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The Lean LaunchPad
Lecture 3: Customers/Users/Payers
Steve Blank
Jon Feiber
Ann Miura-Ko
John Burke
Jerry Engel
Jim Hornthal
Oren Jacob
CUSTOMER SEGMENTS
images by JAM
which customers and users are you serving? which jobs do they really want to get done?
CUSTOMER SEGMENTS
images by JAM
which customers and users are you serving? which jobs do they really want to get done?
Corporate? Consumer?
• Business to Business (B to B)– Use or buy inside a company
• Business to Consumer (B to C)– Use or buy for themselves
• Business to Business to Consumer (B to B to C)– Sell a business to get to a consumer– Other Multi-sided Markets with multiple customers
Market Type & Ignoring Customers
• Clone Market?• Existing Market? • Resegmenting an Existing Market?
– niche or low cost
• New Market?
• When do I ignore customer feedback?
General Heuristics
• You need to talk to more customers than you ever thought possible – 100’s physically, 1000’s on the web
• “I left a message” or “I sent an email” doesn’t count – it’s confusing motion with action
• Do NOT start at the top. You only get one meeting. You’ll almost certainly look like an idiot– First figure out the order of battle
What do they want you to do?
• Increase revenue?• Decrease costs?• Get them new customers?• Keep up with or pass competitors?• How important is it?• Problem or a Need?
Who’s the Customer in a Company?
• User?• Influencer?• Recommender?• Decision Maker?• Economic Buyer?• Saboteur?• Archetypes for each?
Pass/Fail Signals & Experiments
• How do you test interest?• Where do you test interest?• What kind of experiments can you run?• How many do you test?
What do they want you to do?
• Does it entertain them?• Does it connect them with others?• Does it make their lives easier?• Does it satisfy a basic need?• How important is it?• Can they afford it?
Consumer Customers
• Do they buy it by themselves?• Do they need approval of others?• Do they use it alone or with others?
How Do They Decide to Buy?
• Demand Creation• Viral?• SEO/SEM• Network effect?• AARRR (Dave McClure)
Pass/Fail Signals & Experiments
• How do you test interest?• Where do you test interest?• What kind of experiments can you run?• How many do you test?
The Consumer Sales Channel
• A product that’s bits can use the web• But getting a physical consumer product into
retail distribution is hard• Is Wal-Mart a customer?• More next week
Multiple Customer Segments
• Each has its own Value Proposition• Each has its own Revenue Stream• One segment cannot exist without the other• Which one do you start with?
Definitions: Four Types of Markets
• Clone Market– Copy of a U.S. business model
• Existing Market– Faster/Better = High end
• Resegmented Market– Niche = marketing/branding driven– Cheaper = low end
• New Market– Cheaper/good enough, creates a new class of product/customer– Innovative/never existed before
Clone Market
Existing Market Resegmented Market
New Market
Market Type determines: Rate of customer adoption
Sales and Marketing strategies Cash requirements
Market Type
Existing Resegmented New
Customers Known Possibly Known Unknown
Customer Needs
Performance Better fit Transformational improvement
Competitors
Many Many if wrong, few if right
None
Risk Lack of branding, sales and distribution ecosystem
Market and product re-definition
Evangelism and education cycle
Examples Google Southwest Groupon
Market Type - Existing
• Incumbents exist, customers can name the mkt• Customers want/need better performance• Usually technology driven
• Positioning driven by product and how much value customers place on its features
• Risks:– Incumbents will defend their turf– Network effects of incumbent– Continuing innovation
Market Type – Resementing Existing
• Low cost provider (Southwest)• Unique niche via positioning (Whole Foods)
• What factors can:– you eliminate that your industry has long competed on?– Be reduced well below the industry’s standard?– should be raised well above the industry’s standard?– be created that the industry has never offered? (blue ocean)
Market Type – New
• Customers don’t exist today• How will they find out about you?• How will they become aware of their need?• How do you know the market size is compelling?
• Which factors should be created that the industry has never offered? (blue ocean)
For Oct 18th Presentation
• Talk to 10-15 customers face-to-face• What were your hypotheses about users and
customers? Did you learn anything different? • Did anything change about Value Proposition? • What do customers say their problems are? How do they
solve this problem(s) today? Does your value proposition solve it? How?
• What was it about your product that made customers interested? excited?
• If B-B, who’s: decision maker, size of budget, what are they spending it on today, how will this buying decision be made?
• Update your blog/wiki/journal
Technology Application
Sensing Materials
Surveying, mapping and marking of hazardous areas
Removal of landmines and Unexploded Ordnance (UXO)
Contacting…
• Flir (Fido).
• CEIA (metal detector company in Italy).
• United Nations (UN).
• Smith Detections.
Action: Sent email and made calls (703-678-2118). Feedback: No answer on the phone. Waiting for email reply.
Action: Sent email. Feedback: Waiting for email reply.
Action: Sent email ([email protected]) and called (212-963-3344) to Mr. Justin Brady, Acting Director, United Nations Mine Action Service (UNMAS). Feedback: Waiting for reply.
Action: Sent email and called (973 496 9280) to Reno DeBono, Director of Chemistry and Applications. Feedback: Waiting for reply.
Landmine Clearance
Speed: Government entities too slow for this process/program
Minimum feature set: Included too many variables (environmental, deployment)
Pivot
Obtain Near instantaneous customer feedback
Be: Fast, agile and opportunistic and formulated a dramatically new model
Customer Discovery
Customer Validation
Pivot
Customer Creation
Explosive Detection for Transportation Hubs
Landmine Clearance
Speed: Government entities too slow for this process/program
Minimum feature set: Included too many variables (environmental, deployment)
Pivot
Obtain Near instantaneous customer feedback
Be: Fast, agile and opportunistic and formulated a dramatically new model
Customer Discovery
Customer Validation
Pivot
Customer Creation
The Business Model Canvas 1
1.US Army2. Other Gov. Entities3. UN1. Reliable
2. Cheap3. Easy to use4. Rapid5. Large scale
1. Dedicate Personal Assistance2. Demo3. Training
1. IP2. Chemicals3. Facilities
1. Production2. Distribution
1. Manufacture of machine
Production Sensing materials
Direct sales.
Distribution
1 Machine sales
The Business Model Canvas 2
1.US Army2. Other Gov. Entities3. UN
Airports
1. Reliable2. Cheap3. Easy to use4. Rapid5. Large scale
1. Dedicate Personal Assistance2. Demo3. Training
Partner’s distribution channels
1. IP2. Chemicals3. Facilities
1. Manufacture of machine2. Existing companies: Smiths Detection.
Production Sensing materials
4. Wider spectrum
Direct sales.
Distribution
1 Machine sales
1. Production2. Distribution
Target Market
• Who am I going to sell to?
• Airports
• How large is the market be (in $’s)?
• $100 M
• How many units would that be?
• 200 M units
TotalAvailableMarket$4.8 B
ServedAvailableMarket
$1 B
Target Market$100 M
From Canvas version 1 to version 2
• What we thought: Government entities get to need landmine clearance techniques.
• What we did: contacted with the major demining organizations and the UN.
• What we found: Government entities too slow for landmine clearance program.
• What we have done: modified our business model.• Here’s what are going to do: Contact with airports and
Smith Detection.