What Makes Customer Discovery So Important For Startups?

A promising startup comes from a strong foundation of innovation. This itself rests on three pillars: desirability, feasibility, and viability. While you can manage to some degree how well your product is built (feasibility) and ensure your business model is sustainable (viability), desirability—whether customers truly want what you’re offering—is beyond your control. This makes understanding your potential customers early on in your startup journey via customer discovery absolutely essential.

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In fact, 42% of startups fail because they don’t address genuine demand. Instead, they rush to build solutions based on technological feasibility without validating whether a real market need exists. Customer discovery, however, helps ensure that you’re solving the right problems for the right people—before you invest significant time and resources into a product that could miss the mark. 

In this article, we’ll show you with personal stories and hard facts why customer discovery is essential for building your business—and how you can get started with it the right way.

Why is Customer Discovery Important?

Going in hand with the “Lean Startup movement”, customer discovery is a process typically attributed to the entrepreneurs Steve Blanks and Eric Ries. It’s a process dedicated to finding out exactly what your customers need and what their pain points and preferences are to de-risk the product or service you are offering.

But, “A great product sells itself,” right? This quote by Kevin Systrom has appeared countlessly across the internet, in inspirational ads, and more. Unfortunately, even if you build the most magnificent product, there’s a risk it will flop if no one wants it.

So often do fledgling founders think that the risks around customer desirability pale in comparison to challenges like technological feasibility. However, unlike technical issues, which can often be solved with creativity or iterative problem-solving, customer risk remains high until you have absolute clarity that the problem you’re solving is one that truly matters to your customers. That’s why customer discovery is essential in the early stages—before you dive deeper into building your solution.  

A Story From EWOR’s CEO and Co-Founder

One of the many personal anecdotes EWOR’s co-founder and CEO, Daniel Dippold, likes to share with our fellows is a great example of what happens when you slack on customer discovery. So, what happened? 

Daniel recalls, 

“When I was studying, I had some free time on my hands. I had just exited my first startup, and I wanted to do something useful with my time. So I started a coaching business. At first, I personally coached people in personal development, time management, and biohacking. Soon, I wanted to scale the company. I moved away from 1:1 coaching and started creating online courses. My goal was to create the best possible courses related to personal development. I spent the next two quarters filming content using a green screen and a great camera I had invested in. I coded the platform and attracted two co-founders. The videos turned out great, and we were quite proud of what we created.”

You can probably guess what is coming next, given the subject of this article—no one was willing to pay for Daniel’s videos. People could find more and similar, if not better, videos on YouTube for free. In addition, what people really cared about was the personal interaction with Daniel and the way he held them accountable.

Reflecting on this, Daniel noted, 

“If you listened carefully, you might have noticed that not once did I mention a customer need I was trying to solve. I was only solving my own pain points, namely wanting a scalable business and not spending my own time coaching.

I went back and actually did customer discovery. I found out that people really cared about the personal interaction and me finding out what the problem is they were trying to solve through biohacking and personal development. 

After understanding this, I started developing an AI chatbot that mimics this personal interaction in a scalable fashion. The product became a success, and the venture still exists under the direction of a new CEO.”

Other Benefits of Customer Discovery

Daniel’s story illustrates a key point: customer discovery is a powerful tool to reduce customer risk. But its benefits extend far beyond safeguarding you from developing a product that doesn’t meet market needs. Here’s what else it can do for you:

1. Save time and money: Customer discovery also conserves your most valuable resources—time, energy, and money—by involving real-world conversations with potential customers. Through these interactions, you can test assumptions and gather actionable insights early in the process.

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As demonstrated by EWOR’s modified version of Giff Constable’s Truth Curve, it is very easy to have a conversation but difficult to build a prototype, and even more so a live product. Remember, these are complex and resource-intensive tasks, so why risk spending time and money developing a product that no one wants when early-stage feedback can guide you toward success? Sure, the level of insight you gain is lower through conversations and observations alone, but your investment is also minimal.

2. Stand out and drive success: With customer discovery, you are more likely to stand out in a crowded market. By deeply understanding your target audience and addressing specific needs, you can carve out a unique niche and build a product that truly solves your customers’ problems. This tailored approach generates positive feedback, as it’s more likely to resonate with your customers, leading to greater loyalty and long-term business success.

3. Long-term improvement: When you implement the customer discovery process, it sets the stage for iterative improvement. It doesn’t just help at the initial phases of your startup but also provides a foundation for continuous learning and product adaptation as your business grows. This gives the process a long-term value beyond just early-stage validation.

So, by now you've learned a lot about why customer discovery is so crucial—but how do you actually get started? At EWOR, we’ve created a dedicated series to guide you through the entire process. For now, here's a general overview to help you begin.

The Customer Discovery Process

The customer discovery process might start out a bit differently depending on if you have a hypothesis already or not. However, many aspiring entrepreneurs often start without clear hypotheses regarding what the problem is or what the solution to the problem might be. In this case, need-finding is the place to start.  

