vernon’s razor ©2008 patrick vernon busi 701 artistic entrepreneurship class 9 customer pain

Vernon’s Razor©2008 Patrick Vernon

BUSI 701Artistic Entrepreneurship

Class 9

Customer Pain


Videos

• Verma: “Passion and Customer”

• Levinson “Talk to Customers”


Go or No-Go?

Vernon’s Razor


Go or No-Go?


Vernon’s Razor1. Value Proposition2. Market Potential3. Return4. Team5. Competitive Advantage6. Business Model7. Customer Pain

DefiningOpportunity

MinimizingRisk


Customer Pain

• Will the dogs eat the dog food?

• Will the fish bite?

• Keyword: validation


Brook Byers, KPCB

• If you don’t have any customers yet, you need to show that you know who your customer is going to be and that you have gone out and talked to them.”

• “Acid test” for early entrepreneurs: resonance with customers

Byers: know your customers


Value Proposition

• Recap: the reason to create a new venture is to create value

• “Customer Pain” is a validation that somebody will directly benefit from that value


Ways to Validate Customer Pain

1. #1 – paying customers

2. Beta testing

3. Competition

4. Surveys and focus groups

5. Letters of Intent (LOIs)

6. Eyeballs


#1 – Paying Customers

• Like Team is #1 for lowering risk, paying customers validate pain

• Understanding this is #1, strategize to make it happen

• Consider rolling out early imperfect product to start customer relationships

Validating Customer Pain

Validating Pain

1.Paying customers

2.Beta testing

3.Competition

4.Surveys/focus groups

5.(LOIs)

6.Eyeballs


Beta Testing

• Concept test

• Non-paying customers

• Small or scaled down product

• Customer feedback is key


Validating Pain

1.Paying customers

2.Beta testing

3.Competition


5.(LOIs)

6.Eyeballs


Competition

• The existance of competition validates the customer pain– May create other problems

• You still must validate that your venture is differentiated to capture x% of that market


Validating Pain

1.Paying customers

2.Beta testing

3.Competition


5.(LOIs)

6.Eyeballs


Surveys and Focus Groups• Moving from qualitative assertions

(gut feelings) to quantitative data points– From “This seems like it would work”

to “95 out of 100 software engineers were likely to buy”

• 1st step towards excellent customer feedback skill sets

Validating Pain

1.Paying customers

2.Beta testing

3.Competition


5.LOIs

6.Eyeballs


Survey Article• What is the purpose of the survey?• Title the survey• Do not make the survey any longer than it needs to be• Use plain English• Avoid long questions• Ask one question at a time• Avoid influencing the answer• Ensure that the answer format allows meaningful answer• Consider how the compiled data is going be analyzed• Ensure that the questionnaire flows• Target your respondents


Survey Article• Allow the respondent to expand or make comments• Be confidential if needed• Consider anonymity• Give careful consideration to the best response format• Give the respondent an idea of how much time the

survey will take.• Inform the respondents of the survey end date• Pilot the survey• Before publishing the survey proof read the survey

several times• Remember to say thank you


Letters of Intent (LOIs)

• Shows a commitment from potential customers

• Particularly relevant with:– Very high price points – Long-term contracts– Long sales cycle products/services


Validating Pain

1.Paying customers

2.Beta testing

3.Competition


5.LOIs

6.Eyeballs


Eyeballs

• Website traffic

• Showing any interest is more compelling than none

• If your business model is advertising, this moves to #1


Validating Pain

1.Paying customers

2.Beta testing

3.Competition


5.LOIs

6.Eyeballs


Business Model & Customer Pain

• Specific target segment

• Roadmap to future segments

• Verticals and horizontals

• Decision makers (do you solve pain for the wrong people?)

Kawasaki: create something great


Segmentation

• Target Addressable Market

• 1st Pin

• Influencers (Tipping Point)• Crossing the Chasm

(Geoffrey Moore)

Early Market Mainstream Market

Chasm


Product Attributes

Atribute B

Atr

ibut

e A

Kawasaki nitch thyself high right


“Marketing Mix” 4 Ps• Price

• Product

• Promotion

• Place

vernon’s razor ©2008 patrick vernon busi 701 artistic entrepreneurship class 9 customer pain

Documents