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The Lean Customer Discovery and Customer Validation Process

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Taken from Steve Blank's first two steps of his Four Steps to the Epiphany and adding in my own experience practicing lean for over 4 years, this presentation outlines the challenges and questions to ask you and your company as you start out.

I'm writing a book on How to Build Customer Driven Products based on tactics like the ones in this presentation. You can sign up to learn more here: http://eepurl.com/RZoO9

Published in: Business, Technology
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The Lean Customer Discovery and Customer Validation Process

  1. 1. The First 2 Steps to the Epiphany Jason @Evanish August 29, 2013
  2. 2. Who is Jason @Evanish? 100s of customer development interviews with: Cofounded: Blog my learnings: JasonEvanish.com
  3. 3. Today’s Topics Customer Discovery Overview Customer Development Interview Process Customer Validation Overview
  4. 4. Why Customer Development? • Move faster • Reduce risk • Bring process to chaos • Stay in tune with customers • Replace HiPPO & opinions with data • Discover the best market opportunities
  5. 5. The Core: Learn-Build-Measure
  6. 6. Customer Discovery
  7. 7. Who is Your Customer? Phase 1: State Hypothesis Phase 4: Verify Phase 3: Test Product Concept Phase 2: Test Problem Hypothesis
  8. 8. Map Your Ecosystem • Who are the entities in your business? • Connect the entities based on the flow of $$ • How does the product move through channels to meet users?
  9. 9. The Hypothesis : C-P-S • Customer –Who is using your product? • Problem –What problem do they have? • Solution –How will you solve the problem? Be Specific. It’s better to be wrong than vague. Take 5 & write this for your startup
  10. 10. The Intermediate MVP • Map out the basics of your MVP based on the solutions from C-P-S • Identify the riskiest parts & test them • This is before you build anything…just map out what you think is the solution BUILD
  11. 11. Helping you map it: The Lean Canvas
  12. 12. Why all this work?!? • Save Time and Money by discovering early on if something won’t work. • Make course adjustments before you build a large product.
  13. 13. Customer Discovery Wrap Up To Exit means you’ve: • You’ve identified a problem a customer wants solved. • Your product solve the customer’s needs. • You believe you have a viable and profitable business model. • You feel you’ve learned enough to go out and sell.
  14. 14. The Customer Development Interview Learn in detail at: bit.ly/CustDevInterview
  15. 15. The Structure 3. Solution 2. Problem 1. Person The MVP House
  16. 16. The Structure – 1. Person • Who are they? What’s their role? • How is your budget handled? • How do you find new products for work? • How much time do you spend on [Task X]? Goal: Get a baseline background of the person you’re talking to. Be broad. Learn about them and their role in your industry.
  17. 17. The Structure – 2. Problems • NOT about the problems you think they have. • What are your top 3 challenges you face in your job related to [industry X]? • If you could wave a magic wand…what would the solution be? Goal: Get them to say the problem you want to solve is a problem they have (prefer unprompted) Learn about the problems they recognize first.
  18. 18. The Structure – 3. Solution • “That’s interesting” = Kiss of Death. • If they’re not anxious to use right away, they’re not a key target. • Read body language, voice inflection and energy level for signals of interest. • Best reaction is actually following through after the meeting or calls. Now you tell them about your product concept. Goal: Discover if they’re interested in your solution and gather feedback.
  19. 19. Tips for making the most of Interviews 1. Take good notes. 2. Involve other team members. 3. Be Conversational. 4. Go off script. 5. Ask to see any MVPs they’ve made/use. 6. If they’re excited about something, ask if they’ll pay for it. 7. Show them mockups or early concepts if you have them and pay attention to their reactions/feedback. 8. Always Follow up. 9. End with an ask. 10. Be open to new problems and opportunities! 11. Summarize and review your notes with your team.
  20. 20. Where do you find people to interview? Learn in detail at: bit.ly/1stcustomers
  21. 21. The Best Place to Find Candidates:
  22. 22. Help not Sales
  23. 23. Manage Expectations • Only 10-20% of those you reach out to will respond. • Getting started is the hardest, then you can find the channels. • Different target customer usually means having to find a new goto channel.
  24. 24. Now what? • Interview in groups of 8-10 people per customer type. • Summarize notes and review with others. • Look for common patterns matching C-P-S. • Compare to your high level metrics to see if anecdotes match data.
  25. 25. Take 10 minutes! Write your own script: –WHO will you talk to? –WHAT will you ask? –WHAT are you validating?
  26. 26. Customer Validation
  27. 27. Can You Sell It? Phase 1: Get Ready to Sell Phase 4: Verify Phase 3: Develop Positioning Phase 2: Sell to Visionary Customers
  28. 28. Not time for Glengarry Yet… You’re still in learning mode. …about what customers will buy and how!
