Differentiate Customer Development from Product Development

Customer development finds focus on the interaction with the customer. Find right away and potential customer and start interacting and validating your ideas with your customer. Is he truly willing to buy your solution, your product or not? Product development is a totally different approach. You have an idea, you have a concept and you start checking right away on how to turn this idea into a product. Is it feasible? How can I do that? Who are the kind of people I need to engage in order to turn to something actionable. Then you start gaining an understanding of the customer through market research. So you don’t interact generally with the customers, so you don’t talk to them, but you start analyzing data on them. And then there is a phase of competitors analysis.  What has already been done? Are there products that are similar or not? And what are the possible distribution channels that I could use? So this is the first phase. Then the second phase is product development. So you set up a team that start building your product, sometimes engineers, designers, or anything that you might need for your product, and then you start testing it. And at the same time, you organize marketing team and you engage PR experts to start building and raising interest of the product that you are going to launch. And then you launch the product and you set up a very large sale organization and marketing campaign in order to sell your product. But so far until the launch, you generally don’t have any real contact with your customer. And that’s very risky. This kind of approach, product development approach, ignores customers and their development and engagement. 

I want to provide you with an example. I have a dear friend from Israel, he is working in the health industry, and he thought, okay, this product is going to be fantastic. However, I never asked any customer who is willing to buy his product. And at the end, he set up all the business, the product was there. It was fantastic, was more efficient than the one already on the market but nobody was willing to buy it. And so at the end, it turned out to be a big failure. So once again, truly recommend you to engage your user, to get in contact with them. Also because by gaining feedback, then you can also shape better your vision and also your marketing slogans that really truly reach the heart of your customer and the people that you’re working for.

I have several examples. The one I would like to share is related to the financial sector. I had the chance to work with banks and a very nice project that I could realize, and was actually very, very successful, was through the partnership of an Italian startup involved in the transportation industry and the financial sector, and a big Italian bank. We went through several phases of customer interviews. We interviewed more than hundred potential customers. We also built MVPs, we went through several iteration loops. Also had to pivot at a certain point, but big satisfaction is that then when we were happy and when we truly launched our product, it was a great success. And also now it’s still existing after five years and the numbers are keeping on growing and now actually they would like to continue creating new products. The customer is satisfied. And this was really fantastic because it was a big bet for us but we managed to be successful. We’re really grateful for that, but I truly believe that, that was possible only thanks to strong interaction with the customer and through validated learning and through quick prototyping and extensive testing. So that’s something that once again recommend all of you in any kind of sector you’re operating.