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Copyright DKParker, LLC 2015
Customer DevelopmentDave Parker
@DaveParkerSEA
www.dkparker.com/blog
Copyright DKParker, LLC 2015
Agenda
¤ About Dave
¤ Customer Development ¤ What to do ¤ What not to do
¤ +5 Hypotheses
¤ Iterations/Pivots
¤ Q&A – Your questions
Copyright DKParker, LLC 2015
Where to start?
You have opinionsYou have Data You get money!
Investors have opinionsThey have money
Copyright DKParker, LLC 2015
You are not Henry Ford
Copyright DKParker, LLC 2015
Customer Development Goals
¤ Find out if customers care?
¤ What do they want?
¤ Determines the difference your product at launch and at scale
¤ Feature priorities
¤ Product Roadmap
¤ Market Timing – see Bill Gross Ted Talk
Copyright DKParker, LLC 2015
Customer Development
¤ Steve Blank – Four Steps to the Epiphany¤ Customer Discovery ¤ Customer Validation ¤ Customer Creation ¤ Company Building
¤ Eric Reis – Lean Startup ¤ Learn - Ideas¤ Build – Code ¤ Measure – Data
Copyright DKParker, LLC 2015
What To Do
¤ YOU get out of the building and interview prospects (they aren’t customers until they use or pay) ¤ 50 B2B interviews ¤ 100 B2C
¤ Standard set of questions ¤ Google form – you fill it in
¤ 1) Face to face 2) Skype or hangout¤ Watch
¤ Ask the next question – why?
Copyright DKParker, LLC 2015
What Not To Do
¤ You are not the customer
¤ Don’t tolerate a small sample set – this could delay your success by Years
¤ Avoid “Selection Bias” ¤ “Isn’t our product amazing”
¤ No rhetorical questions
¤ No blind surveys
¤ Can’t outsource
Copyright DKParker, LLC 2015
What do you want to know?
Negatives
¤ If you have a fatal flaw in your assumptions – when do you want to know?
¤ If it was to fail why would it fail?
Positive
¤ Do they really want it ¤ Pain Pill ¤ Vitamin
¤ What will they pay
¯\_(ツ)_/¯
Copyright DKParker, LLC 2015
Tooth Brush Test
Copyright DKParker, LLC 2015
+5 Hypotheses
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What can you test?
¤ Price
¤ Sales Model Hypothesis – how will you sell it?
¤ Demand Hypothesis – is anyone looking
¤ Business Model Hypothesis – how will you make money
¤ Customer Acquisition Cost (CAC) /Life Time Value (LTV) Hypothesis
All of these are required for your forecast
Copyright DKParker, LLC 2015
Price
¤ Value based pricing vs. cost base pricing
¤ Monthly Recurring Revenue
¤ Packaging
¤ 90% startups start too low
Copyright DKParker, LLC 2015
Sales Model Hypothesis KnownMarket
Unknown Market
Low Price Point
High PricePoint
Known Search Words
Unknown Search words
Web Direct ✔ ✔ ✔
Direct ✔ ✔ ✔ ✔ ✔
Indirect ✔ ✔ ✔
Licensing ✔ ✔
Retail
Copyright DKParker, LLC 2015
Demand Hypothesis
¤ Is anyone looking for what you are doing
¤ Key word/phrases ¤ SEO – long time to build ¤ SEM
¤ AdWords Key Word Planner ¤ Display Ads
¤ This gives you top of funnel/marketing spend
Copyright DKParker, LLC 2015
Business Model Hypothesis
¤ B2B¤ 9 Model ¤ Market Metric
¤ B2C ¤ 10 Models ¤ Market Metrics
http://dkparker.com/businessmodels/
Copyright DKParker, LLC 2015
Customer Acquisition Hypothesis
The following apply regardless of models
¤ Cost of Customer Acquisition (CAC)
¤ Lifetime value of Customer (LTV) ¤ 36 month calculation in a mature business, 12 months for you
¤ Time to close sale ¤ How does this change with product/market maturity?
¤ Churn/Retention
¤ Word of mouth vs. Virality
Copyright DKParker, LLC 2015
Iterations & Pivots
Copyright DKParker, LLC 2015
Iterations and Pivots
Iterations
¤ Features
¤ Target customers
¤ Pricing
Pivots
¤ Are painful – Tires to Airplanes
¤ Mike Maples – Thunder Lizards
¤ Five Famous Pivots ¤ Odeo become Twitter
Copyright DKParker, LLC 2015
Repeat after me…
¤ I’m an entrepreneur
¤ Half my ideas are amazing
¤ Half are crap
¤ We need to find out which one this is!
Copyright DKParker, LLC 2015
Q&A – Your Questions
Copyright DKParker, LLC 2015
[email protected]@DaveParkerSEA