4.2 customer discovery

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4.2 customer discovery

  1. 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. Startup Owner’s Manual The four steps to the epiphany Based on books from Steve Blank and Bob Dorf
  2. 2. Old Product Development Model Concept / Seed Round Product Dev Alpha/Beta Test Launch / 1st Ship
  3. 3. What’s Wrong With This? - Marketing - Sales - Engineering Concept / Seed Round Product Dev Alpha/Beta Test Launch / 1st Ship - Marcom Materials - Create Positioning - Hire PR Agency - Early Buzz - - Hire Sales VP - Hire 1st Sales Staff - Hire first Bus Dev - Create Demand - Launch Event - “Branding” - Build Sales Organization - Do deals for FCS
  4. 4. Connect to Customers: Customer Development is as Important as Product Development Concept / Seed Round Product Dev Alpha/Beta Test Launch / 1st Ship Customer Discovery Customer Validation Customer Creation Company Building
  5. 5. Customer Development Philosophy • Connect with Customers – they’re your life blood • Get outside the building..! • Earlyvangelists – They make your company • The goal for release 1 – Minimum feature set for Earlyvangelists – Minimum Viable Product
  6. 6. Customer and Product Development Synchronization Concept / Seed Round Product Dev Alpha/Beta Test Launch / 1st Ship Customer Discover y Customer Validation Customer Creation Company Building
  7. 7. Customer Development • Each step has a set of phases • Plan what you need to learn in writing so everyone knows: – what they should be doing – when they should be doing it – if they succeeded, then what? – if they need to do more • These are tests and checklists, not inviolable commandments
  8. 8. 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 Discovery The first step of the 4 Steps to the Epiphany
  9. 9. Timeline • Existing Market: 1 to 6 months • Resegmentation: 3 to 12 months • New Market: 1 to 4 years Customer Discover y Customer Validation Customer Creation Company Building
  10. 10. Customer Discovery • Stop selling, start listening • Test your two fundamental hypotheses – The Problem you’re solving (unmet need) – The Product Concept Customer Discover y Customer Validation Customer Creation Company Building
  11. 11. Discovery = Hypothesis Testing • What are Hypothesis? • Where do Hypothesis come from? • Why test them? • How do you test them?
  12. 12. The Customer Discovery Process To Customer Validation Phase 1 Author Hypothesis Phase 2 Problem Hypothesis Phase 4 Verify, Iterate and Expand Phase 3 Product HypothesisNote: Resolve Product first then design product
  13. 13. Phase 1: Author Hypothesis • One-time writing exercise • All other time spent in front of customers • Assumes you’re smart but guessing Phase 1 Author Hypothesis Phase 2 Problem Hypothesis Phase 4 Verify, Iterate and Expand Phase 3 Product Hypothesis
  14. 14. Hypothesize each of these Issues • Customer/Problem • Product • Distribution/Pricing • Demand Creation • Market Type • Competition Product Customer / Problem Distribution / Pricing Demand Creation Market Type Competition
  15. 15. What’s the PROBLEM you’re solving for..? • Types of customers • Magnitude of the problem • Visionaries • A day in the life of customer • Organizational Impact • ROI Justification • Problem Recognition • Minimum feature set MVP
  16. 16. What’s the PRODUCT that solves the PROBLEM? • Features • Benefits • Product Delivery Schedule • Intellectual Property • Total cost of Ownership • Dependency analysis
  17. 17. How do you connect with CUSTOMERS? • Distribution Model • Distribution Diagram • Sales Cycle / Ramp • Channel strategy • Pricing (ASP, LTV) • Customer Organization Map • Demand Creation
  18. 18. Hypotheses for Demand Creation • How will you? - Create Virility - Focus Advertising - PR • Who are influencers / recommenders? • How do competitors create demand? • Key trade shows? • Key trends?
  19. 19. Competition Hypotheses • Who is out there? • Why are they important? • How do customers use them today? • What don’t customers like about them?
