One of the most challenging aspects of navigating startup development is identifying and validating customer-desired outcomes. Understanding the customer’s needs can be difficult to determine as customers are not always able to articulate their desired results. Founders make several assumptions about these outcomes that need to be evaluated, prioritized, and validated through customer engagement, market research, and early product testing. Finally, startups must balance their customers’ desired outcomes with their business objectives and constraints.
Building on an earlier post on customer outcomes, I will walk you through how understanding and defining customer outcomes develop throughout the venture realization process. As you will see, deep understanding is critical for startup success, and the focus on this begins at the very start of the process.
What is a Customer Outcome versus Benefit?
Founders commonly conflate terms such as customer outcomes, benefits, and value. While not a perfect anecdote to the confusion, I consider value the sum of desired outcomes and product benefits (or V=DO + PB). A combination of the result that the customer experiences or achieves and the product benefit that enables said result leads to perceived value. In short, outcomes are the result that the customer seeks to gain from a product or service.
On the other hand, a benefit is a specific way in which the product or service helps the customer achieve their desired outcome or solves a problem they are experiencing. Product benefits enable the customer to accomplish specific, measurable results. Therefore, benefits should be quantifiable as much as possible. Defining the benefits of your product allows you to differentiate a product from its competitors and persuade customers to choose it over others.
For example, a customer outcome might be to improve overall health. A product benefit that helps the customer achieve this outcome might be a specific set of features that enables them to manage weight loss goals. Features are specific characteristics or attributes of the product that will allow a particular benefit. Features describe the technical aspects of a product and how it works. While features describe what a product does, benefits describe how it can help customers achieve their goals or solve their problems. In the above example, a feature of a weight loss program might be that it has a chat function that connects you with a health coach. This feature is part of the product functionality that enables the benefit of weight management. Together, product benefits and associated features support the desired customer outcome.
Identifying Customer Outcomes
When you look at the venture realization process, one of its main threads is identifying and validating what your customers want to achieve. Starting with the early framing of the new venture opportunity through iterative product testing to post-purchase feedback, you constantly learn what the customer wants from a compelling offering.
Usually, the identification process begins with the founders’ early assumptions about the customers’ needs and goals. Then, in what I call the opportunity frame, founders must consider the following criteria:
- Is the opportunity articulated as a – need, want, problem, JTBD, Goal – and selection rationale provided?
- Is the customer’s experience grounded in a specific context? Is the context well articulated?
- Is the customer selection based on clear criteria regarding the severity of need and dissatisfaction with current options?
- Are assumptions regarding customer challenges and pain points provided? Is any quantification provided?
Responding to each of these criteria provides a foundation for how you plan to position your venture and potential product offerings to your target customer. Of course, your assumptions will change, but you need to start on solid ground.
With a preliminary identification of your target customer, you now want to list all your assumptions about customer outcomes and benefits. Here are a few criteria to consider as you evaluate your current assumptions.
- Is the result that the customer experiences or achieves articulated clearly?
- Is how the customer would like to function or behave differently expressed?
- Is the customer’s definition of a successful outcome provided?
- Are critical success criteria within the specific context identified?
- Is how the customer would like to feel differently (emotions) described?
- Are these outcomes measurable, and are the metrics specified?
The final step in these early outcome assumptions is to craft an early opportunity statement. You can find a statement template in this post. As you prepare your opportunity statement, ensure it includes all the specified elements outlined in the template. Additionally, you want to ensure that the information reflects the present context, does not pre-suppose your solution, and includes measurable behavioral outcomes and benefits.
Aligning Customer Outcomes with Solution Benefits
One of the tools founders can use to determine the alignment between their customer’s needs and potential solutions under consideration is the Business Model Canvas. The Business Model Canvas is a tool that helps founders visually organize their assumptions about how the business will work. The business models look at several key business activities and how the venture will provide value to the customer. However, the critical elements associated with customer outcomes are the target customer segmentation and value proposition.
The alignment between the customer segment information and value proposition elements is typically considered the degree that the product offering meets the market’s needs, labeled as product-market fit. During the earliest stages of venture realization, I tend to articulate it as a problem-solution fit. While this might seem like semantics, I purposely say it this way because I want founders to keep their options open on how to best solve the customer’s problems and meet their needs. During the early business model formation, the focus should be on assumptions about the customer’s needs and what value they expect from an effective solution. Once you validate these early assumptions, you shift your focus to the whole business model and how all the components work together to provide value to the market and product-market fit. By thinking through these elements and how they align with the market, founders can identify potential misalignment areas and make adjustments to align the product or service with the needs and wants of the customer.
