1. Customer Development in the
High Tech Enterprise
Customer Validation
Part 1 & 2
Steve Blank
sblank@kandsranch.com
3/27/10 1

2. Agenda
 Logistics/Questions
 Review
 Case: HP Kittyhawk
 Guest: Hiten Shaw Kissmetrics
 Customer Validation

3. Today: Customer Validation
Customer Customer Customer Scale
Discovery Validation Creation Company
• Develop a repeatable and scalable sales process
• Validate your business model
• Only earlyvangelists are crazy enough to buy

4. Customer Validation:
Phase 3 Phase 4
Customer
Positioning Business
Validation
Model
Verified
From Discovery
To Creation
Phase 1
Phase 2
Get
Sell to
Ready
EarlyVangelists
to Sell

5. Customer Validation
Get Ready to Sell!
Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan
Formalize
Sell to “EarlyVangelists”! Advisory
Board
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap
Develop Positioning!
Product Company Present to
Positioning Positioning Analysts &
Verify! Influencers
Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap Roadmap Model

6. Customer Validation
Get Ready to Sell!
Articulate
a Value
Proposition
Inside the Building!
Prelim Sales
& Collateral
Materials
Prelim
Distribution
Channel Plan
Prelim Sales
Roadmap
Hire a
“Sales Closer”
Align Your
Executives
Formalize
Sell to “EarlyVangelists”! Advisory
Board
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap
Outside the Building!
Develop Positioning!
Product Company Present to
Positioning Positioning Analysts &
Verify! Influencers
Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap Roadmap Model

7. Phase 1:
Get Ready to Sell
Phase 3 Phase 4  Serious preparation
Positioning Business before 1st sales
Model
Verified  Another writing exercise
 Aligning Executives
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

8. Get Ready to Sell
 Value Proposition
 Sales Collateral
 Distribution Plan
 Sales Roadmap
 Sales Closer
 Synchronize Execs
 Advisory Board
Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan
Formalize
Advisory
Board

9. Get Ready to Sell:
Articulate a Value Proposition
 Create Value Proposition
 Is it emotionally compelling?
 Does it make or reinforce an economic case?
 Does the it pass the reality test?
 Varies by Market Type

10. Get Ready to Sell:
Preliminary Sales Collateral
 Create collateral roadmap
 What you need and when you need it
 Supports the sales roadmap
 Ensure the collateral matches the internal audiences
 Create all selling materials
 Presentations
 Data sheets
 White Papers
 How would collateral differ by Market Type?

11. Get Ready to Sell:
Preliminary Channel Road Map
 Channel Food Chain and responsibility
 Channel discount and financials
 Channel Management
 How would channel plan differ by Market Type?

12. Channel Alternatives
Pick One
OEMs
System
Integrators
Direct
Sales Force
Value-Added Your
Your
Resellers (VARs) Customers
Company
Dealers
Distributors
Retail/Mass
Merchants/Online

13. Channel Diagram
Book Publishing Company
National
Publisher Wholesaler Distributor Retailer
Determine Merchandise
Deliver Books Allocations Titles
(from printer) Stock Books
Deliver Orders Sell Books
-Establish Identity Ship Books
-Create Demand
Dispose of Acknowledge
Returns Returns

14. Channel Margins
Book Publishing Company
Publisher National Customer
Distributor Retailer
Wholesaler
% of 35% 15% 10% 40%
Retail
$s $7.00 $3.00 $2.00 $8.00 $20.00

15. Get Ready to Sell:
Preliminary Sales Road Map
 Built around key insights about the selling process
 Answers
 Who decides the sale?
 Influencers, recommender, decision makers Where is the
budget? How many sales call to the sale? To who? What is
the script for each?
 Consists of:
 Organization Map
 Influence Map
 Customer Access Map
 Sales Strategy
 Implementation Plan

16. Early Sales

17. Get Ready to Sell:
Hire a “Sales Closer”
 Identify need for a “Sales Closer
 Founders have experience “closing” business?
 Do they have a “world-class” set of contacts?
 Bet the company on their ability to close sales?
 If not, hire a “Sales Closer”
 Do NOT hire a VP of Sales
 Typical background would be a regional manager
 How does Market Type effect this hire?