Need-finding

The first step to developing your hypothesis and finding a problem worth solving is to adopt a customer-centric mindset. That is, always placing your customer at the centre of what you are doing and taking their feedback seriously. But, how do we do that? Let’s start with a more detailed look at what need-finding actually is.

Need-finding is a research method where we look without knowing what we are looking for. The goal is to try to find a need that people have that is not met with current solutions, products, or processes. It can be a physical, emotional, intellectual, or cultural need. It could be an aspirational need—something your user hopes to achieve—or a straightforward operational pain point, or even something in between.

The research methods used in need-finding are very similar to what the scientists among you might know as naturalistic research. It is a type of research where you don’t have a clear hypothesis to test and are not sure what kind of data you are looking for. Instead, you learn from genuine human experiences, uncovering genuine needs and behaviors that can’t always be captured through structured interactions or artificial settings. Because of this, need-finding is a great place to start when you want to build a new product or service. 

For more in-depth details on the need-finding process itself, we highly recommend checking out our other articles on this topic, as there are many factors that can skew your customer discovery process and lead to false insights.

Synthesise Your Data and Develop A Problem Statement

Broadly looking at the customer discovery process, once you've gathered extensive data through interviews and observations and immersed yourself in the world of your potential customers, you’ve likely gained valuable empathy and a deep understanding of the challenges they face. The next crucial step is to synthesise this information to identify the key problem or problems that need solving.

Synthesis involves combining the insights and ideas you’ve collected to form a coherent understanding. It’s about bringing together different data points to create a clear, focused problem statement that will guide the next phase—ideation. This process requires both creativity and subjectivity; two people with the same data may interpret it differently or arrive at distinct problem statements, and that’s perfectly acceptable. The aim isn’t to find a “right” answer, but to thoroughly process the information and allow yourself time to make connections and uncover fresh insights. These new understandings will shape how you approach solving the problem.

It’s important to distinguish synthesis from analysis. While analysis breaks information down into smaller components for individual examination, synthesis is about constructing a broader picture by integrating those elements. This holistic approach is essential for identifying patterns and drawing meaningful conclusions.

Once you finish up with synthesis, it is now time to bring those new insights to life by creating a problem statement—a focused description of an issue that needs addressing or a situation ripe for improvement.

In human-centered design approaches like customer development and design thinking, a problem statement often takes the form of a point of view (POV). This POV is a meaningful and actionable statement that clarifies who the potential user is, what their needs are, and why those needs exist. A well-constructed POV helps ensure that your design and innovation efforts stay sharply focused on solving real user problems.

Methods and Tools in Customer Discovery 

In customer discovery, there are several methods available to gather insights and feedback from your target market. Using a combination of these approaches is highly recommended, as each one offers unique insights. By combining methods, you gain a more comprehensive understanding of your customers. Below are three of the most common methods to begin your customer discovery journey.

1. Interviews

Interviews involve having question-and-answer conversations with potential users or customers. The goal is to uncover the emotions and motivations that drive their behaviors and determine whether there’s a need that isn’t being met. 

Pro Tip: Use a notebook for in-person interviews to stay engaged, but for video calls, typing is more personable as it prevents you from looking down at a notebook, which can come across as disengaged. Whenever possible, record the interview with tools like otter.ai to capture details and revisit insights later. Always ask permission before recording.

2. Observations

Observations help you look for differences between what people say, do, and what they actually do. This method helps you gain a deep understanding of how users currently navigate the problem and reveals any workarounds.

Pro Tip: The Ideo Method Cards can be a valuable resource here, given that this deck provides 51 creative observation methods to guide your process.

3. Immersions

Immersion involves stepping into the shoes of your potential customer to experience the problem firsthand. This is a great way to both physically and emotionally experience the difficulties a potential user or customer might have.

Pro Tip: When immersing yourself in your potential customer’s world, be sure to document not only the physical challenges but also the emotional aspects of their experience. This holistic approach helps you identify opportunities for more meaningful, human-centered solutions.

That’s a Wrap

Customer discovery is the foundation of building a product that resonates with your audience and solves real problems. By investing time in need-finding, synthesising insights, and developing a clear problem statement, you de-risk your startup and set it on a path toward success. This process not only saves valuable time and resources but also helps you craft a solution that stands out in the market and fosters long-term customer loyalty.

Remember, the journey doesn't end with the initial stages of customer discovery. It's a continuous process of learning and adapting, helping your business evolve alongside your customers' needs. As you progress, combining different methods like interviews, observations, and immersions will keep your insights fresh and actionable.

In the end, understanding your customers at a deeper level is what will drive your startup to thrive in the long run.

Ready to take your startup journey to the next level? Explore more of our in-depth articles packed with insights, or unlock exclusive resources and mentorship opportunities through the EWOR Fellowships.

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