“What you need to succeed in a startup is not expertise in startups. What you need is expertise in your own users.” Paul Graham
Customer development is the process startups use to validate and improve their business model by talking to customers.
But should you listen to your customers? Critics of the strategy love to cite Henry Ford, "If I had asked people what they wanted, they would have said faster horses." Here's the thing:
When you talk to your customers, they can accurately tell you their past or current problems (i.e. "My horse is too slow because she needs to stop to poop every three hours.). However your customers won't invent a breakthrough product for you. That is the role of you as the entrepreneur.
Other critics love to cite Steve Jobs, who said, "It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them." While Jobs did say this, most people take this quote out of context and assume you should never design products and talk to customers. Consider this quote Jobs gave at Apple's 1997 Worldwide Developers Conference,
You've got to start with the customer experience and work backwards to the technology... As we have tried to come up with a strategy and vision for Apple, it started with: What incredible benefits can we give to the customer? ...Not starting with: Let's sit down with the engineers and figure out what awesome technology we have and then how we're going to market that.
By asking your customers past and current problems, desires, pains, and outcomes, you can determine your product roadmap, marketing strategy, pricing strategy, your true competitors, your position in the market, and much more.