This document provides an agenda and materials for a customer development class focusing on customer validation. The agenda includes reviewing two case studies of HP Kittyhawk and Wildfire, as well as a discussion of customer validation. The materials include slides on the HP Kittyhawk case, an overview of the customer validation phase, and details on getting ready to sell including articulating a value proposition, developing sales collateral, mapping channels and sales, hiring a sales closer, and formalizing advisory boards.
Lecture 8 - Technology, Innovation and Great Power Competition - Cyber
Customer Development/Lean Startup 092609 class 7 and 8
1. Customer Development in the
High Tech Enterprise
Customer Validation
Parts 1 & 2
September 26 2009
Steve Blank
sblank@kandsranch.com
9/25/09 1
2. Agenda
! Logistics/Questions
! Review
! Cases: HP Kittyhawk, Wildfire
! Customer Validation
Customer Development in the High-Tech Enterprise Fall 2009
4. HP Kittyhawk Questions
! How well do they execute product development?
! How competent was the development team?
! What Market Type could they chosen?
Which did they choose?
! What revenue curve did that choice result in?
! What revenue curve did they commit to?
! What were the consequences?
Customer Development in the High-Tech Enterprise Fall 2009
5. Kittyhawk Case
! Classic “Innovators Dilemma”
" New Market innovation in a large corporation
" Needs large forecasts to justify development
budget
" Unrealistic because its unpredictable and always
slower growth
" May steal resources from mainstream products
Customer Development in the High-Tech Enterprise Fall 2009
6. Today: Customer Validation
Customer Customer Customer Scale
Discovery Validation Creation Company
• Develop a repeatable and scalable sales process
• Only earlyvangelists are crazy enough to buy
Customer Development in the High-Tech Enterprise Fall 2009
7. 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
Customer Development in the High-Tech Enterprise Fall 2009
8. 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 Refine Sales Sell to Refine
Visionary Early Roadmap Channel Channel
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
Customer Development in the Roadmap Enterprise
High-Tech Model Fall 2009
9. 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 Refine Sales Sell to Refine
Visionary Early Roadmap Channel Channel
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
Customer Development in the Roadmap Enterprise
High-Tech Model Fall 2009
10. 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
Customer Development in the High-Tech Enterprise Fall 2009
11. 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
Customer Development in the High-Tech Enterprise Fall 2009 Board
12. 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
Customer Development in the High-Tech Enterprise Fall 2009
13. 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?
Customer Development in the High-Tech Enterprise Fall 2009
14. 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?
Customer Development in the High-Tech Enterprise Fall 2009
15. Channel Alternatives
Pick One
OEMs
System
Integrators
Direct
Sales Force
Value-Added Your
Your Customers
Resellers (VARs)
Company
Dealers
Distributors
Retail/Mass
Merchants/Online
Customer Development in the High-Tech Enterprise Fall 2009
16. 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
Customer Development in the High-Tech Enterprise Fall 2009
17. 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
Customer Development in the High-Tech Enterprise Fall 2009
18. 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
Customer Development in the High-Tech Enterprise Fall 2009
19. Early Sales
EarlyVangelist
Has / Or can Acquire
a Budget
Has Put Together a Solution
out of Piece Parts
Has Been Actively Looking For a Solution
Know They Have a Problem
Has A Problem
Customer Development in the High-Tech Enterprise Fall 2009
20. 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?
Customer Development in the High-Tech Enterprise Fall 2009
21. 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
Customer Development in the High-Tech Enterprise Fall 2009
22. 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
Customer Development in the High-Tech Enterprise Fall 2009
23. 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
Customer Development in the High-Tech Enterprise Fall 2009
24. Sell to EarlyVangelists
! Contact Visionaries
! Sell
! Refine Sales Roadmap
! Sell to Channel Partners
! Refine Channel Roadmap
Contact Sell to Refine Sales Sell to Refine
Visionary Early Roadmap Channel Channel
Customers Customers Partners Roadmap
Customer Development in the High-Tech Enterprise Fall 2009
25. 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
Customer Development in the High-Tech Enterprise Fall 2009
26. 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
Customer Development in the High-Tech Enterprise Fall 2009
27. Build the Organization Map
Dave Jones
CEO
Karen Rogers
VP Marketing
Neil Garrett Suzanne Kellogg
VP Database VP Merchandizing
Marketing
Our Potential
Customer
Customer Development in the High-Tech Enterprise Fall 2009
28. 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
Customer Development in the High-Tech Enterprise Fall 2009
29. 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
= issues to be addressed before a sale
= in house competition
Customer Development in the High-Tech Enterprise Fall 2009
30. The Influence Map
Functional Technical
High Executive 1
Low
Customer Development in the High-Tech Enterprise Fall 2009
31. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low
Customer Development in the High-Tech Enterprise Fall 2009
32. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3
Customer Development in the High-Tech Enterprise Fall 2009
33. 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
Customer Development in the High-Tech Enterprise Fall 2009
34. The Sales Roadmap:
Starts with Influence Map
Educate & Present
Solution
Operational Technical
High Execs CIO
End IT
Users
Low Staff
Customer Development in the High-Tech Enterprise Fall 2009
35. 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
Customer Development in the High-Tech Enterprise Fall 2009
36. 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
Customer Development in the High-Tech Enterprise Fall 2009
37. 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
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
Customer Development in the High-Tech Enterprise Fall 2009
38. 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
Customer Development in the High-Tech Enterprise Fall 2009
39. 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
Customer Development in the High-Tech Enterprise Fall 2009
40. Develop Positioning
! Product Positioning
! Company Positioning
! Present to Analysts &
Influencers
! Builds briefs for demand
creation activities
Product Company Present to
Positioning Positioning Analysts &
Influencers
Customer Development in the High-Tech Enterprise Fall 2009
41. Positioning:
Product Positioning
! Market Type affects positioning
Existing Market New Market Resegmented Market
Product Compare your It’s too earlier fo r Compare your product to
Positioning product to your customers to your competitors Describe
Statements competitors. understand what your how some feature o r
Describe how products features will attribute of the product
some feature or do for them. Instead, solves the problem your
attribute of the describe the problem customer has in a way
product is your product will solve comparable products do
better, faster, and the benefits that not. Describe the benefits
cheaper, the customers will get that the customers will get
easier. from solving it. from solving their problem
this new way.
Customer Development in the High-Tech Enterprise Fall 2009
42. 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.
Customer Development in the High-Tech Enterprise Fall 2009
43. 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
Customer Development in the High-Tech Enterprise Fall 2009
44. 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
Customer Development in the High-Tech Enterprise Fall 2009