Customer Discovery & Validation

Jason @Evanish

AKA - The First Two Steps to the Epiphany:

Getting to Product-Market Fit

Today’s Topics

• Customer Discovery Overview

• Customer Development Interview Process

• Customer Validation Overview

Why Customer Development

• Move faster

• Reduce risk

• Bring process to chaos

• Stay in tune with customers

• Replace HiPPO & opinions with data

• Discover the best market opportunities

The Core: Learn-Build-Measure

Customer Discovery

Who is Your Customer?

Phase 1 – State

Hypothesis

Phase 1 – State

Hypothesis

Phase 4 –Verify

Phase 4 –Verify

Phase 3 –Test Product

Concept

Phase 3 –Test Product

Concept

Phase 2 – Test Problem Hypothesis

Phase 2 – Test Problem Hypothesis

Map Your Ecosystem

• Who are the entities in your business?

• Connect the entities based on the flow of $$

• How does the product move through channels to meet users?

The Hypothesis : C-P-S• Customer

– Who is using your product?

• Problem– What problem do they have?

• Solution– How will you solve the problem?

Be Specific. It’s better to be wrong than vague.

The Intermediate MVP

• Map out the basics of your MVP based on the solutions from C-P-S

• Identify the riskiest parts & test them • This is before you build anything…just map out

what you think is the solution

BUILD

Helping you map it: The Lean Canvas

Why all this work?

• Save Time and Money by discovering early on if something won’t work.

• Make course adjustments before you build a large product.

Exit Goals for Customer Discovery

• You’ve identified a problem a customer wants solved.

• Your product solve the customer’s needs.

• You believe you have a viable and profitable business model.

• You feel you’ve learned enough to go out and sell.

The Customer Development Interview

• Learn in detail here: http://greenhornconnect.com/blog/how-structure-and-get-most-out-customer-development-interviews

The Structure – 1. Person

• Who are they? What’s their role?• How is your budget handled?• How do you find new products

for work?• How much time do you spend on

[Task X]?

Goal: Get a baseline background of the person you’re talking to. Be broad.

Learn about them and their role in your industry.

The Structure – 2. Problems

• NOT about the problems you think they have.

• What are your top 3 challenges you face in your job related to [industry X]?

• If you could wave a magic wand…what would the solution be?

Goal: Get them to say the problem you want to solve is a problem they have (prefer unprompted)

Learn about the problems they recognize first.

The Structure – 3. Solution

• “That’s interesting” = Kiss of Death.• If they’re not anxious to use right

away, they’re not a key target. • Read body language, voice

inflection and energy level for signals of interest.

• Best reaction is actually following through after the meeting or calls.

Now you tell them about your product concept.

Goal: Discover if they’re interested in your solution and gather feedback.

Tips for making the most of Interviews1. Take good notes.2. Involve other team members.3. Be Conversational. 4. Go off script.5. Ask to see any MVPs they’ve made/use.6. If they’re excited about something, ask if they’ll pay for it.7. Show them mockups or early concepts if you have them

and pay attention to their reactions/feedback.8. Always Follow up.9. End with an ask.10. Be open to new problems and opportunities!11. Summarize and review your notes with your team.

Where do you find people to interview?

10 – 20% Response Rate

The Best Place to Find Candidates:

30-40% Response Rate

Help not Sales

Manage Expectations

• Only 10-20% of those you reach out to will respond.

• Getting started is the hardest, then you can find the channels.

• Different target customers often are found in different channels.

Now what?• Interview in groups of 8-10

people per customer type.• Summarize notes and review

with others.• Look for common patterns

matching C-P-S (Customer – Problem – Solution).

• Compare to your high level metrics to see if anecdotes match data.

• Iterate if there’s no match.

Customer Validation

Can You Sell It?

Phase 1 – Get Ready to

Sell

Phase 1 – Get Ready to

Sell

Phase 4 –Verify

Phase 4 –Verify

Phase 3 –Develop

Positioning

Phase 3 –Develop

Positioning

Phase 2 – Sell to

Visionary Customers

Phase 2 – Sell to

Visionary Customers

Not time for Glengarry Yet…

You’re still in learning mode.…about what customers will buy and how!

