What is Customer Validation? Overview And Best Practices For 2023
Customer validation verifies that products or services offered by startups bring value and utility to their users. It also helps startups make strategic decisions such as market penetration, business model design, product development, and cost optimization. However, even though most businesses have some form of customer validation, it's hard to tell whether you did enough research to make a product decision. On the one hand, you want to collect enough data from a large enough sample size to ensure that the data is rich and unbiased. On the other hand, research is expensive and takes resources away from other endeavors.
In this blog, we discuss what customer validation is, how to develop a customer validation process, and some best practices to follow. You'll also learn how customer validation can help your business achieve its goals.
What Is Customer Validation
Customer validation is the process of verifying that your business plan is on the right track and that your offering brings value to your customers. It also gives you and your developers an idea of whether your assumptions about how users interact with your product are correct. Startups and businesses of all sizes use customer validation to test their hypotheses and assumptions about the way they offer value to their customers. It also helps the product team to deliver valuable and viable solutions to customer pain points.
You will want to invest in customer validation early in the product lifecycle, typically after finishing up your minimum viable product (MVP). However, you should consider revisiting customer validation as your business grows and strives to continuously improve the experience (UX).
Concepts Behind The Customer Validation Process
The customer validation process compares two core product development artifacts: the MVP and user stories. The validation process tests to see if users interact with the product (MVP) the same way you think they would, as described in the user story.
Your minimum viable product (MVP) is the backbone of any new venture. It's the rough draft of your product's or service's foundation and stands as the "control group" for future testing and updates to its usability.
Your user story describes in non-technical terms what users should want to do when interacting with a particular feature. User stories help developers see the bigger picture and how the feature will impact the user experience.
In relation to the customer validation process, the user story is your hypothesis, and you'll test it against how your customer actually interacts with your MVP. Assuming you have a well-defined user story, your customers should interact with the MVP as you expected them to.
Similarities And Differences: Customer Validation vs Customer Discovery
Customer validation and customer discovery are two distinct processes that fall under the umbrella of customer development. Customer development refers to asking potential customers open-ended questions and providing hypothetical questions to determine the feasibility of your proposed product or service. Customer validation and customer discovery are often used synonymously with each other. While these two processes are very much related and often feed each other to accomplish the same goal, they gather different information.
Let's start by outlining the differences between customer validation and customer discovery:
Customer discovery identifies whether or not your proposed business idea has market potential. It uses resources like customer interviews to better understand customer needs, wants, and desires. The information helps develop initial product features that meet the needs of your target market.
Customer validation happens once you've developed the MVP and before you start investing in additional features. This way, you won't waste valuable time and resources on creating something that does not address your user's pain points.
Customer validation is usually more focused on the product itself. Customer discovery, on the other hand, looks at customer needs holistically and considers potential business models that can be built around customer demand.
Regarding similarities, both processes involve applying a scientific approach to test whether or not an innovation is viable. Both generally follow the steps below:
- Step 1: Hypothesis formulation
- Step 2: Data Collection
- Step 3: Data aggregation and organization
- Step 4: Data analysis/testing your hypothesis
- Step 5: Applying the analysis to come up with actionable insights
In application, the customer discovery and validation models seek to streamline the work product owners do by already having a resource in market research that connects the product-market fit.
How To Develop A Customer Validation Process
Developing a customer validation process requires a deep understanding of how your industry works and what customer needs you'll prioritize. Any business looking to create the best solution for its potential customers will benefit from customer validation. Regardless of who the target audience is, customer validation seeks to understand customer needs, wants, and values. When executed correctly, the validation phase will help your business develop product features that meet customer needs while reducing development risk. Before you can start the customer validation step of your product solution, you'll need to make sure you have the following prerequisites:
1. Software Development Risk Assessment
Once you have identified the customer's needs, next comes the risk assessment phase. Risk assessment looks at foreseeing potential modes of failure that would prevent you from completing your project or not achieving your product goals. You can allocate resources more efficiently by understanding how potential development risks associated with a customer validation project will be met.
Software development risk assessment is part of the project management process where stakeholders discuss potential risks that may arise during implementation. Part of a thorough risk assessment process is accounting for assumption errors in your user story. Usually, this can be avoided by making sure your customer validation is as airtight as possible before fleshing out any additional features or add-ons to your solution. Knowing what your customer's needs are from the onset is a risk mitigation strategy that keeps your development customer-centric.
2. Minimum Viable Product
A Minimum Viable Product (MVP) proves if your innovation solves user problems.
Here is a quick breakdown of an MVP:
- Minimum: The bare core of a product version using the lowest fidelity in terms of cost, time, and other resources needed in development.
- Viable: The lowest level of usability wherein users can see the innovation's potential.
- Product: The feasibility and relevance of the technology in terms of the resources available. Also pertains to understanding if the product is concise enough to test your specific hypothesis about customer interactions and potential value proposition.
By creating an MVP, you can quickly and easily test the feasibility of your product solution with potential customers.
3. User Persona
Once the customer discovery phase is complete, it is time to create user personas that will provide you with a better understanding of your customer's needs and attitudes. By creating user personas, you can understand how potential customers think about your product solution and what factors are essential to them.