  20. 20. Phase 2: Test and Qualify Problem Hypothesis • Get out of the building • Solve a real problem • Test the problem • Become the customer Phase 1 Author Hypothesis Phase 2 Problem Hypothesis Phase 4 Verify, Iterate and Expand Phase 3 Product Hypothesis
  21. 21. Test & Qualify Problem Hypothesis • Friendly First Contacts • “Problem” Presentation • Customer Understanding • Market Knowledge Friendly first contacts “Problem” Presentation Customer Understanding Market knowledge
  22. 22. Test & Qualify Problem: First Contacts • Build your Rolodex • Develop “innovators” list • Create reference story / sales script • Schedule Customer Visits
  23. 23. Test & Qualify Problem: Customer Understanding • Become a domain expert • Understand their “day in the life” • Understand their problems / pain • Get a feel of how this impacts their life / work • Who has similar products that solve this problem • How do they learn about new solutions • Can they be helpful later?
  24. 24. Test & Qualify Problem: Market Knowledge • Get a feel for the “lay of the land” • Adjacent market players • Industry influences • Key Analysts • Attend Conferences / Tradeshows
  25. 25. What Problem? • You are responding to customer needs – Are clearly understood by the customer – If the solution were presented, the customer would purchase • Where responding to customer needs – Problem not understood by the customer – If an eye-opening solution were presented, they would buy • The customer is complete unaware they need it – If an eye-opening solution were presented, they would buy You can build a company on these!
  26. 26. Phase 3: Test Product Hypothesis • First reality check with product development • The product hits the streets • Lots of customer visits • More doses of reality Phase 1 Author Hypothesis Phase 2 Problem Hypothesis Phase 4 Verify, Iterate and Expand Phase 3 Product Hypothesis
  27. 27. Test Product Hypothesis • First Reality Check • Product Presentation • Yet More Customer Visits • Second Reality Check First reality check Product Presentation Yet more customer visits Second reality check
  28. 28. Test Product Hypothesis First Reality Check • Build a Workflow Map of customer – Before and after your product • Problem Scale • Key Insights • How did the product spec match needs? • Re-review product feature list • Why are you different?
  29. 29. Test Product Hypothesis Product Presentation • Questionnaire • Start with Problem Presentation • Then describe the product • Demo if you have one
  30. 30. Test Product Hypothesis: Yet More Customer Visits • Set up more calls • Validate solution, product and positioning • Understand customer and organization pain • Validate Pricing and Budget • Understand “Whole Product” needs • Understand Approval Process
  31. 31. Test Product Hypothesis: Second Reality Check • Does the product solve a problem? – Serious Problem? – For a large scalable market? • How did the product spec match needs? • Re-review feature list
  32. 32. Phase 4: Verify, Iterate and Expand • The Problem • The Product • The Business Model • Iterate or Exit The Problem The Product The Business Model Iterate or Exit Phase 1 Author Hypothesis Phase 2 Problem Hypothesis Phase 4 Verify, Iterate and Expand Phase 3 Product Hypothesis
  33. 33. Verify, Iterate & Expand: The Problem • Problem Hypothesis Testing • Magnitude of customer needs • Rank customer problems • Summary of customer problem input
  34. 34. Verify, Iterate & Expand The Product • Product match problem? • Feature list • Quantify customer problem • Summary of customer product input • Why are you different? • Review Product Spec
  35. 35. Verify, Iterate & Expand The Business Model • Customer model • ROI • Market Size • Service • Development • Manufacturing • Customer Acquisition
  36. 36. Customer Discovery Exit Criteria • What are your customers top problems? – How much will they pay you to solve them? • Does your product concept solve them? – Do customers agree? – How much will they pay? • Draw a day-in-the-life of a customer – Before and after your product • Draw the org chart of users and buyers • Are you ready to move on to Customer Building?

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