what it means. This allows you to take the time to understand what you didn’t know before and how those learnings impact your product strategy. Once these learnings have been digested, your path will adjust to suit it as necessary.
Step 7: Continue this process until a product/market fit is achieved. To validate the strategy, there will be a series of follow-up MVP tests that will occur. Keep tweaking things based on learnings and ensuring that the direction that you are heading still marks sense.
You know that your approaching Product/Market fit when you’re consistently hearing validation from your customers. This is when you’re ready for the next steps of planning and implementing the new product or service.