After meeting these prerequisites, you can develop your customer validation process to ensure you provide the best user experience. You can base this on your customer segments and that the fundamental assumptions you've made about them are correct.
Let's go through the vital steps in the customer validation process:
Step 1: Identify who will test your MVP
There is no one-size-fits-all customer validation process, as the approach will vary depending on the product and target market. However, key customer validation steps include identifying who will test your innovation and how it will be selected. To determine which customers would be most interested in your product solution, you should reference your customer segments and user personas.
From there, you can reach out to those people in your network and ask if they would be interested in testing your MVP. Once they confirm, you'll need to find a way to test it with them – whether that's through online surveys or user feedback sessions.
Step 2: Validation testing
Once you have ensured you've got the ideal set of users to test your MVP, it's time to start validation testing. This process entails running tests with these users to gather feedback and data on how your product solution performs.
Validation testing should include a mix of different customer segments to accurately understand how the product solution performs across all customer groups. Additionally, collecting feedback throughout the entire user test process is essential – from pre-test preparations through post-test analysis. This will help you identify areas where your product solution needs possible enhancements. User testing is presenting your MVP (or specific features) to users and seeing how they navigate it! You will want to ask users to talk through their thought processes and how they feel about the steps.
Always keep in mind your user's story in choosing the right group to test your product or service. Your user's story will support the innovation's specific features' end goal and streamline how best to approach the user journey and testing. The user journey and testing start with collecting critical data from your target audience through defined methods like:
- Journey Mapping
- Heat Mapping
- User Persona
Journey mapping gives startups valuable insights into how their customers receive and interact with their products, allowing businesses to see customer interactions sequentially, from the first-time customer interactions to the purchase or usage of the final product. The best way to approach journey mapping is to ask questions and collect data throughout user testing so you can identify pain points later on.
Heat mapping is a type of journey map that identifies where people's cursors are on a screen. It maps where users click, how much time they spend on a screen, and overall user flow patterns across your chosen platforms. Heat mapping will help you understand which features are used most often and where customers need help finding what they're looking for.
Finally, user persona research is the outcome you get by going through the process. Each component of validation testing helps you identify customer needs and wants. In understanding who your target market is, you can make more informed decisions about product features and designs that will appeal to them.
Ultimately, you want to validate whether or not your MVP resonates with your audience. Such data can then be used to streamline the customer development process. From there, you can decide whether or not your new product is a market fit for your intended user persona.
Step 3: Analyze customer feedback.
Once customer validation has been completed, the next step is analyzing the feedback received. Here you will look at the specific areas where issues tend to occur for users when using the product. Problems include clarity of instructions, buttons' functionality, and overall UX simplicity.
This will help you understand customers' issues with your product solution and give you a path forward. By examining all of the data collected during customer validation, you'll be able to make informed decisions about how to move forward with your product development cycle. Ideally, you'll also have the information needed to create a unique value proposition that sets your innovation above the competition.
At this step, the brainstorming begins towards creating the best version of your MVP so it is as functional and usable as it can be before hitting the market. Also, at this step, it's time to develop innovative solutions via your features and add-ons once you've identified the areas of customer feedback that need attention. For example, in understanding customer pain points, you can create products and services that effectively address these issues, which helps your business target new customers and generate more revenue.
Ultimately, it'll provide a better experience for the people who use your product solution- which is what drives customer loyalty and repeat sales. The process can involve brainstorming new ideas or revamping existing product features to address customer pain points. By doing this, you'll not only improve the user experience but also increase your market share.
Benefits Of Customer Validation
The customer validation process has a handful of benefits for startups. These benefits go beyond increasing your overall sales and profits and streamlining into a more meaningful result. Let's go through these additional benefits.
1. Increased Customer Trust
Taking the time to understand what your target customers need and how they want to be communicated with will create a customer trust that is hard to replicate. This type of rapport sets you apart from your competitors. It can result in customers returning time and again, even if the product changes marginally. You can also use this as the core foundation of your position statement in answering the question, "Why should customers choose my solution over the competition?".
2. Confidence in Your Project
Customer validation gives you confidence that you are on the right track and are creating something that people will use and enjoy. Even if it's not all positive feedback, you will usually have a clear path forward for both design and development.
3. Faster Product Development And Iteration
Customer validation can speed up the process of product development by allowing you to quickly understand what customers want and need without having to trial or beta test extensively. This saves time and money, making it possible for your startup business to iterate on products much faster than those without customer validation. In addition, this leads to a better end-user experience- meaning customers are happier with your innovation overall!
Customer validation is an invaluable process that startups must incorporate into their business plan. By doing customer validation, you can speed up the process of product development, saving time and money while ensuring a high-quality end-user experience. Additionally, the results have a handful of benefits, including less need for customer service, faster product development and iteration, and overall customer satisfaction.
Altogether, customer validation is a necessary process that startup companies should consider when designing and executing their business model. If you're ready to take on your customer validation process, reach out to us at Aloa, where we apply our experience and expertise in operations and apply them to real-life startup projects.