Treat Your Customers Like Children (or your Children like Customers) | Market By Numbers | Marketing Help

By brantcooper, January 9, 2010 1:59 pm

One of the more intriguing dynamics in startups and business in general, is customer communication. Customer Development is, of course, all about talking with customers to test fundamental business hypotheses, match product solution to customer problem, and in general, learn as much about them as possible in order more efficiently and effectively market and sell to them.

The tension comes from learning when to ignore your customers and when to take heed. Custdevguy reminds us that customers have their own agenda, which might not coincide with your own. Steve Blank reminds us that Customer Development is not just collecting web metrics and it’s not about focus groups. I’ve written before that Customers own the pain, Founders own the vision, meaning that as an entrepreneur, you must tailor your vision to solve the customer’s pain. That is the objective of speaking with your customers.

Sean Ellis perhaps says it best, describing the process as “honing in” on the “signal” that is the core value proposition of your product to your customer. What’s valuable about this description to me, is that rather than looking at what you need to ask each customer, it provides a high-level perspective on what your objective should be and how to get there.  It’s talking to enough customer and asking whatever questions necessary to hone in on the core value of the product.

This is useful for either startups or parents (or I suppose parents that are in startups).

Something related to this would be 37signals way of making “opinionated software” instead of adding features continually.

Vanity Metrics vs. Actionable Metrics and Lean analytics (Double Header Post)


Vanity metrics: good for feeling awesome, bad for action. (photo source: UK Guardian)

This is a guest post by serial entrepreneur Eric Ries. He was most recently co-founder and CTO of IMVU, which has more than 20 million registered users and generates $1,000,000+ in revenue per month. Eric is also a venture advisor to Kleiner Perkins.

How do you get to $1,000,000 per month in sales? By testing the right things. Eric is a metrics man.

Here is just one business-changing example, taken from the outstanding “How IMVU Learned its way to $10M a year” on Venture Hacks

IMVU learned its way to product/market fit. They threw away their first product (40,000 lines of code that implemented an IM add-on) as they learned customers didn’t want it. They used customer development and agile software development to eventually discover customers who would pay for 3D animated chat software ($10M in revenue in 2007). IMVU learned to test their assumptions instead of executing them as if they were passed down from God.

Enter Eric Ries…

Vanity Metrics vs. Actionable Metrics

The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions. Unfortunately, the majority of data available in off-the-shelf analytics packages are what I call Vanity Metrics. They might make you feel good, but they don’t offer clear guidance for what to do.

And a complimentary post…

Lean analytics: Questions VCs should ask (and you’d better answer)

Thanks to Flickr's Aussiegirl for this

Recently, I was in Israel for a cloud computing conference and some meetings with local VCs. The folks at Gemini, a VC firm, organized an evening with their portfolio CEOs to discuss lean analytics for startups. I concluded the presentation with a list of metrics that a web-based startup should track. I guess they were the right questions; at the end of the evening, Guy Horowitz, my host for the event, said,

“I feel bad for the CEOs of my portfolio companies that aren’t here. Their next board meeting will be miserable.”

Not measuring the right things can be fatal. And VCs are in the business of separating the soon-to-be-dead from the fledgling successes. There’s nothing quite as good at doing this as the cold, hard light of analytics. So here’s the list, with a slide deck and some examples.

Here are two good posts that are about metrics and analytics. If you actually read both of them, you might find some conflicts between metrics that have value vs. the ones that investors may be interested in, but that is life for you.

Customer Development and the Lean Startup | Recess Mobile Blog

I’ve heard the Lean Startup methodology likened to a framework. Its central precept is that a startup should develop its customers as it develops its product – that is, both concurrently and in a structured, concerted fashion. If you’re taking advantage of a framework like Rails for the latter, you shouldn’t be using the business equivalent of compiled Java for the former (or more accurately, cf. Waterfall, Agile). It’s about mitigating risk at every decision point. It’s a floor wax and a dessert topping. Even use it for your blog.

If this post was a candy bar, it would be something like a Super Snickers with more nuts, caramel, and chocolate than anything on the market. This is a super lean startup post that has enough links to keep you busy for days reading up on how to at least not completely screw up your startup.