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Discovery Phase Interviews

05.02.2014

How-to Guide (suitable when your offering is big, complex, and expensive)

AskI love doing discovery phase interviews and have always been particularly good at them.  They reward those that think quick on their feet and have a broad education and business knowledge.  For me it is improvisational theater meets MBA case study review– great fun.  In a recent startup incubator program, I made an attempt to describe the process I use so that others could try on their own….

Step one of any product launch, business expansion initiative, or startup is best described by Steve Blank as “Discovery”.: “validating whether they are solving a meaningful problem and whether anybody would hypothetically be interested in their solution”  Technical people, especially, struggle with this phase (partially because they think they already know the answer and partially because they are often poor collaborative listeners)

Lean Startup (Riess) and other modern product launch concepts focus on selling early and often.   This first phase is the big exception.  Here we want to confront customers but make it absolutely clear that we are not selling, not sure if we will ever sell, or even sure what the offering might look like or be priced.  Instead, we are journalist on a mission to understand the customer and their business.

Repeat after me: “We are not sure if we will sell, when we might sell, and what the package might look like”.  This is critical.

You have an idea for a product/service for a specific customer group (MVS).  You test your theory by first assuming that it is flawed and search for the inevitable flawed portions of your idea.  You do this by asking open questions.  Let’s start from the beginning and assume that you have an idea and have defined a potential Minimum Viable Segment (MVS) that tightly describes things like region, industry, and other attributes of what you expect to be a homogenous customer group.

How do you get people to let you interview them?  One of my favorite techniques is to attending an event.  Some time ago, I was working on a project for personal GPS trackers for door to door delivery people in German speaking markets.  The Mailtag event in Nuremburg had delivery companies, aggregators, and marketing agencies that employ these delivery companies.  At the booths are mostly salesmen, but there are also often operational and CEOs/owners (if it is a big enough event).  Salesmen are especially generous to tell you whatever they know; however, you must never visit a booth when potential customers are waiting or nearby (this is like getting between a bear and her cubs).

Alternatively, a cold call is often effective for such activities.  Remember, you are not selling—you are seeking information about a potential market.  Pick a region and a week and start calling.

How do I start?  You need to position you company or your startup team.  This means 3 sentences that explain what is your experience, who do you already help, and why you are considering a launch in this market segment.  “We are trying to decide if this market would be right for our solution and what that solution might need to look like if we did make the commitment”

Then, start asking questions?  What similar solutions have you seen?  We thought the fundamental problem that we could solve is XXXX, can you tell me a bit about this type of problem in a company like yours?  If your company wanted to buy a solution like this, who would be involved in the decision and where would it be budgeted from?

Next, dig into the problem more.  What about completely different solutions?  (eg. temporary workers to count instead of an automated barcode inventory system)  How have they succeeded as a company so far without such a solution?  At this point, the person you are interviewing  is often trying to convince you that there is a market for your solution.  Be careful on two fronts:  Don’t let the conversation shift to him buying—instead tell him you will contact him immediately if you decide to commit to this market/problem space.  Next, make sure he is not just giving encouragement to be nice and think that this is what you wan to hear.  Probe deeper into why the problem cannot be ignored or solved n different ways—remember, before your idea was created, they existed and prospered.

Finally, understand the job titles of the people involved in the decision.  Focus on Technical, User, and Financial buyer roles (Consultative selling / Miller Heimann).   In your next meeting, you will now know which people you want to interview.

You often have some minimum solution in mind for your first release (MVP).  Go back to their major problems and compare your solution with the customer.  Avoid defending your product or choice of solutions.  Turn questions around by asking, why their reaction is not as you anticipated.  Remember, you are an independent journalist—you quest honest knowledge even if it is irrational or defective per your education.  You want to know how they think, not convince them to buy. (at least at this stage)

In these later interviews, test the comments of the first interviews, “I was told that typically a field salesman would drive more than 50K Km per year for the company and that they had company credit cards that could purchase solutions that cost less than 50€/month—how would your company be different?”  The person is letting you interview them because you are telling them that they are important and knowledgeable (ego) and they are curious about what you and their colleagues are saying.  The information you share will often keep them motivated to share with you more.

In the wrapup, i) thank them, ii) summarize what you learned, iii) ask them if you can ask follow questions later as you learn more, and iv) commit that you will tell them if you plan to ‘commit to this market’ or not.

What if I already have one customer in this market already?  If done correctly, this discovery phase can reveal more information in 2 days than you learned from your current customer in 6 months.  Acknowledge that you have one customer already, but that you have not committed to have a general commitment to the market.

Notice I use the word “commitment” a lot.  You are going to commit energy, resources, and money to this idea.  Even though you have already invested in MVP and researching your idea, there are for sure other people that would like you to make this investment to solve their different problems.  Your future investment will be 100X what has been made so far—it is important that your potential customer and you both understand the cost of saying “let’s try”.  Focus on what customers are willing to pay for, why, and how.

for those that like video examples: http://startupweekend.wistia.com/medias/tao3s8hf7l

 

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