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Part 1 of Customer Development

Travis PowerNovember 13, 2010

Rocky Mountain ProductCamp

Customer Discovery

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Session SummaryBasis for Customer Development

Startups fail for lack of customers not for lack of product.

What processes do we have in place to help us link products with paying customers?

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Session Summary

Purpose:

Turn your initial hypotheses about markets and customers into facts.

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GoalsDevelop basic understanding of Customer Discovery and its role in the Customer Development Process

Understand the strengths of the process and when you would use it

Know of resources where you can find more information

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Who is this guy?• Mechanical Engineer• Rockwell Automation

Your participation is incredibly valuable here!

• Master of Engineering Degree, Engineering Management

• Product Management, R&D Management, Tech Ventures

• High Technology Marketing

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Whats wrong with Prod Dev. Model for

Startups?

Focus is on 1st ship date!

Where are the customers?

Not enough LEARNING!

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Cust. Dev. Process

Turning assumptions into facts

Finding scalable & repeatable sales process

Driving demand for your product

Transition from learning org into execution org

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Overview of Customer Discovery

Assumption

Hypotheses

Test Hypotheses

Test Product Concept

Verify

Iterative ProcessThis is all about learning

Answers are out there!

Upstream Marketing

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Product

Downstream

Upstream

• Lead Gen

• Collateral

• 4 P’s

• Drive Prod.• Creatio

n• Strategy

B- School

Our Focus

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Innovation Continuum

Incremental Radical

Extension of existing product or process Product characteristics well- defined Competitive advantage on low cost production Often developed in response to specific market need "Demand-side" market/customer pull

New technology creates new market R&D invention in the lab Superior functional performance over "old" technology Specific market opportunity or need of only secondary concern "Supply-side" market/technology push

© Mohr, Sengupta, Slater 2005

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Cust Discovery Process

http://steveblank.files.wordpress.com/2010/02/customer-discovery-for-the-enterprise.jpg

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Who do we go talk to?Early Evangelists

Contact 50, interview 5-10

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Radical Innovation

Innovators

Technology Enthusiasts

Early Adopters

Visionaries

Late Majority

Conservatives

Early Majority

Pragmatists

Laggards

Skeptics

{ { { { {

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Early EvangelistsTypes of Early Evangelists:

Not helpful

Jackpot!

Steven Blank, Four Steps to the Epiphany, 2006

1. Has a problem

2. Understand he or she has a problem

3. Actively searching for a solution

4. Cobbled together an interim solution

5. Committed and can quickly fund a solution

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How do you meet these people?

• Start with people you know and go from there• Always ask if they know others that may be interested• Check forums for subject experts• Tradeshows, Events, Conferences

Suggestion: Use mind mapping software to manage contacts

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Listen for Main Parameters of Value

• Determine “main parameters of value” (MPV)

Customer Value Proposition(mpv)

Some Key MPVs met, technology shortfalls still exist. Early adopters, Enthusiasts adopt

Some Key MPVs met, technology shortfalls still exist. Early adopters, Enthusiasts adopt

Essential key MPVs met to satisfy mass market. Early majority adopt.

Essential key MPVs met to satisfy mass market. Early majority adopt.

Most Key MPVs satisfied, customers delighted. Best In Class product

Most Key MPVs satisfied, customers delighted. Best In Class product

Inn

ova

tion

Customer Value Proposition is derived from Main Parameters of Value (MPVs)

$$$$

$$$

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What’s enough?

64% 20% 16%

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The 1st MeetingNOT A SALES CALL!

Listen first attitude

20 min. long

Slide Deck 1-2 slides about the problem you think they have

Show solution

Get hypotheses answered

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2nd VisitYou’ve met with development team

Take product concept to early evangelists

Does it solve their problem?

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Iterate as neededVerify all your assumptions using the cycle:

• Buying Habits• Product Features• Price• Distribution Channels• Decision Makers• Product Competitive• Demand Creation• Market Type

Move to next phase once you’ve answered all these questions

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Recap• Customer Development – Link products with paying

customers

• Focus is on learning not execution of a business plan

• Customer Discovery – turn assumptions about customer into facts

• Cheap, lean

• Develop product for these few, not mass market

• Exit when product and customer hypotheses are verified

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Additional ResourcesBook: The Four Steps to the Epiphany. Steven Gary Blank

Blog: Steve Blank’s personal blog. www.steveblank.com

Twitter: @sgblank, #CustDev, #LeanStartup

Book: The Entreprenuer’s Guide to Customer Development. Cooper & Vlaskovits.

eBook @: www.custdev.com

Google Group: http://leanstartupcircle.com/

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Thank You!