Key Building Blocks:Value PropositionCustomer Segments Bob Dorf firstname.lastname@example.org
VALUE PROPOSITIONSwhat are you offering them? what is that getting done for them? do they care? images by JAM
Step 1. Spec. the Value Proposition• Product(s)?• Service(s)?• Ecosystem?• Is it a company or product?
Value Proposition – Common Mistake• Is it just a feature of someone else’s product• Is it a “nice to have” product• Is it a “got to have” product• Can it scale to a company?• …THE IMPORTANCE OF ENTHUSIASM – It’s viral thus economical – It’s the only road to success – Find it NOW, not after you build!
Value Proposition - Discovery• Product – Long term vision – features – Benefits – Minimum Viable Product spec• For a web/mobile app – Low fidelity MVP live and running• Understand Customer Problem and Solution• Test Market Type
Product• Problem Statement: What is the problem?• Technology / Market Insight: Why is the problem so hard to solve?• Market Size: How big is this problem?• Competition: Where does your product fit in the world? What do customers do today? Why would they buy from you instead of….. » at do customers do today?• Product: How do you do it? How do you make it?
Step 2: What’s the Minimum Viable Product – Physical• First, test your understanding of the problem• Next test your understanding of the solution – Proves that it solves a core problem for customers – The minimum set of features needed to learn from earlyvangelists- Interviews, demos, prototypes, etc- Lots of eyeball contact
Step 2: What’s the Minimum Viable Product – Web/Mobile• NOW “low fidelity” web/app for customer feedback – First, tests your understanding of the problem• LATER, “high fidelity” web/app tests your understanding of the solution – Proves that it solves a core problem for customers – The minimum set of features needed to learn from earlyvangelists- Avoid building products nobody wants- Maximize the learning per time spent
Step 2: What’s Testing the Minimum Viable Product – Web/Mobile• Smoke testing with landing pages using AdWords• In-product split-testing• Prototypes (particularly for hardware)• Removing features• Continued customer discovery and validation• Surveys• Interviews
Step 2: What’s the Testing the MVP– Web/Mobile - Tactics• Interview customers – make sure they have a matching core problem• Set up web site landing page to test for conversion – What offers are required to get customers to use the product (e.g. prizes, payment) – Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness• Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through
CUSTOMER SEGMENTSwhich customers and users are you serving? which jobs do they really want to get done? images by JAM
Corporate? Consumer?• Business to Business (B to B) – Use or buy inside a company• Business to Consumer (B to C) – Use or buy for themselves• Business to Business to Consumer (B to B to C) – Sell a business to get to a consumer – Other Multi-sided Markets with multiple customers
Customer Types• Saboteurs• Intermediaries (OEM’s and resellers)
Market Type & Ignoring Customers• Clone Market?• Existing Market?• Resegmenting an Existing Market? – niche or low cost• New Market?• When do I ignore customer feedback?
General Heuristics• You need to talk to more customers than you ever thought possible – 100’s physically, 1000’s on the web• Don’t ever forget face-to-faceWEB contact: you need to see them smile, get lost, mess up• “I left a message” or “I sent an email” doesn’t count – it’s confusing motion with action• Do NOT start at the top. You only get one meeting. You’ll almost certainly look like an idiot – First figure out the order of battle
Definitions: Four Types of Markets Clone Market Existing Market Resegmented New Market Market• Clone Market – Copy of a U.S. business model• Existing Market – Faster/Better = High end• Resegmented Market – Niche = marketing/branding driven – Cheaper = low end• New Market – Cheaper/good enough, creates a new class of product/customer – Innovative/never existed before
Market Type Existing Resegmented NewCustomers Known Possibly Known UnknownCustomer Performance Better fit TransformationalNeeds improvementCompetitor Many Many if wrong, Nones few if rightRisk Lack of branding, Market and Evangelism and sales and distribution product re- education cycle ecosystem definitionExamples Google Southwest Groupon Market Type determines: Rate of customer adoption Sales and Marketing strategies Cash requirements
Market Type - Existing• Incumbents exist, customers can name the mkt• Customers want/need better performance• Usually technology driven• Positioning driven by product and how much value customers place on its features• Risks: – Incumbents will defend their turf – Network effects of incumbent – Continuing innovation
Market Type – Resementing Existing• Low cost provider (Southwest)• Unique niche via positioning (Whole Foods)• What factors can: – you eliminate that your industry has long competed on? – Be reduced well below the industry’s standard? – should be raised well above the industry’s standard? – be created that the industry has never offered? (blue ocean)
Market Type – New• Customers don’t exist today• How will they find out about you?• How will they become aware of their need?• How do you know the market size is compelling?• Which factors should be created that the industry has never offered? (blue ocean)
Target Market • Who am I going to sell to? • Airports • How large is the market be (in $’s)? Total Served Target • $100 MAvailable Available Market Market Market • How many units would that be? $4.8 B $1 B $100 M • 200 M units