#startup #customer development

POSTED ON:

December 13, 2021

In our previous posts, we shared how we had shaped our concept, established the right entity, and got through accelerations programs. In today’s post, we turn to Draivn’s customer development strategy.

While the world is getting too far with venture models, startups and bold products, new customer development models or no customer development models emerge. As a result, the adepts of such models – including unicorn companies – sometimes can’t boast high revenue, even though investors throw tons of money into them.

In most of the cases, we agree that modern problems require modern solutions. But in the case of customer development, we stick to the classic approach.

✅ Building hypothetical business models based on our assumptions;
✅ Validating the hypothesis and solution scalability with potential customers;
✅ Adjusting business models to customer feedback and market demand.
✅ Developing the product and warming up the demand for the solution.

Again, easier said than done. But let us show how it’s done by our team.

TAGS:

Assumptions and hypotheses first
There’s one thing you should remember – brainstorming goes better backed by your background. To be efficient, spend some time investigating the market, trends, solutions and – what is more important – the existing, emerging, and future problems. Here are the items we brought into focus at this stage:

✅ Insurance market trends;
✅ Successes and failures of telematics insurance programs and initiatives;
✅ Motor fleet insurance market players – big and small.

Based on the information, we delivered a hypothesis for the currently demanded product and the “Problem” it solves.

Validation second
Having the hypothesis ready, we moved towards validating our assumptions. And that’s where the game of David and Goliath started. (“Who is David? (c)”)

Being a startup, Draivn needed to reach out to the potential customers mostly being big corporations with thousands of branches and employees, huge hierarchy, and as conservative and slow as they can be. Here are just a few company types we reached to validate our assumptions:

✅ Fleet motor insurance customers;
✅ Insurance brokers;
✅ Insurance agents/MGAs;
✅ Tier 1s, maintenance, leasing, IoT, and other related companies.

And though we focused on the markets of Europe and the US, the amount of work to accomplish was enormous. One day, we'll dedicate a post to these activities.

Long story short, we’ve gone through the whole industry and got answers to the four “Wh”:

✅ What kind of potential customers do we have and how do they make decisions?
✅ Which markets are more mature and ready to accept Draivn?
✅ What is the common problem that the stakeholders face?
✅ What should the solution, MVP, and commercial version look like?

It took us one year, thousands of emails, and hundreds of calls, but it was worth it.

As you see, the validation procedure merged with the process of product, business model, and concept shaping. Although our initial goal was to validate the concept, by the end of the journey, we had a clear vision of the current problem, the markets, and customer segments that experience such a problem. And as the process lasted for months, we did fine-tune and adjust our product iteratively, constantly validating it on the go.

As a result, we have a clear roadmap from an MVP to a fully-scaled solution, the understanding of target niches and their priority. The foundation laid during that year, allows us to focus on the development, delivery, and scaling it across markets or the supply chains for the years to come.

Summary
We believe that customer development is a crucial part of any project or solution development. Some think it’s a must-have for start-ups or new products only. But in reality, some well-established businesses and industry leaders need such an approach even more. It happens because successful businesses may neglect the customers and other market players' state, relying on their expertise and knowledge, which is sometimes limited or outdated.

The proper customer development and constant feedback loop with your customers are a must for any company that cares about their product and its potential, their place on the market and long-time success.

Special thanks to our advisors who made this customer development process as smooth as it could be by sharing their Knowledge, Experience and Network (KEN). And this is one more reason why you should acquire some experienced people to support you in your startup journey.

Lessons learned
✅ Find the customer, then build the product. Not vice versa.
✅ Advisors play a crucial role in both customer and product development, so focus on building your advisory board upfront.
✅ Positioning and target markets are vital. The same product can be warmly perceived in some countries, while others will hardly see any benefit from it.
✅ You will be rejected often. It doesn’t mean that the product is bad or useless: sometimes it is just the way you pitch it. So master pitching and make sure that your granny understands what the hell you are building.
✅ When somebody stumbles, don’t laugh, but watch your feet. Watching the unicorns stumbled over gaining revenue and draining investments is not that funny. Try to become the one who stops it.
✅ Modern problems require modern solutions. But unless some aggressive adept of cancel culture tries to beat you up, try a good old classic approach.
✅ In God we trust, the rest we verify.
✅ David beats Goliath.

Let’s learn other lessons together – follow us on LinkedIn and join Draivn’s journey to the unicorns.

Request a demo