Break Down Your Sales Road Map

• Who influences a sale?• Who recommends a sale?• Who is the decision maker?• Who is the economic buyer?• Who is the saboteur?• What is the budget for purchasing your type of

product?• How many calls does it take to make a sale• What is the profile of an early customer?

The Gospel According to Blank – Phase 1 : Get Ready to Sell

Goal: Take what you learned from Customer Discovery and apply to development of Sales Process

Map out the Food Chain of your Sale

Exercise: Make Your Food Chain

• Who is the end user?

• Who is the purchase decision maker?

• Who seeks out a solution like Yours?

• What are alternative channels?

Find out how to (reliably) get your foot in the door…

• At what level do you want to enter?

• How many people on the organizational map need to say yes?

• Does each department perceive the problem the same way?

• In what order do you need to call on people?

• Who can derail the sale?

The Gospel According to Blank – Phase 2: Sell to Visionary Customers

Goal: Get someone to Pay for your product and learn how to repeat the process.

Free != Customer

Customer =

Build Your Sales Roadmap

What steps are involved in your sales process?

The Gospel According to Blank – Phase 3: Develop Positioning

Goal: Based on problem and sales lessons, optimize positioning for your product & company.

Positioning

• Speak the language of your customer• Written by those that interact directly with the

customer• Verify with Product team to ensure what’s built

meets expectations set

The Gospel According to Blank – Phase 4: Verify

Goal: Verify all the work you’ve put into Customer Validation to iterate or move onto Customer Creation.

Productive Paranoia

Ask Yourself: Is your business *really* on track?

Questions to Ask…Product:-Are you repeatedly losing any deals? Why?-Are customers satisfied? What else do they expect?-Are you building the right features?-Were there any pricing issues? Did you lose customers on pricing?

Sales: -Can you verify the sales process and accurately project its success rate?-Can you realistically map your sales pipeline?-Are you closing deals?

More Questions to Ask…Channel:-Did you factor in the channel costs to the overall costs of your product?-How do various channels affect the sales time?-What does your sales force look like?

Business Model: -Based on known factors, how profitable is the business?-Will costs be the same as you grow?-How much funding do you need to reach profitability?

Customer Validation Wrap Up

To Exit means you’ve-Proven you found a Customer Problem-Found earlyvangelists that will pay you-Found a repeatable and scalable sales process-Demonstrated a viable business model

Customer Development in a Nutshell

Common Sense + Diligent Process + Thought =

Questions?

Further Reading - Books

The Lean StartupBy Eric Ries

Great high level overviewof all the principles of aLean Startup.

The Entrepreneur’s Guideto Customer DevelopmentBy Patrick Vlaskovits &

Brant Cooper

The Cliff Notes for LeanStartups; a must read for everyone on your team.

The Four Steps to theEpiphanyBy Steve Blank

The Bible of Lean Startups.Tough read, but excellentcontent.

Running LeanBy Ash Maurya

A practical guide to builda great lean startup fromthe creator of the lean canvas.

These books, especially 4 Steps, were key sources in creating this presentation & my learning of this methodology

Further Reading – Lean Related Blogs

• Steve Blank, Godfather of Lean Startups• Ash Maurya, Practitioner and action-oriented• Dave McClure, Investor, advisor, badass• Cindy Alvarez, Product manager at Kissmetrics • Andrew Chen, Metrics and Customer acquisition

expert

Further Reading – Helpful Presentations

• The Customer Development Methodology – by Steve Blank

• Startup Metrics are for Pirates – by Dave McClure

• The Top 10 Reasons to not be a Lean Startup– By Patrick Vlaskovits & Brant Cooper

• 20 Ways not to build stuff – by Cindy Alvarez

• How to recruit and interview potential customers – by Elizabeth Yin

• Building Your Customer Development Plan – by Cindy Alvarez

• Minimum Desirable Product: Customer Development for the “Winner Take All” Web – by Andrew Chen

Contact me…I’m happy to help

On Twitter: @EvanishOther sites: About.me/Evanish Email: Evanish.J@Gmail.com

…if I don’t have the answer, I’ll work

with you to find it.