Having a great idea is subjective. What strikes you as brilliant and useful can mean the opposite to someone else. How can you make sure not to run into this problem with your business? How do you confirm your product needs and ideas to avoid wasting time?

As part of the EWOR Academy, Henrik Piroth gave a lecture on validating product needs. At 24 years old, Henrik spent the past decade in the entrepreneurship world. The founder and co-CEO of heycater!, Henrik created the largest B2B catering marketplace in Germany, Switzerland, and Austria.

In this article, we’ll teach you how to use three simple steps to validate product needs for your company.

Step 1: Understanding Your Customers

Entrepreneurship is one of the best tools to create a better world. It’s the reason why EWOR partners with experienced entrepreneurs to create our platform with over 17 courses and hundreds of resources. We want to help you improve the status quo.

But, you can’t use that tool to create an impact if you can’t create value for your customers. Thus, the goal is to confirm your ideas about your product.

The first step to creating that value is to understand your customers. Using the Four Forces of Change principle and Henrik’s tips on customer interviews, you’ll gain crucial insights from your customer base.

The Four Forces of Change

The four forces of change are the framework in which you can understand your customers’ motivations and frictions. These four aspects influence their buying decision and are key to understanding what your product needs to deliver.

Many entrepreneurs only focus on the motivation side of the equation. Yet, understanding both aspects creates the full picture of what your customers need.

Validate Product Needs

Switch From (Push)
This force describes the pains of the customer’s current situation. It’s the starting point for your idea generation and, thus, the pull factor for your prospects. What do they struggle with and what are their unmet needs? What pain is causing them to search for a new way of doing things?

Example: Customers experience the pain to find good and accessible caterers.

Switch To (Pull)
The second aspect of this model is the pull factor for customers. It describes the promise of a new solution to one of their problems. What do customers think they’re trying to achieve? What is their goal? Will your product allow them to achieve the goal?

Example: heycater! offers all caterers in one accessible online marketplace.

Anxiety
The third factor concerns customer anxieties. It’s their apprehension of the new, which depends on the type of problem your product is solving for them. What mental tradeoffs are they making? Do they feel uncertain about you or your product’s features? Do they wonder if they need it or how it works?

Example: Customers worry about timely deliveries and financial risks.

Inertia
The final force is the habit of the present. When you launch a new product, consider the influence of the competition. What allegiances do customers currently have? What is making it hard functionally, emotionally, or socially for them to switch to your product? Did prospects invest significant resources in a competitor?

Example: Customers have worked with the same local caterer for years already.

Customer Interviews

To gain the most value from the four forces approach, it’s important to work with authentic customer feedback. You won’t benefit from your biased assumptions. Thus, mastering the art of customer interviews is crucial for your business. 

Creating value for customers will always remain your key value driver. To ensure you’re on the right track, customer interviews serve to validate your customer needs.

Run these interviews at any stage and size of your company. Be at the forefront of customer research and make sure your entire team never loses sight of the core focus of your business.

Differentiate between customer interviews and product interviews. The former is about understanding your customers’ thought processes. Ideally, these interviews don’t focus on the product at all. Therefore, understanding how your users interact with your products is what the product interview is for.

Overview: Tips for Customer Interviews

  • Take them back to a moment when they dealt with the problem you’re solving: What were they wearing? Where exactly were they?
  • No leading questions
  • Base your questions in past, no future-looking hypotheticals
  • Listen to the exact language/vocabulary
  • Record the interviews
  • Be as specific as possible
  • Avoid talking about your specific solution

Step 2: Getting Your Metrics Right

After understanding your customers, focus on hard facts and turn them into useful guidelines to validate product needs. Let’s move away from trial-and-error approaches and focus on metrics instead.

Why Do Metrics Matter for Product Validation?

There is a popular saying that 90% of your results will come from only 10% of your work. In other words, you’ll try a lot and fail on many occasions. Only a few of the things you try will create the most value for your company and customers.

With a good team, you will get what you measure. Good metrics help to make better decisions and align your entire team. Thus, finding the product and market fit should be an iterative, but a targeted process.

This mindset is particularly important in the early stages of your start-up. By understanding your most important metrics, you will create great products faster.

North Star Metric

One key metric to measure and predict your company’s success is the North Star Metric (NSM). It describes a metric that leads to revenue growth, reflects customer value, and indicates your progress.

