Forward PartnersStartup general interest

Talking with customers: focus on quality not quantity

By August 11, 2014 One Comment

At Forward Partners we invest in early stage companies in the ecommerce ecosystem, often from company inception. Much of the time, then, there are no customers who have bought the product, and often there isn’t even a prototype we can look at. We have to evaluate the idea and conversations with potential customers are one way of doing that.

Everyone understands, by now, the importance of talking with customers to validate business ideas. However, few entrepreneurs do it well, and recently I’ve noticed that companies are asserting the quality of their customer discussions based on the number they’ve had rather than the quality. A typical conversation might go like this:

  • Me: That sounds like an interesting idea. Have you spoken with any potential customers?
  • Entrepreneur: Yes! We spoke with 150 customers.
  • Me: Mmm, that sounds like a lot. What did you learn?
  • Entrepreneur: That they totally want our product.
  • Me: Ok, but why, and what have they done in the past that suggests they will make the effort?
  • Entrepreneur: We didn’t ask that question.

I recently blogged about the customer discovery process at our portfolio company Lexoo. Daniel van Binsbergen, the founder, spoke to 20 customers and including the time to set up the conversations and write them up afterwards it took pretty much all of his time for two weeks. Those 20 conversations taught Daniel an incredible amount about his business and his answer to my ‘what did you learn?’ question would have been more detailed and much stronger (read this post for details).

Talking to customers should be a discovery exercise, not a tick box exercise, and hence a small number of high quality conversations is much better than speaking with lots of people. With quick and poorly constructed conversations It’s easy to get lots of falsely positive validation (people who are nice and poor at predicting what they will do saying they will buy your product). I’ve said it at least twice on here now, but The Mom Test is an excellent guide on how to do it well. We’ve also found that it’s helpful to have someone from outside of your company join the discussion as they are able to listen impartially and avoid confirmation bias.