18. Get Ready to Sell:
Synchronize Your Execs
 Product Development
 Schedule
 Deliverables
 “Good-enough” Philosophy
 Engineering’s role in sales, installation, post-sales support
 Sales Collateral review

19. Get Ready to Sell:
Formalize Advisory Boards
 Advisory boards are critical in nascent stages of a startup
 To sell to industry specific customers requires an industry
advisory board
 Multiple Advisory Boards
 Use at different times
 Different purposes

20. Phase 2: Sell
Phase 3 Phase 4  First sales
Business
Positioning
Model  First channel sales
Verified
 Scalable and Repeatable
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

21. Sell to EarlyVangelists
 Contact Visionaries
 Sell
 Refine Sales Roadmap
 Sell to Channel Partners
 Refine Channel Roadmap
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap

22. Sell:
Contact Visionaries
 Looking for people with problems
 They are few are far between
 They need to become your
cheerleaders…
while paying you to do so

23. Sell: Turn Visionaries into
EarlyVangelists
 Very few are early customers
 Visionaries will emerge to buy an unfinished
product if it truly solves a painful problem
 A lack of these early purchasers is a red-flag
 Market Type effects ease of execution

24. Build the Organization Map
Dave Jones
CEO
Karen Rogers
VP Marketing
Neil Garrett Suzanne Kellogg
VP Database VP Merchandizing
Marketing
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

25. One Step at A Time
Dave Jones
CEO
Ben White Karen Rogers
VP Sales VP Marketing
Joe Black Neil Garrett Suzanne Kellogg
Dir. Sales Operations VP Database VP Merchandizing
Marketing
Leslie Elders
Financial Modeling
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

26. Organization Map
Dave Jones
CEO
Ben White Karen Rogers Roger Smith
VP Sales VP Marketing CIO
Joe Black Neil Garrett Suzanne Kellogg Phil Whitry
Dir. Sales Operations VP Database VP Merchandizing Director IT
Marketing
Leslie Elders Geoff Smith
Financial Modeling Financial Tools
Development
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

27. The Influence Map
Functional Technical
High Executive 1
Low

28. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low

29. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3

30. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3 4 Corp. IT staff or Division IT

31. The Sales Roadmap:
Starts with Influence Map
Educate & Present
Solution
Operational Technical
High Execs CIO
End IT
Users
Low Staff

32. The Sales RoadMap:
Adds Access, Assessment & Strategy
Access Assess Strategy Educate & Present
Needs Solution
Finance
Product Operational Technical
Mgmt
High Execs CIO
Sales
Intro Account
Meetings Strategy
Corp. End IT
Mktg Users
Low Staff
Support
IT

33. The Sales RoadMap
Access Assess Strategy Educate & Present Sell, Sell, Sell, Sell
Needs Solution
Finance
Product Operational Technical
Mgmt
High Execs CIO
Sales Implement
Intro Account Proposal
Meetings Strategy Plan
Corp. End IT
Mktg Users
Low Staff
Support
IT

34. RoadMap becomes The Sales Pipeline
4. Understand
1. Prepare 2. Initial Meeting Existing Situation
• Hoovers, One • Ask tough questions a) Technology
Source, Web • Do Buy- In Demo
3. Qualify?
b) Organization
c) Competition
T
h
e
i
m
5. Custom Pitch
• Prepare! 6. Win Over IT 7. Define Problem 8. ROI Pitch
• Get NDA signed • Tech deep dive • Develop Action Plan • Prove the Value!
9. Exec Session
• Set expectations for
this meeting early on.
10. Solution 11. Formal Pricing 12. Negotiate
Session Proposal • Sales
• Detailed Tech discovery
• 13. Close!
• No surprises! • Finance
• Support

35. Sell: Sell/Refine Channel Roadmap
 Early channel partners need to be “Visionaries”
 Indirect channels/integrators have $ minimum
 Indirect channels/integrators just fulfill
 Market Type affects channel adoption

36. Phase 3:
Company & Product Positioning
Phase 3 Phase 4  Market Type driven
Business
Positioning
Model  Company & Product
Verified
 Based on real-world facts
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

37. Develop Positioning
 Product Positioning
 Company Positioning
 Present to Analysts & Influencers
 Builds briefs for demand creation activities
Product Company Present to
Positioning Positioning Analysts &
Influencers

38. Positioning:
Product Positioning
 Market Type affects positioning

39. Positioning:
Company Positioning
 Market Type affects positioning
Existing Market New Market Resegmented Market
Company Compare your It’s too earlier for Company positioning for
Positioning company to your customers to understand this type of market
Statements competitors. Describe how different your communicates the value
how your company is company is, since in a of the market segment
both different and new market there are no you’ve chosen and the
credible. other companies to innovation your
compare it to. Therefore, company brings to it.
company posi tioning is What is it that customers
about communicating a value and want and
vision and passion of what need now.
could be.

40. Phase 4:
Verify, Iterate or Exit
Phase 3 Phase 4  Market Type driven
Business
Positioning
Model  Company & Product
Verified
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

41. Verify
 Product
 Sales Roadmap
 Channel Roadmap
 Business Model
Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap Roadmap Model