Remember that economic success is the result of creating customer value. Instead of focusing on revenue, the customer is the most important factor for the NSM. Revenue can’t function as an NSM because it’s not representative of your product needs. You could have one well-paying customer who drives revenue, while other customers reject your product.

In short, revenue is not a good indicator of value.

Instead, your NSM should be the closest behavioural metric that shows when value is delivered to both customers and your company. Which action is natural for customers, if they love your product?

For example, a catering company like heycater! setstheir NSM to the number of orders placed by customers. For the internet forum Quora, the NSM is the number of answered questions on their website. Social media platforms will use the number of daily active users as their NSM.

It’s key to have only one north star to align your team and focus on one value-driving force. If you have more than one NSM, it’ll be difficult to prioritise the most important factors for your growth.

For an in-depth guide to the popular North Star Metric, visit our article “How to Define a Start-Up North Star Metric That Really Matters.”

Step 3: Run the Growth Process

The third step of understanding the growth process combines customer research and the NSM. When you put all three pieces together, they form a sound strategy to validate product needs for your company.

Growth Sprints

To ensure the most progress, conduct so-called growth sprints every week. These sprints aim to test and analyse the riskiest assumptions about your product and consumers. Think of it as a simple confirmation process that steers you away from costly mistakes.

The main goal is to move fast and learn in a continuous loop. Failure is the norm when you test so many assumptions, while success is the important exception. 

If an assumption is complex and doesn’t work in a sprint, break it down and find a way to test it anyway. Don’t waste time engineering and just get results. “Done is better than perfect,” is the guiding principle of growth sprints.

Sticking to weekly or bi-weekly growth sprints will save you time and money in the long run. By using this tool, you won’t waste resources on ideas that won’t work with growth sprints.

The Growth Process

Growth sprints are only one piece of the full growth process. By combining customer research and the most important metrics, you’ll enter the growth cycle.

Validate Product Needs

Based on customer interviews, generate ideas for your product. Choose which ideas are worth pursuing in a prioritisation session and experiment in growth sprints. Based on your experiment findings and customer feedback, generate another round of new ideas. 

Using this simple cycle regularly will ensure growth in the right direction. It’s a straightforward method to validate customer and product needs.

Scoring Ideas

Deciding which ideas to test isn’t easy. Focus on effort and impact as the most important variables for your experiments. Ideally, find assumptions that are easy to execute but have the most impact.

Track these assumptions and experiment results in a simple spreadsheet. Using Google Sheets is a great and cheap tool, especially in the early stages of your start-up. For a more sophisticated scoring, use the RICE principle: reach, impact, confidence, and effort.

Scoring is not a discussion. It’s a fact-based tracking system of what ideas are worth pursuing. Again, done is better than perfect. Select one expert who has a good overview of your company and put them in charge of scoring.

It’s wise to create a separate spreadsheet of what Henrik calls the “Experiment Graveyard.” Regardless of their success, make sure to archive all experiments and save the lessons you learned. If you come across a similar idea in the future, it’s easy to cross-reference and avoid making the same mistakes.

Setting up a Growth Team

To validate product needs, clearly define a growth team. Use our list of roles and topics to set up an effective growth team:

  • Marketing

This person is a generalist and an analytical marketer with strong leadership and entrepreneurial abilities.

  • Product

  This team member only fixates on customers and value.

  • Analytics

This person focuses on generating insights from experiments and makes data-driven decisions.

  • Engineering

This is a pragmatic, curious, customer-oriented, and goal-oriented person.

  • Design

This person is good at fast prototyping and implementation, is not pixel-perfect, has good UX understanding, and knows the main goals.

  • Copy

This person understands the customer language, can translate customer language into short-form and is good at direct-response writing.

Run weekly growth meetings with this team and set an agenda to validate your product needs. Review your metrics and draw conclusions from your data. Use this time to decide on the next experiments and plan your next steps. Remember to keep a backlog of ideas for future reference.

In the beginning of your journey, the founder has to wear most of these hats. As your company develops, expand your growth team as well.

Bottom line

There are three steps to validating customer and product needs for your company. Understand your customers’ thought processes, focus on the right metrics, and follow the growth cycle.

With the right team and regular growth meetings, you will save money and time in the product development process. Analysing product needs is not rocket science as long as you break down the process and focus on the right tasks. Use Henrik’s methods to validate your product needs and set your business up for success.

About the author
EWOR Team

EWOR is a school conceived by Europe’s top professors, entrepreneurs, and industry leaders. We educate and mentor young innovators to launch successful businesses.

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