  29. 29. Break Down Your Sales Road Map • Who influences a sale? • Who recommends a sale? • Who is the decision maker? • Who is the economic buyer? • Who is the saboteur? • What is the budget for purchasing your type of product? • How many calls does it take to make a sale • What is the profile of an early customer?
  30. 30. The Word According to Blank – Phase 1 : Get Ready to Sell Articulate a Value Prop Prelim Sales & Collateral Materials Prelim Distribution Channel Plan Prelim Sales Roadmap Hire a Sales Closer Formalize Advisory Board Goal: Take what you learned from Customer Discovery and apply to development of Sales Process
  31. 31. Map out the Food Chain of your Sale
  32. 32. Find out how to (reliably) get your foot in the door… • At what level do you want to enter? • How many people on the org chart need to say yes? • Does each department perceive the problem the same way? • In what order do you need to call on people? • Who can derail the sale?
  33. 33. Take 10 minutes! Map out your food chain! • Who is your end user? • Who makes the purchase decisions? • Who is looking for a solution like yours? • What are their alternatives? Remember: It’s okay to be wrong. When you write it down, it forces you to measure whether you are right or wrong and make changes.
  34. 34. The Word According to Blank – Phase 2: Sell to Visionary Customers Contact Early- vangelists Sell to Early- vangelists Refine Sales Roadmap Sell to Channel Partners Refine Channel Roadmap Goal: Get someone to Pay for your product and learn how to repeat the process.
  35. 35. Free != Customer Customer =
  36. 36. Build Your Sales Roadmap Get Lead Send initial outreach Qualify a lead Validate the lead Preliminary Sales Call Win over the CIO Second PitchWin over IT Formal Proposal Negotiate & Close
  37. 37. The Word According to Blank – Phase 3: Develop Positioning Product Positioning Company Positioning Present to Analysts & Influencers Goal: Based on problem and sales lessons, optimize positioning for your product & company.
  38. 38. Positioning • Speak the language of your customer • Written by those that interact directly with the customer • Verify with Product team to ensure what’s built meets expectations set
  39. 39. Take 10 minutes! • What problem(s) are you solving? • How would your customer describe the problem? • What is the outcome your customer wants? (i.e.- Your solution)
  40. 40. The Word According to Blank – Phase 4: Verify Verify the Product Verify the Sales Roadmap Verify the Channel Roadmap Verify the Business Model Iterate or Exit Goal: Verify all the work you’ve put into Customer Validation to iterate or move onto Customer Creation.
  41. 41. Productive Paranoia
  42. 42. Questions to Ask… Product: - Are you repeatedly losing any deals? Why? - Are customers satisfied? What else do they expect? - Are you building the right features? - Were there any pricing issues? Did you lose customers on pricing? Sales: - Can you verify the sales process and accurately project its success rate? - Can you realistically map your sales pipeline? - Are you closing deals?
  43. 43. More Questions to Ask… Channel: -Did you factor in the channel costs to the overall costs of your product? -How do various channels affect the sales time? -What does your sales force look like? Business Model: -Based on known factors, how profitable is the business? -Will costs be the same as you grow? -How much funding do you need to reach profitability?
  44. 44. Customer Validation Wrap Up To Exit means you’ve - Proven you found a Customer Problem - Found earlyvangelists that will pay you - Found a repeatable and scalable sales process - Demonstrated a viable business model
  45. 45. Customer Development in a Nutshell Common Sense + Diligent Process + Thought =
  46. 46. Questions?
  47. 47. Contact me…I’m happy to help. On Twitter: @Evanish Other sites: About.me/Evanish Email: Evanish.J@Gmail.com Find all my Lean learnings at JasonEvanish.com/lean-startups/ Find a detailed, blog form of the interview process at bit.ly/CustDevInterview And tips for finding your first customers at bit.ly/1stcustomers
  48. 48. Further Reading - Books The Lean Entrepreneur By Patrick Vlaskovits & Brant Cooper Awesome, actionable examples for any market. The Entrepreneur’s Guide to Customer Development By Patrick Vlaskovits & Brant Cooper The Cliff Notes for Lean Startups; a must read for everyone on your team. The Four Steps to the Epiphany By Steve Blank The Bible of Lean Startups. Tough read, but excellent content. The Startup Owner’s Manual By Steve Blank An in depth guide to lean Startups for your company. Helpful from Day 1 to 1,000. These books, especially 4 Steps, were key sources in creating this presentation & my learning of this methodology
  49. 49. Further Reading – Helpful Presentations • The Customer Development Methodology –by Steve Blank • Startup Metrics are for Pirates –by Dave McClure • The Top 10 Reasons to not be a Lean Startup –By Patrick Vlaskovits & Brant Cooper • How to recruit and interview potential customers –by Elizabeth Yin • Minimum Desirable Product: Customer Development for the “Winner Take All” Web –by Andrew Chen

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