Customer development is “advocating for the business.” It’s not something that you should do because it makes customers happy. It’s something you must do to build a sustainable business where people open their wallets and pay for your product or service. Why You Need Customer Development Most new products (and companies) fail. The odds are against you. Around 75% of venture-backed startups fail.
Anywhere from 40% to 90% of new products fail to gain significant market adoption. But surely, we think, we will be the exception. We like to think of building products as an art—something guided by our creativity, intuition, and intellect. We all know that there are good product managers (and designers and engineers and strategists) and mediocre ones. Maybe that’s what makes the difference between a failed product and a success? Unfortunately not. Universally, we’re just not very good at building products and companies solely based on creativity, intuition, and intellect. It’s not just a startup problem, either: in 1937, the companies that made up the S&P 500 had an average life expectancy of 75 years; recently that number has dropped to just 15 years. On a smaller scale, we’re not as good as we think we are, either.
Most of our ideas don’t increase value for customers or companies—Microsoft estimates that only around one-third of their ideas improve the metrics they are intended to improve. Amazon tests every feature and fewer than 50% work; Yammer’s numbers are roughly the same. Netflix and Intuit don’t claim any higher proportion of successes.