Customer validation 101


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Customer validation 101 by Thor Ernstsson of Casual Corp.

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Customer validation 101

  1. 1. Customer Validation tips and tactics to make sure you’re solving the right problem
  2. 2. What Is It? Validate assumptions before spending time and money on execution Customer Validation The customer “proof” that you have what it takes to execute against your business opportunity
  3. 3. When Do I Use It? Nearly every successful company can be analyzed through this framework: Vision - aspirational goal Opportunity - the business at scale Validation - team, product, market, etc
  4. 4. So What Is Customer Validation? Restated: Customer Validation means demonstrating that a particular customer segment perceives value in your offering This is critical in any pitch, to VCs, clients, employees, and more.
  5. 5. How do I Validate? There are many many ways to validate your customer need… but first: Identify the earliest adopters The ones that will LOVE your product, even before it’s ready and then TALK TO THEM
  6. 6. Ultra-niche Segments If you can’t get 10 users, what makes you think you’ll reach 10k or 10m? Ultra-niche segments Segment aggressively to understand deep issues, not just what people say they want.
  7. 7. Pitfall: Customers It’s common to talk to friends and other supportive groups and mistake them for “customers” Make sure the niche segment are real customers Get them to pay something… anything Make sure that you’re determining viability of the business, not just if someone thinks it’s a good idea
  8. 8. Examples Three types of segments and specific tactics to target them: Global 2000 companies Small business Consumer Product
  9. 9. Global 2000 Customer Identify the type of person within the Global 2000 company that would be interested Create 2-4 hypotheses about what they’ll respond to Find a way to reach out and split test a single value proposition to your target Measure open and response rates; don’t expect any YESes on the first several iterations
  10. 10. Global 2000: tools Lots of relatively cheap tools to identify people, measure messaging efficacy, and create professional split-test landing pages
  11. 11. Global 2000: outcomes First phase: messaging CTR and response rates to emails, e.g. ToutApp:
  12. 12. Global 2000: outcomes Second phase: responses Once you know what your segment responds to, track like a normal sales pipeline. Use lightweight tools, since you’re still testing:
  13. 13. Small Business Customer Understand what else is competing for your customer’s time / money The hardest part is identifying your early adopter segment and getting in front of them The goal is to find the one thing that drives conversions
  14. 14. Small Business: tools Tools here are often traditional marketing tools: - Search engine marketing - Printed materials - Door-to-door “sales” - Cold calls Look for tools that allow you to compare effectiveness of pitches Get in front of your customers; Get Out Of The Building
  15. 15. Small Business: outcomes Split test messaging in a similar way, i.e. cold call 500 potential customers and try two different value props: VP-A: 98% hung up on me VP-B: 10% hung up on me Validated Learning: B is better than A (or at least less bad) After a few iterations and a lot of NOs, you may start getting some YESes
  16. 16. Concierge MVP In many cases, because you’ve distilled the value prop down to a single thing, it’s possible to deliver the offering without fully investing in building it out. If the small business client agrees to sign up, then you can often perform the service that should be automated in a manual way. It should be indistinguishable from the customer’s point of view
  17. 17. Consumers Customer Validation for consumer products is generally more about scale than selling to individual users Identify segment & market to them as if the product is real. Use qualitative user interviews to identify needs. Verify them with quantitative tests, and ask for a nominal payment Goal: build a backlog of paying users
  18. 18. Consumers: tools Many platforms and marketplaces exist to help validate consumer need, including:
  19. 19. Consumers: case study
  20. 20. Audience Examples ? ? ?