CustDev: What It Is and How It Improves Your Product

CustDev (Customer Development) is a methodology that puts the customer’s opinion at the forefront. Before making any decisions about a product, research is conducted to understand what customers (existing or potential) truly want.

In this article, we’ll take a closer look at what CustDev is, how and why to conduct it, and how to come up with really good questions.

What is CustDev?

In its original understanding, the term customer development referred to an approach to startup development based on a deep study of the needs of the target audience.

Today, the term CustDev is often used in a narrower sense, as a synonym for in-depth interviews. Such an interview is a method of qualitative research where the interviewer has a detailed conversation with one or more respondents to understand their views, experiences, and motivations.

The CustDev method is often used to test business hypotheses related to launching new products or updating existing ones. The main task is to understand whether customers need the product, whether it solves their problems, and if it is useful for them. If interviews show that the product is irrelevant, its concept is adjusted. Less often, a different market segment is sought. After making adjustments, the interviews are conducted again.

Survey results where less than 80% of respondents show clear interest indicate that the concept needs to be revised or resources should be reallocated to more promising projects.

For example, a mobile app development company is planning to launch a service for learning foreign languages. CustDev will tell them which learning methods the target audience prefers — interactive exercises, audio recordings, video lessons, or something else. Based on the data received, the company will create an app that users will really like.

Why your business needs CustDev

CustDev is conducted to analyze everything related to products or features for real people. It tests both existing developments and planned ones.

There are generally two main cases where the CustDev method is applied.

The first is the launch of a new product

With CustDev, you can find out in advance whether potential customers are interested in the project. Management’s opinion on the high demand for a product often does not match reality.

CustDev is also useful when making investment decisions. It helps assess the prospects of a new project before investing funds. Sometimes startups seeking funding conduct CustDev on their own. The research results are then included in presentations for investors, increasing the chances of securing funding.

Once the exact target audience for a new product has been identified, the company can conduct additional interviews to understand whether people are willing to pay for the product (and how much). It often happens that an initially promising idea faces harsh realities. For example, users are willing to pay a maximum of 30$ per month for a fitness app, while the company’s original calculations assumed a price of 150$. In such a situation, reducing the price by five times would be unacceptable for the business. CustDev reveals such discrepancies at early stages, saving company resources and preventing the launch of a knowingly unprofitable product.

The second is product updates

With CustDev, you optimize the development of updates. It doesn’t matter if you need to add a small feature or completely change the tone of voice or brand image.

Product specialists, such as product managers, constantly monitor the "health" of the product: they track relevance, identify existing and potential problems. Based on this, improvement ideas are generated, which are then tested using various methods, including customer development.

For example, with CustDev, you can find out whether users will like the new website design or app interface. If the reaction is negative, the idea is refined without wasting time and resources on an unnecessary redesign.

Companies often focus on the requests of the most active users, ignoring the needs of a broader audience. For example, decisions to make changes may be based on numerous support requests, but such users do not always represent a representative sample.

Sometimes companies change a product based on the opinions of employees, whose experiences may not always align with the views of customers. For example, if someone on your team thinks that white text on a black background is hard to read because it hurts their eyes, there’s a chance that many users might disagree.

CustDev helps avoid such mistakes. You’ll get feedback from real users, ensuring a more accurate understanding of their needs and expectations.

Next, you need to define the target audience for the update. To do this, you should analyze the opinions of key customers—those who bring in the most revenue. It’s possible that their problems differ from what you expect. From a return-on-investment perspective, it would be more cost-effective to focus on them.

How to conduct CustDev

Customer development is usually divided into several stages:

1. A new app feature or product idea is broken down into hypotheses

For example, a food delivery service company assumes that orders will increase if they offer a "schedule delivery" feature. They formulate the following hypotheses to test:

• Users find it inconvenient to order food in advance because their plans may change.

• Customers are willing to pay a little extra for an order if they can schedule it for a specific time.

2. The target audience is identified.

Typically, a small market segment with specific characteristics is chosen for this purpose. Various methods are used in this process: the persona method or the JTBD (Jobs to be Done) concept. If the company already has a customer base, they segment it not by demographic characteristics (age, gender), but by how customers interact with the business.

The persona method is a tool used in marketing to create generalized but realistic profiles of typical users.

The Jobs to be Done (JTBD) method focuses on the deep needs of customers. Its goal is to develop solutions that are truly useful to users.

Let's consider an example of an online clothing store. The owner identifies audience segments that frequently add items to their cart but do not complete the purchase. This segment is likely interested in discounts or promo codes.

3. Finding people

To conduct CustDev, you need to find at least 10 respondents that fit the description. The search is conducted in relevant communities on social media and in places where the target audience usually spends time. It is not recommended to involve your close friends in the survey, even if they meet the segment's criteria, as their opinion will be biased.

Two types of people are most likely to agree to an interview: those who criticize the product and its loyal fans. Their opinions are often not entirely objective but can still be useful. Ask why the person agreed to the interview to understand their motives. Offer incentives, such as merchandise, discounts, or even money, to attract average users.

Respondents are asked open-ended questions to identify common problems and gather valuable insights. A separate questionnaire is developed for each task. During a single stage of CustDev, all participants answer the same questions.

