Download - Course 4 - Intro Customer Development

Class 4, UCN, Antofagasta, 2011

1

Intro to Customer

Development

OutlineSteve BlankHow it has been doneProduct / Customer DevelopmentCrossing the chasmCustomer DiscoveryCustomer ValidationBusiness Canvas

Steve Blank

How it was done• High burn rate• Swing for the fences• Full management teams• Assume customer is known• Assume features are known• Assumes growth is by execution

Crossing the Chasm: Moore

Concept /Seed Round

Product Developm

ent

Alpha/Beta Test

Launch / 1st Ship.

PositioningCreate

Materials

Expensive PR

Early Buzz

BrandingLaunch EventCreate

Demand

Marketing

SalesHire Sales

BossHire Staff

Build Organizati

onWork Leads

Biz DevHire Biz

Dev Boss

Close 1st Ship. Deals

Problem: Expensive Failure

Built and they will come syndromeExpenditure is loaded upfront (1st Shipping):

Product development (p.e. design, software dev)

Infrastructure (p.e. warehusing, server clusters)

Sales & marketing departments

Hiring and executing according to “plan”“now we need an API to integrate with...”

Hard to steer a cruise ship

Fix?Focus on Develop Customers not only the ProductDesign for customersCustomers from day Onefinaly, match Product to Customer Development

Pair Product to Customer Development

Concept /Seed Round

Product Developm

ent

Alpha/Beta Test

Launch / 1st Ship

Problem Know

Solution Know

Concept /Seed

Product Developm

ent

Alpha/Beta Test

Launch / 1st Ship

SCRUM PracticesProduct Backlog

Current prioritized list of work to be done

Effort Estimationiterative on Backlog items

Sprint30 day / 15 days iteration

Sprint Planning Meetingdecide goals for next sprint and how team will implement

Sprint BacklogProduct Backlog items for sprint

Daily Scrum meetingwhat doing, what will do, and any problems

Sprint Review Meetingpresent results of sprin

Split-test (A/B) experimentation Extremely rapid deployment

Continuous deployment, if possible Deploy when core ready

Just-in-time architecture and infrastructure Incremental investment for incremental benefit

Five why's – ask five times to solve problems Use defects to drive infrastructure investments E.g. Vendder had to CDN before coming to Chile.

Customer Development Keys

Parallel process to Product DevelopmentMeasurable CheckpointsNot tied to FCS, but to customer milestonesNotion of Market Types to represent realityEmphasis is on learning & discovery before execution

Search for a Biz

Stop selling, start listening There are no facts inside your building, so get outside

Test your hypothesesTwo are fundamental: problem and product concept

Continuos DiscoveryDone by Founders

Customer Discovery Cicle

Phase 0: Get buy-inConvince your-selfConvince othersGather a teamMission statement & values

ProductCustomer/ProblemDistribution/PricingDemand CreationMarket TypeCompetition

Phase 1: State Hypoteses

Product HypotesesFeaturesBenefitsProduct Delivery ScheduleIntellectual PropertyTotal Cost of OwnershipDependency Analysis

Customer/Problem Hypothese

Types of Customers/ArchetypesMagnitude of the problemVisionaries & Early EvangelistsA Day in the Life of a customerOrganizational impactROI JustificationProblem RecognitionMinimum Feature Set

Early Evangelist

Distribution / Pricing Hypotheses

Distribution ModelDistribution DiagramSales Cycle/RampChannel strategyPricing (ASP, LTV)Customer Organization MapDemand Creation

Demand Creation Hypotheses

How do competitors create demand?How will you?

Dave McClure’s AARGH model

Who are influencers/recommendors?Key trade shows?Key trends?Start assembling advisory boar

Exit for Customer Discovery

What are your customers top problems?

How much will they pay 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 & after your product

Draw the org chart of users & buyers

CUSTOMER SEGMENTS

which customers and users are you serving? which jobs do they really want to get done?

VALUE PROPOSITIONS

what are you offering them? what is that getting done for them? do they care?

CHANNELS

how does each customer segment want to be reached? through which interaction points?

CUSTOMER RELATIONSHIPS

what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

REVENUE STREAMS

what are customers really willing to pay for? how? are you generating transactional or recurring

revenues?

KEY RESOURCES

which resources underpin your business model? which assets are essential?

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KEY ACTIVITIES

which activities do you need to perform well in your business model? what is crucial?

KEY PARTNERS

which partners and suppliers leverage your model?

who do you need to rely on?

COST STRUCTURE

what is the resulting cost structure? which key elements drive your costs?

39images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

Cómo Qué Quién

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9 Guesses

Guess

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Guess Gues

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Guess

Guess

Guess

Test Hypotheses:• Product• Market Type• Competition

Turning Hypotheses to Facts

Test Hypotheses:• Problem• Customer• User• Payer

Test Hypotheses:• Channel


Test Hypotheses:• Demand Creation


Test Hypotheses:• Product• Market Type• Competitive

Test Hypotheses:• Pricing Model / Pricing

Test Hypotheses:• Size of Opportunity/Market• Validate Business Model

Test Hypotheses:• Channel• (Customer)• (Problem)


Test Hypotheses:• Demand Creation


Test Hypotheses:• Product• Market Type• Competitive

Test Hypotheses:• Pricing Model / Pricing

Test Hypotheses:• Size of Opportunity/Market• Validate Business Model

Test Hypotheses:• Channel• (Customer)• (Problem) Customer

Development Team

Agile Development

The Pivot

• The heart of Customer Development• Iteration without crisis• Fast, agile and opportunistic

Startup Metrics for Pirates

• Acquisition: users come to site from various channels

• Activation: users enjoy 1st visit: "happy” experience

• Retention: users come back, visit site multiple times

• Referral: users like product enough to refer others

• Revenue: users conduct some monetization behavior

AARRR!

(note: If you’re in a hurry, Google “Startup Metrics” & watch 5m video)

AARRR!: 5-Step Startup Metrics Model

Website.com

Reven

ue $$$

Biz DevAds, Lead Gen, Subscriptions, ECommerce

Activatio

n

Homepage / Landing Page

Product Features

ACQUISITION

SEOSEM

Apps & Widgets

Affiliates

Email

PR Biz Dev

Campaigns, Contests

Direct, Tel, TV

Social Network

s Blogs

Domains

Retention

Emails & Alerts

System Events & Time-based

Features

Blogs, RSS, News Feeds

REFERRAL

Emails & widgets

Affiliates, Contests

Viral Loops

Download - Course 4 - Intro Customer Development

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