The 4 steps to the epiphany - Customer Discovery template - guilhem bertholet

Start easily with Customer Development
A playbook for entrepreneurs

***
GuilhemBertholet

Inspired by The Four Steps to the Epiphany – Steven G Blank GuilhemBertholet.com

1-01 - Customer Discovery
Product Hypothesis

Objectives: write down initial guesses about the product and its development.

Step 1:Product Features
List the top 10 (or fewer) features with a one-sentence description of it.

● Feature #1:blablabla
● Feature #2:blablabla
● …
● Invalidatedfeature: blablabla

Discussion points, links, ...

Step 2: Product Benefits
Describe the benefits the product will deliver to customers (new, cheaper, better, faster, …).

● Product benefit #1:blablabla
● …
● …
● Invalidatedbenefit: blablabla


Step 3: Intellectual Property
Assumptions about IP, technology bottlenecks, patents to be used or filed, ...

● IP & technology point #1:blablabla
● …
● Invalidatedbenefit: blablabla


Step 4:DependencyAnalysis
Things out of our control that we will depend on to succeed (technology, market adoption, usages…)

● Dependance #1:blablabla
● Dependance #2:blablabla
● …
● Invalidateddependance: blablabla



Step 5: Product Delivery Schedule
Prioritization of the shipping order of the different product features. If possible, givesome dates.

● Feature set for shipping #1:blablabla + blablabla
● Feature set for shipping #2:blablabla
● …


Step 6: Total Cost of Ownership / Adoption
What’s the total cost the customer will pay to implement the solution, including training, hardware,
hiring people, etc. ?

● Cost #1: blablabla
● ...



Customer & Problem Hypotheses

Objectives: write down assumptions on who you think the customers are, and what
problems they have

Step 1: Types of customers
Who are the decision takers? The buyers? The influencers? The end-users? Are thereanypotential
saboteurs?

● Customer type #1: blablabla
● Customer type #2: blablabla
● …
● Invalidatedcustomer type: blablabla


Step 2: Customer Problems
what pain do customers experminent? If customers had a magic wand, what would they change? Are
they latent or active needs? How deep is the need? Do customersalready in search of a solution?

● Problem #1: blablabla
● Problem #2: blablabla
● …
● Invalidatedproblem: blablabla


Step 3: A day in the life or your customers
How do your customers “work”, or behave? How do the different types of customers spend their days?
Go out and talk to them!

● Cust. Type #1 typical day:blablabla
● Cust. Type #2 typical day: blablabla
● …


Step 4:Organizationnal map and customer influence map
Try to understand how your customers interact with other people and businesses. Findwho influences
who. Who has to beconvinced?
Drawhere !



Step 5: ROI (Return on investment) justification
What’s the return of your future customers, in terms of money saved, new customers generated, time
saved, influence, data, …? What will they win against their present solutions? Try to put precise
figures in your answers!

● Key figures: blablabla
● Potential gains: blablabla
● …
● Invalidated figures and facts:blablabla


Step 6: Minimum feature set
Try to understand what is the smallest feature set customers will still be glad to pay for. Really kill
your own will to add “just another small thing”.

● Feature 1: blablabla
● Feature 2: blablabla
● …
● Won’t-be-included features:blablabla



Distribution and Pricing Hypotheses

Objectives: Describe what distribution channel you intend to use to rich customers
(direct, online, telemarketing, reps, retail, …)
3 criteria to have in mind: does the channel add value to the sales process? What are
the prices and complexity of the product? Are there established customer buying
habits?

Step 1: what does the distribution channel look like?
Who’s here? What are the margins?

● Channel 1: blablabla
● Chennel 2 2: blablabla
● …
● Invalidatedchannel: blablabla


Step 2: what are your pricing assumptions?
Do customers already pay for something similar? How much? How will they buy from you ? At which
price do customers find your offer really too expensive?

● Pricingrationale 1: blablabla
● Pracingrationale 2: blablabla
● …
● Invalidatedpricingfact: blablabla


Step 3: what is the customer LifeTime Value?
Do you sell once? Or do you keep your customers for a long time? Do a sold customer brings you new
ones? Do you enhance recurrence?

● Fact 1: blablabla
● …
● Invalidatedfact: blablabla



DemandCreationHypotheses

Objectives: find out how customers learn of new companies and new products: set
hypotheses on how your customers will hear about you.

Step 1: Creating customer demand
You need to find a way to create demand and drive people into the sales channel. Advertising? PR?
Word of mouth? Fairs? Telemarketing? Partners? Spam? Which magazines do customers read?
Note: the further away from a direct sale, the highest costs of demand creation...

● Customer demand creation idea 1:blablabla
● Idea 2: blablabla
● …
● Invalidatedidea: blablabla


Step 2:Understandinginfluencers
Who are the industry trend-setters? Thought leaders? Who’s affecting customers’ opinions: analysts,
blogers, members of the press... ?Whocouldjoin an advisoryboard?

● Influencer 1: blablabla
● Influencer 2: blablabla
● …
● Invalidatedinfluencer: blablabla



Market Type Hypotheses

Objectives: start-ups generally enter one of three market types, and you’ll have to
chose one. Even if you can defer that decision, you need to start working on one
hypothesis. You’ll have to answer to that question: is your company entering an
existing market, resegmenting an existing market, or creating a new market?

