Customer Validation

part of Customer Development - see that page for more details

Feb'2010 - Ash Maurya's process - At the end of Customer Discovery you should have identified a customer problem worth solving and started building your solution (MVP). During Customer Validation, you’ll test your finished MVP by selling it to Early Vangelist-s and in the process start developing a repeatable and scalable sales process... Before you’re ready to sell, you have to distill down your product into a clear message (Positioning Statement), develop your sales materials (demo, website), identify your preliminary distribution channel (Sales Channel), define your sales roadmap (conversion funnel), and of course, finish your MVP. You then test your finished MVP + sales process by first Selling face-to-face to earlyvangelists, then to web visitors. Product Market Fit is all that matters here so build/measure/test until you’re fit... Even if you’re considering a Freemium model, I would not offer a free plan till after Product/Market fit. You need to validate that your customers will pay for your premium plan first. The exception is if you are building a service that primarily relies on high-NetworkEffect-s to succeed. For example, social media services (twitter/Facebook) and Market-places. There early user engagement trumps revenue.

• So how do you know when you’ve hit Product Market Fit? Dave McClure suggests hitting a 6 or higher on a customer satisfaction scale of 1-10. Sean Ellis uses a survey to determine if more than 40% of his customers would be disappointed if the service were discontinued. The mechanics of how you measure Product/Market fit is a little vague and subjective – how many people do you poll, when, how? I rely on a combination of my revenue and retention metrics to identify customers that are continually paying AND using the product. I then poll these customers with the “would you be disappointed” question.