Skuffed & Shiny

Contrary to popular opinion, I think startups should be thinking about their business model.

The Customer

There is a popular quote attributed to Steve Jobs “[that] it is not the customers responsibility to know what they want”. It is true yet few of us instinctively know what our customers really want. If you do make sure of it.

Personally, I feel as founders we are responsible to know who our customers are and what it is that is wanted. It is also our responsibility to spend investment money and our team’s time very wisely. We have partnered with our customers, our investors and our team to deliver value.

How do I do that?

For me, it’s a matter of asking the right questions as soon as possible and then keep asking them over and over and over. For this post I am going to move away from the company and focus on a startup again as a case study. It will be a good exercise for me and more applicable for this post.

I have 3 key questions every startup and new business initiative should ask about their customer.

1. Who is your customer?

When you can answer the question, “My customer is _______” with conviction and clarity you have solved the biggest problem in business. For this example;

“My customers are the admissions departments of the 4000+ liberal arts colleges across the United States.”

2. What challenges do they have?

Next, you must know and understand your customer’s challenges before you can add any value. A direct and focused answer is still best;

“Every year college admissions will spend millions to attract qualified students. Regardless of how much admissions spends, they simply can’t afford to target all the thousands of students looking to apply.

Colleges will offer some students tuition discounts, grants and scholarships. But when they do, they risk blocking other students who would attend given the opportunity.

These colleges walk a fine line with how many student can be accepted. If to few student are enrolled the school will not have enough income to cover costs. If too many students are enrolled, the school will not have enough teachers for all the students.

This is why admissions have high departmental budgets. Attracting the right students and the right number of students, is make or break deal for a liberal arts college.”

The temptation to oversell the problem or jump right into the solution is there. Don’t do it. Stay on target and focus on the customer and not a potential solution. If you go solution-first it is a solution looking for a problem.

3. What is the value for the customer?

Be as focused with the value statement as possible. OK, here is my value proposition:

“Liberal arts colleges use an expensive process to manually select and interview each student based on academic aptitude. Yet, student also select a school based on personal preference such as academic interest, location, culture and family history with the school.

Identifying high potential candidates on both academic aptitude and on personal interest factors will help colleges optimize who they should be marketing to. Improving successful admissions by just 5% will help a liberal arts college add millions each year in tuition.”

The idea still needs customer development work and a MVP (minimal viable product) is going a long way to help us do that.

The customer development process is more than just a clear identification of the market, problem statement and value proposal, customer development also includes validating that your ideas are right.

Focus on the challenges faced by your customers and you’ll grow much more quickly.

Next Customer Development Process