Step 1: Are you in an existing market?
Is there an established and well-defined market, with a large number of customers? Does your
product have better “something” than competitors?
Who are the competitors? What are the market share of each? What are their marketing and sales
expenses? What are the entry costs? Which performance attributes are important for customers? How
do competitors define the market? What are the market standards?

● Competitors’ type 1: blablabla
● Type 2: blablabla
● …
● Invalidatedcompetitors: blablabla


Step 2: Are you in a resegmented market?
Is there an established and well-defined market with large numbers of customers and your product is
lower cost than the existing solutions? Or can it be uniquely differentiated from the incumbents (going
to niche)?
What existing markets do customers come from? What customers needs remain unmet by
competitors? what compelling features of your product will drive customers abandon their current
suppliers? To what size can you grow? How will you educate the market? What are the sales
forecasts?

● Existingmarket 1: blablabla
● Existingmarket 2: blablabla
● …
● Invalidatedmarket: blablabla



Step 3: Are you entering a new market?
What are the adjacent markets next to the one you are creating? What compelling need will make
customers use/buy your product? What compelling feature? How long will market education take?
What market size will be sufficient? How will you educate the market and create demand? How much
money will it take before the market be educated? What will stop competitors from taking the market
from you? Is it possible to define the product as either resegmenting a market or entering a new one?

● …


Quick overview...
Small graph of all three market types attributes...

Existingmarket Resegmentedmarket New market

Customers existing existing new/new usage

Customer needs performance 1. cost simplicity&convenience
2. perceivedneed

Performance better / faster 1. good enough at the low Low in “traditional
end attributes”, improved
2. good enough for new by new customer
niche metrics

Competition existingincumbents existingincumbents non consumption /
other startups

Risks existingincumbents 1. existing incumbents market adoption
2. niche strategy fails


CompetitiveHypotheses

Objectives: have a look on the competition to understand who’s in here and on what
features/needs you’ll going to compete. If you’re creating a new market, no need to do
this part.

Step 1: Why customers would buy something from you?
What’s the competition basis? Do competitors fight on product attributes? on features? on service?
What are their claims? Why do you believe you’re different?

● Claim 1: blablabla
● Claim 2: blablabla
● …
● Invalidatedclaim: blablabla


Step 2: What do you allow customers to do?
Do you bring something they couldn't do before? Do it faster? Better? Cheaper? Through a
betterchannel?

● Advantage 1: blablabla
● Advantage 2: blablabla
● …
● Invalidatedadvantage: blablabla


Step 3: Who are your best competitors?
What do you like most about each competitor? What do customers prefer? how do competitive
products do get used?

● …



Step 4: What do people do without your product?
Do they do something? Do it badly?

● …



First Customer Contacts

Objectives: Start going out of the building and meet people to get deep
understanding of how customers actually work and what they need and how they buy.
You just want to validate or modify you hypotheses.

Step 1: Friendly First Contacts
In your personal network, find the first people you’re going to talk to. List 50 contacts from friends,
investors, founders, lawyers, recruiters, magazines, books, … even if they do not have a direct interest
in the product. Call them and remind to ask them who you could call by their recommendation.

● Contact 1: blablabla
● Contact 2: blablabla
● …
● Invalidatedcontacts: blablabla


Step 2: Use the contacts
Send a brief mail explaining what you do and why: gathering customer thoughts, that your contacts
will forward as an introduction to potential customers or interesting people to meet. Use the reference
to contact this level-2 batch of people, asking for some free time to talk. Prepare to do *TEN* phone
calls a day.

● Intro mail: blablabla
● Phone speech: blablabla


Step 3: List the “innovators”
Find the people, amongst the previous list or not, that are seen as early adopters, trend setters or
innovation spotters.

● Innovator1: blablabla
● Innovator2: blablabla
● …
● Invalidatedinnovators: blablabla



The Customer Problem Presentation

Objectives: based on your hypotheses, develop a presentation about the problem you
want to solve. Problem presentation (in contrast with a product presentation) isn’t
designed to convince customer, but rather to elicit information from customers.

Step 1: One slide presentation
When accurate, you can use a one slide to state the problems as you see them, but a simple flip chart
can make it too.
Do not propose the solutions, instead explain how you see the problems, let your contact restate or
reorder them, and go on only afterwards.

List of problems Today’s solution Your solution

● Bullet point 1: blablabla
● Point 2: blablabla
● …
● Do-not-mentionpoints:blablabla


Step 2:Attract feedbacks
During the meeting, do not propose the solutions, instead explain how you see the problems, let your
contact restate or reorder them, and go on only afterwards with column 2. You’re not the one
convincing the other, you need to let them convince you they have a problem.
Once a problem is recognized, ask how much having it costs to the customer.

● Feedback 1: blablabla
● Feedback 2: blablabla
● …


Step 3:Summarize
Ask “what’s the biggest pain in your work?” and “if you could have a magic wand and change
anything, what would it be?”.
After each meeting, make a follow-up e-mail and summarize the learnings.

● …



In-Depth Customer Understanding

Objectives: you want to understand how your customers spend their day and their
money, and how they get their job done.

Step 1: How customers live
How do your customers do their job ? Who are they interacting with? Whatotherproducts do they
use?

● Normal dayfact 1: blablabla
● …


Step 2: Would people pay for it?
What would make customers change the way they live by now? Which price? What features? What
would be the barriers to adopting the product?

● Paying argument 1: blablabla
● Paying argument 2: blablabla
● …
● Invalidatedarguments: blablabla


Step 3: How would they know you?
Who are the visionnaries? What do they read? Which event do they go to?

● …



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