Rule of 40 Phone Conversations … and New Product Success

Who do you talk with in the 40 conversations?

On the other end of each phone conversation are prospective customers for the product developed from your new product idea. You’ve cold-called them using a random sample of 40 individuals drawn from all customers in the target market. During these 40 conversations you discovered what they want your new product to do for them. You uncovered ways to deliver your solution at a profit. You learned if it is a valid opportunity for making use of your technology and marketing skills.

Why 40 conversations?

The Central Limit Theorem 1 and normal distribution are statistical tools for drawing conclusions about the needs of prospective customers from a small random sample. For a sample of 40 prospective customers, >90 % of the parent population’s needs are within one standard deviation from the mean.

My work since 1985 has been with clients in the B2B arena who wish to discover and confirm what prospective customers’ want the client’s product idea to do for them. I’ve found that 40 phone conversations about the idea with a random sample of customers can elicit 90% of both their explicit and latent needs.

After 25-30 conversations, customers’ latent needs begin to emerge and predominate in the conversations. Often these needs hide below the expressed needs customers first articulate when they muse on what might cause them to switch from their current solution.

Why latent needs are important

Uncovering customers’ latent needs can result in a distinctive new product which delivers more value to customers. A deep understanding of these needs can also create new customers through a new business model.

Like black hole regions in space-time, latent needs are hard to discover. Gradually their outlines appear by mapping the energy absorbed when the elicitor probes the customer with “why” or “I don’t understand” questions. Often the probing unearths a problem that customers didn’t consciously realize they had, one that the elicitor realizes the new product idea can solve.

1.  (2011) C. Annis “Central Limit Theorem” Statistical Engineering