4. The initial hypothesis is adjusted based on the results obtained.

If the findings disprove the original idea, the pool of potential customers is reconsidered, or the offer itself is reworked. Then, additional data is collected. Based on this, the initial plan is revised again. This cycle often repeats many times, especially if the offer is entirely new to the market.

5. A trial product model is created.

This step can be skipped, but it helps save on expensive development costs. The model is shown to both the people who were already interviewed and new respondents. Sometimes, they are asked if they would purchase such a product, and even a mock contract signing is simulated to make the person seriously consider the purchase. If the brand already has customers, a specific segment can be given access to try the new version. Then, a comparison is made between those who used the updated product and those who stayed with the old one.

6. Finally, a decision is made.

CustDev leads to one of the following outcomes:

• The hypothesis is confirmed. After adjustments, the assumption aligns with the needs of the audience. The project is brought to life.

• The hypothesis is not confirmed. Numerous interviews with different variations demonstrate the idea’s ineffectiveness. In this case, the decision is abandoned to save resources for other projects.

How to ask good questions for CustDev

During CustDev, it’s important to understand how relevant your product is to the respondent and whether it truly solves their problems.

You need to formulate questions that will help you determine:

• Does the person have a problem that your product solves? How serious is this issue for them, and how does it affect their life?

• Does the respondent consider your service valuable? Are they aware of similar products?

• What methods has the person already tried to solve the problem? Are they satisfied with the results, and what do they feel is missing from the existing options?

• Is the respondent willing to pay for such a service? What factors will influence their decision to purchase?

• What product features are most important to the person? What would they like to see in your product, and what do they consider unnecessary?

Is the respondent willing to test a prototype? What interests them about using it?

What to do next?

After completing the interviews and collecting all the answers in one place, it's time to summarize the research.

First, analyze the recurring responses. Highlight the most frequently mentioned statements and group them into thematic categories. Create charts and graphs to visually represent the data. For example, make a list of the most important product features that participants mentioned the most.

Next, assess the results and test the hypotheses you initially set. Were your assumptions confirmed? If not, what new conclusions should be drawn from the results? What new hypotheses can be tested?

Types of CustDev interviews

Within CustDev, three types of interviews are used:

1. Solution interviews are conducted to understand whether a customer is interested in purchasing a product or service after it hits the market. The main goal is to get the respondent’s honest opinion, not to sell them anything.

For example, a fitness center is developing a workout program with a virtual instructor. The interviewer’s task is to immerse the person in this idea. You could ask:

• About habits: “How often do you work out now?” — to understand how relevant workouts are to the person.

• About competitors: “Are you currently using any fitness apps?” — to find out what features are important to people in similar services.

2. Problem interviews aim to understand the difficulties the audience faces and to identify their needs. For this, the interviewer prepares open-ended questions that motivate the respondent to share their experience. For example, instead of asking, “Was it difficult for you to choose a restaurant in an unfamiliar city?” it’s better to ask, “Can you tell me how you usually choose a restaurant when you're in a new place?”

3. UX testing is conducted to assess how easy it is to use an application and how satisfied customers are with it. Testing takes place in real conditions, which helps identify difficulties and improve the app's usability.

For example, a taxi service is developing a new pre-order feature. They need to understand how easily users can figure it out.

How testing is conducted:

• The interviewer contacts the respondent.

• Then, they share their screen and provide access to the app with the new feature.

• The test participant makes a pre-order: selecting the date, time, and address.

• The interviewer observes and asks the participant to verbalize their actions: “What do you see now?” or “What are you doing right now?”

Pros and cons of CustDev interviews

Developing a product based on guesses is a risky endeavor. Customer development offers an alternative—building a business on real data. This is the main advantage of this approach.

Here are additional benefits of CustDev:

• Idea validation: Align your assumptions with actual customer needs.

• Risk minimization: Identify and eliminate weaknesses early to reduce the likelihood of failure.

• Profitability assessment: Determine the financial potential of your product or service.

• Impress investors: Research data on your target audience will definitely attract financial partners.

However, there are also disadvantages:

• Information leakage: Conducting surveys and interviews with customers sometimes leads to the disclosure of confidential information about the product under development.

• Development delays: Continuous research and hypothesis validation can slow down the process. The project will definitely take longer.

• You could get outpaced: While you’re testing ideas, competitors may enter the market with a finished product that meets customer demands.

Tips for conducting CustDev

During preparation:

• Plan CustDev questions in advance. Don’t waste interview time on formulating them.

During the interview:

• Be an active listener. If something is unclear, ask for clarification to avoid gaps in your research.

• Maintain a neutral position. Don’t try to sell the product—focus on gathering information from the respondent.

• Record answers on a voice recorder. This is more convenient than taking notes—you can always listen to the interview again to verify information.

• Inform the client how long the conversation will take.

• Keep track of time. Try to spend 2-3 minutes on each question.

Conclusion

CustDev is a tool that turns ideas into in-demand solutions. With it, you can identify the needs and desires of real people. This allows you to avoid costly mistakes and build your business on a solid foundation—a deep understanding of your customers. CustDev is a kind of insurance against failure.

Despite some challenges related to time consumption and confidentiality issues, CustDev is an investment that will definitely pay off in the long term.