4.4 customer validation

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  • 1. This presentation is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this presentation are the sole responsibility of Rick Rasmussen and do not necessarily reflect the views of USAID or the United States Government. Customer Validation
  • 2. Customer Validation - The Second Step • Validation comes after discovery • Pivots are expected • Make early sales • Constrain spending Customer Discovery Customer Validation Customer Creation Company Building
  • 3. Ideas behind Customer Validation • Can the business scale? • Is the sales funnel predictable? • Is there a repeatable and scalable sales roadmap?
  • 4. The Process Customer Validation Customer Discovery Customer Creation • Type of startup • Distribution model • Articulate problem & product concept • Understand customer view of competitors • Day in the life • Attend conferences • Estimate mkt. size • Press, analysts, influencers list • How do customers make buying decisions?
  • 5. The Process 5 Customer Discovery Customer Creation Customer Validation • Revenue model • Channel model • Initial company & product positioning • Test w/early adopters • Company & product launch strategy • Test with early adopters • How do customers purchase? • Understand analysts/ influencers view
  • 6. Customer Validation Details 6 To Customer Creation Phase 1 Get Ready to SellPhase 2 Get Out of the Building and Sell Phase 4 Verify/Metrics that Matter Phase 3 Developing Positioning
  • 7. Phase 1: Get Ready to Sell • Craft positioning statement – Develop collateral • Develop acquisition plan • Activate plan and tools • Hire a sales closer (gladiator) • Sales channel roadmap • Formalize advisory board Phase 1 Get Ready to SellPhase 2 Get Out of the Building and Sell Phase 4 Verify/Metrics that Matter Phase 3 Developing Positioning
  • 8. Phase 2: Get out of the Building and Sell • Find Early-Vangelists • Prepare Optimization Plans • Get out of the building and sell • Optimize getting more customers • Refine the sales roadmap • “Keep” and “Grow” Phase 1 Get Ready to SellPhase 2 Get Out of the Building and Sell Phase 4 Verify/Metrics that Matter Phase 3 Developing Positioning
  • 9. Get out of the Building • B2C – Surveys – Friends – Experts • B2B – Real customers – Primary leads – Lean on friends for introductions
  • 10. Four Types of Customers Early Evaluators Early- Vangelists Scalable Customers Mainstream Customers Motivation Technology Evaluation Vision-match Practicality Need the “whole product” delivered Pricing Free Give them a hefty discount Published list price and hard negotiating Published list price and harder negotiating Decision Power Can OK a free purchase Internal cheerleader for a sale Standard sales process Competitive “bake-off” and/or RFP
  • 11. Phase 3: Develop Positioning • Company Positioning • Product Positioning • Validate Positioning Phase 1 Get Ready to SellPhase 2 Get Out of the Building and Sell Phase 4 Verify/Metrics that Matter Phase 3 Developing Positioning
  • 12. Moore’s Automatic Positioning Generator • For <target customer> • Who <compelling reason to buy> • Our product is a.. <product category> • That <key benefit> • Unlike <main competitor> • Our product <key differentiation>
  • 13. Customer Validation Positioning Year 1 Objectives Positioning Existing Market •Market share •Differentiation & credibility •Product differentiation Re-Segmenting Existing Market •Market resegmenting & new market share •Segmentation & innovation •Redefining existing market & product differentiation New Market •Market adoption •Vision & innovation in new market •Defining the new market, the need & the solution •Early adopters
  • 14. Company Positioning • Market Type affects positioning Existing Market Resegmented Market New Market Company Positioning Statement Compare your company to competitors Compare product to competitors Educate. Describe problem, how you solve and benefits derived
  • 15. Phase 4: Verify • Pivot or Proceed • Assemble Data Findings • Validate your Business Model • Validate Financial Model • Find Metrics that Matter Phase 1 Get Ready to SellPhase 2 Get Out of the Building and Sell Phase 4 Verify/Metrics that Matter Phase 3 Developing Positioning
  • 16. Customer Validation: Exit Criteria • Which startup strategy are you executing? -Existing -Re-Segmenting -New • Positioning tested & complete • Launch strategy match startup type • Demand creation activities match startup type • Customers standing in line yet? – If not Kill the Project