Once you have your assumptions organized, you can begin the discovery process. During this phase of your efforts, you are looking to dive deeper into the customer’s current behaviors and challenges. This understanding will help to validate what is most important to the customer.
Understanding of the Customer’s Priorities
Customers may have multiple desired outcomes, so it can be challenging to prioritize which ones are most important to them. However, several methods help to prioritize customer outcomes before developing an early version of a product or service. Here are a few to consider:
Customer Interviews & Surveys: Conducting interviews with potential customers can help founders understand their needs, wants, and pain points. This information helps o prioritize which outcomes are most important to customers. For a general discussion on customer interviews & surveys, check out Customer Discovery: Early Interviews and Customer Discovery: Surveying Early Customers. Generally, founders should start with in-depth, semi-structured customer interviews. In some cases, founders may want to expand the number of interviews by organizing focus groups. Focus groups involve bringing a small group of representative customers together to discuss their needs and desire. The information gathered from these groups can be used to prioritize customer outcomes. Once you have interviewed many target customers, you can consider using survey methods to collect more data to support and validate customer behavior and preferences patterns.
Determining what outcomes are most important to the customer can be challenging. There are several ways to solicit information in a non-biased manner. Here are some questions to consider in interviews, focus groups, and surveys. Of course, it depends on the specific context and what you are trying to achieve. Still, some examples of good questions to ask a customer to determine desired behavioral outcomes include the following:
- What is the primary goal or objective you hope to achieve?
- What specific problem are you trying to solve, or what purpose are you trying to achieve?
- What outcome are you expecting due to our interaction/product/service?
- What are the most important things you hope to accomplish in this situation?
- What are the critical success factors for an effective solution?
- How do you currently measure success or progress?
- How would you define a successful outcome or solution?
- What are the most important factors or criteria for success in this situation?
- Are any specific metrics or data you want to see as part of the solution?
- How do you measure success when you use a particular product?
Customer Experience Maps: A customer experience map is a tool that helps founders understand the various stages a customer goes through as they attempt to solve a specific problem or achieve a particular goal. The mapping process allows founders to understand the customer’s perspective better and identify areas where a product solution may meet their needs or deliver the desired outcomes. In addition, creating an experience map early in the venture development process can help founders identify potential pain points or friction in the customer’s everyday experience and adjust the new solution design to address issues before launching the product.
A customer experience map can help determine customer needs and outcomes by visually representing the customer journey and the different touchpoints where customers interact with a product or service. This visualization allows teams to identify specific needs and pain points that customers may have at each stage of the journey and can help to inform the development of the product or service to meet those needs better. Additionally, customer experience maps can help identify the desired outcomes customers hope to achieve through using a product or service, such as increased convenience or improved efficiency. By considering the customer needs and desired outcomes identified through the customer experience map, teams can design a product or service more likely to meet the target customer’s needs and achieve the desired outcomes.
Using these methods and extensive market research, founders can better understand the customer’s needs and wants and prioritize which outcomes are most important to them. These efforts help inform the product’s development and ensure that it meets the target customers’ needs.
Validating Customer Outcomes Via Early Product Testing
Once founders identify desired outcomes and prioritize them, they can begin to validate their assumptions that what the customers say is accurate and will lead to their satisfaction. Assessing the validity of customer-desired outcomes in early product testing involves evaluating whether the proposed product or service can realistically meet the needs and wants of the target customers. Methods include:
- Feasibility Studies: These are in-depth analyses of the proposed product or service’s technical, financial, and market feasibility. They can help determine if the product or service is viable from a technical and economic perspective and if there is a likely market for it. This method is most appropriate when products require extensive product development resources.
- Minimal Viable Product (MVP): Creating an early product version allows founders to test specific features, benefits, and outcomes with potential customers and gather feedback on its effectiveness. MVP testing aims to provide the customer with an experience demonstrating the product’s capacity to provide value. Through iterative testing, the customer experience becomes more authentic.
- User Testing: User testing is testing the product with a group of representative users to gather feedback on its usability, user experience, and feasibility. This testing approach works well with software and certain physical products.
- Pre-Post Surveys: Surveys can gather customer feedback on whether the product meets their needs and results in the desired outcomes. With this survey method, you can measure any behavioral change that takes place as a result of your product or service.
By applying these methods, founders can validate the relationship between customer-desired outcomes and product benefits. Does the solution meet the target customer’s needs? These approaches enable founders to adjust the product as needed to improve its chances of success.
Identifying customer outcomes is challenging but a critical element of the venture realization process. As startups increasingly engage target customers, their understanding of marketplace needs comes into focus.
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