What’s Your Customer Development Viral Coefficient?

Summary: Customer Development demands a lot of conversations with potential customers.  If every person you talk to introduces you to two more people, your golden.  If you are not getting introductions, you’re in trouble (some advice on what to do).  The Customer Development Viral Coefficient is a measure of this rate and the first insight an entrepreneur gets on his startup idea feasibility. 

Getting Out of the Office

Steve Blank’s “Get Out of the Office” advice and Ash Maurya’s Running Lean process both advocate beginning a startup with lots of potential customer conversations.

Finding people to give us feedback can be frustrating, tedious work. Or it can be easy and fun.

I’ve experienced both extremes and am sharing a heuristic to give you insight into your chance of success during Customer Development.

How I Find People to Interview

I start with my own network and look for people who have the problem I’m trying to solve. After getting feedback on my Problem/Solution assumptions I ask for intros to others.

Conversations lead to introductions…and more conversations…and so on.

Customer Development Viral Coefficient

I call the introduction/conversation ratio the Customer Development Viral Coefficient (CDVC) based on the Marketing Viral Growth Coefficient 1.

CDVC > 1

If every person you talk to introduces you to two more people with the problem, you’re golden.  Congrats, your CDVC > 1.

After a few weeks of Customer Development you’re having tons of great meetings and your biggest problem is getting through your email inbox, thanking everyone, and making sense of the input you’re getting.

I’m experiencing CDVC>1 with the Grapetree Project and it’s a blast.

Even if our solution ideas suck – as mine certainly did a month ago – we know we’ve got a shot at success because

  1. People share our worldview that something is wrong.
  2. They think we have the unique qualifications to help.
  3. They will risk their own reputations to introduce us to others.

We’ll get enough data to keep adapting our solution until it no long sucks.

Unfortunately, most of my projects and most startups I help have CDVC < 1.

What if Your CDVC < 1 and You’re NOT Finding Potential Customers?

If most people you talk to don’t introduce you to someone else with the problem, you’re in trouble.  Your CDVC < 1.

You’re probably frustrated with Lean Startup, deflated, and generally miserable.  You’re armed with passion, skills, ninja-like Lean Startup skills and hardly anyone will talk to you.

IT SUCKS. TRUST ME, I’VE BEEN THERE.

After working through your limited network you’ve almost run out of people to talk to. People don’t follow-up with you, don’t respond to your emails and requests for help.

I lived in this purgatory for more than a year and know how you feel.

YOU are NOT the problem. You are doing everything right.

But your chances of success largely depend on what you do next.

What to do if you’re not finding customers to interview?

In a subsequent post I offer some advice on what to do – and what not to do – based on my own mistakes and successes.

Thank you Ray Wu for reviewing drafts of this post.

  1. Yes…I realize this is a linear equation and not a power equation like the viral marketing models.  I started creating a complex power model but realized it just doesn’t matter – I can only talk to so many people a day.  Forget about the math, CDVC is a conceptual heuristic. Are you getting more introductions than you can manage? CDVC>1. Are you staring at an empty email inbox? CDVC<1.  Of course these are extremes and your experience is probably between these.

7 Comments

  1. Russell Harper November 10, 2012 at 7:55 pm #

    Yes, please keep writing.

    I’ve owned my own business for many years, but still find these posts very interesting.

    Thanks,

    Russ

  2. Sean Murphy November 11, 2012 at 4:00 pm #

    “After working through your limited network you’ve almost run out of people to talk to. People don’t follow-up with you, don’t respond to your emails and requests for help.

    YOU are NOT the problem. You are doing everything right.”

    You may very well be the problem if no one is following up.

    • kevindewalt November 11, 2012 at 7:10 pm #

      That could be, although if you’re THAT much of a problem you probably couldn’t get the original meeting. More likely you’re not the right match for your target market as has happened to me.

  3. david waxman November 12, 2012 at 11:03 am #

    very interested in hearing more! thank you. david

  4. Steve Lawrence November 24, 2012 at 11:45 am #

    I am at that point of talking to potential clients. I would love to hear more.

I read EVERY comment and want to hear from you