I rarely meet a founder who relishes the now established practice of customer discovery. The process of “getting out of the building”to test the thesis behind their product can and is a long journey. Startups that do not approach it with the mindset of openness risk unnecessary challenges later.

 

Customer Discovery

The goal of customer discovery is to understand the potential solution buyer, the buying process AND how the proposed solution will integrate with existing systems.  Assuming that the first three questions below are answered affirmatively, the remaining two questions take on vital importance.

  1. Do buyers have the problem that the solution is designed to fix?
  2. How urgent is the problem?
  3. What are competing priorities?
  4. What is the buyer journey? Who in the enterprise conducts the evaluation? How is purchase selection made?
  5. What other systems must the solution communicate with?

 

The importance of the fourth question is clear. Understanding how the buyer makes purchase decisions for similar product during the customer discovery process allows startups to conduct more effective sales and marketing programs. The importance of incorporating the last question however, is less obvious. At first blush, gathering intelligence on matters relating to deployment seems premature. After all, a sale has to be made first, right?

Understanding the Ecosystem

The lack of understanding of how a solution fits into its customer technology stack can prove fatal to a startup’s long-term viability, especially if the efficacy of the solution requires integration into system(s) from established players in the industry. Why? Should the established player perceive the startup as a threat, they have the resources to undertake any and all of the following:

  • Actively engage in the practice of sowing “FUD” otherwise known as “Fear, Uncertainty and Doubt” which at best lengthens the sales cycle and at worst negates a sale
  • Develop a competing solution

 

Startups that ignore this potential source of friction and those that take an adversarial stance toward these providers do so at their peril. Those that are mindful and take a proactive approach stand a better chance of success.

Technology Alliances and Sales

Startup J, which augments reporting capabilities of third-party systems with rich data, recognized the importance of establishing formal relationships with providers of these types of third-party systems. They initiated contact with several of the providers once an MVP was established and as they began efforts to enroll initial customers. Even though the process of establishing technology alliances was slower than the startup had expected, it was able to focus sales conversations on solution benefits versus having to react to misconceptions caused by the third-party system’s sales representatives.  The technology alliance did not lead to more sales, but it did neutralize potential sources of friction.

 

Patents and customers are social proof of a startup’s viability to prospects and investors, the right technology partners can also have the same effect. It is easier to consider a startup that has integrations into established systems than one that does not. Furthermore, customer traction makes startups attractive acquisition targets; especially if adoption rates are high among the partner’s customer base.

 

Photo credit: By Jean-François Gornet from Paris, France (Chercheur d’or) [CC BY-SA 2.0], via Wikimedia Commons

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