class 2 berkeley/columbia lean launchpad xmba 296t

The Lean LaunchPad

Session 2: Customers, Customers, Session 2: Customers, Customers, Customers & Value PropositionCustomers & Value Proposition

Professors Steve Blank,Jon Feiber, Jim Hornthal, Oren Jacob

https://sites.google.com/site/xmba296t/

XMBA296T



Agenda

• Team Bus Model Presentations• Customer Segment

– Business model = b-to-b, b-to-c, b-to-b-to-c– Ecosystem= payers, users, saboteurs, advocates

• Value Proposition– Product– Service– Ecosystem

VALUE PROPOSITIONS

images by JAM

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

Value Proposition

• Product(s)?• Service(s)?• Ecosystem?

• Is it a company or product?

Value Proposition - Discovery

• Product – Long term vision– features – Benefits– Minimum Viable Product spec

• For a web/mobile app– Low fidelity MVP live and running

• Understand Customer Problem and Solution• Test Market Type

Product

• Problem Statement: What is the problem?

• Technology / Market Insight: Why is the problem so

hard to solve?

• Market Size: How big is this problem?

• Competition: What do customers do today?

• Product: How do you do it?

Minimum Viable Product – Physical

• First, test your understanding of the problem• Next tests your understanding of the solution

– Proves that it solves a core problem for customers – The minimum set of features needed to learn from

earlyvangelists

- Interviews, demos, prototypes, etc- Lots of eyeball contact

Minimum Viable Product – Web/Mobile

• NOW “low fidelity” web/app for customer feedback– First, tests your understanding of the problem

• LATER, “high fidelity” web/app tests your understanding of the solution– Proves that it solves a core problem for customers – The minimum set of features needed to learn from

earlyvangelists

- Avoid building products nobody wants- Maximize the learning per time spent

Testing the Minimum Viable Product – Web/Mobile

• Smoke testing with landing pages using AdWords• In-product split-testing• Prototypes (particularly for hardware)• Removing features• Continued customer discovery and validation• Surveys• Interviews

Testing the MVP– Web/Mobile - Tactics

• Interview customers – make sure they have a matching core problem

• Set up web site landing page to test for conversion– What offers are required to get customers to use the product

(e.g. prizes, payment)– Use problem definition as described by customers to identify key

word list – plug into Google search traffic estimator - high traffic means there is problem awareness

• Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through

Market Type

Type of Market Changes Everything

Existing Market Resegmented Market

New Market

Market Type determines:Rate of customer adoption

Sales and Marketing strategiesCash requirements

Market Type

Definitions: Three Types of Markets

• Existing Market– Faster/Better = High end

• Resegmented Market– Niche = marketing/branding driven

– Cheaper = low end

• New Market– Cheaper/good enough can create a new

class of product/customer

– Innovative/never existed before


New Market

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)

Type of MarketChanges Everything

• Market– Market Size

– Cost of Entry

– Launch Type

– Competitive Barriers

– Positioning

• Sales– Sales Model– Margins– Sales Cycle– Chasm Width


New Market

• Finance• Ongoing Capital

• Time to Profitability

• Customers• Needs

• Adoption

• Finance• Ongoing Capital

• Time to Profitability

• Customers• Needs

• Adoption

Customer Segments

Model and Ecosystem

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

Corporate Customers

Business to Business (B to B)

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?

Market Type & Ignoring Customers

• Existing Market? • Resegmenting an Existing Market?

– niche or low cost

• New Market?

• When do I ignore customer feedback?

Consumer Customers

Business to Consumer (B to C)

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?

Market Type & Ignoring Customers

• Existing Market? • Resegmenting an Existing Market?

– niche or low cost

• New Market?

• When do I ignore customer feedback?

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

Multi-Sided Markets

Business to Business to Consumer

(B to B to C)

Who’s The Customer?

• Consumer End Users, Corporate Customers Pay

• Multiple Consumers• Etc.

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?

The Customer Ecosystem

Who’s the Customer in a Company?

• User?• Influencer?• Recommender?• Decision Maker?• Economic Buyer?• Saboteur?• Archetypes for each?

How Do They Interact to Buy?

• Organization Chart• Influence Map• Sales Road Map

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?

How Do They Hear About You?

• Demand Creation• Network effect• Sales

Finding the right customerFrom radiologists to gynecologists

MammOpticsExcursions into hospitals

Leading doctors

Patients

Hospital Managers

Technicians

Debra Ikeda Jason Davies

Jafi Alissa LipsonSunita Pal

6 women >40 8 women <40

Alicia X-ray mammography

Paul BillingsHolly V. Gautier

MammOpticsHospital purchasing decision tree

MammOpticsHospital purchasing decision tree

Hospitals

Complex purchasing decision

tree. Several saboteours

MammOpticsPrivate practice purchasing decision tree

MammOpticsPrivate practice purchasing decision tree

Private practice

Faster adoption rate

Attractive value proposition✔

ACOGACS

Doctor specialty

committee

Hospital Administrati

on

Technician

RadiologistMammography

MammOpticsCustomer Workflow

Current market Insurance

ACOGACS

Doctor specialty

committee


on

Technician



Current market

But what would happen if we replace mammography?

Insurance

ACOGACS

Doctor specialty

committee


on

Technician

Radiologist

Mammography


Breast Radiologists

Technicians Hospitals

Loss of jobs

Loss of jobs Eliminates loss leaderPuts emphasis on

biopsies

Insurance

ACOGACS

Doctor specialty

committee


on

Technician

Radiologist

Mammography


Insurance

ACOGACS

Doctor specialty

committee


on

Technician

Radiologist

Mammography


InsuranceSame cost as mammography

($140)Reduced number of biopsies

($1000)

ACOG/ACSImproved healthcare(mammography weak

technique)

Insurance

ACOGACS

Doctor specialty

committee


on

Technician

Insurance

Radiologist

Mammography


Insurance

Doctor specialty

committee


on

Technician



ACOGACS

MammOptics

Patient

PCPOB/GYN

Insurance

Doctor specialty

committee


on

Technician

Radiologist

Mammography


ACOGACS

MammOptics

Patient

PCPOB/GYN


on

Technician

Radiologist

Mammography

MammOptics

Patient

PCPOB/GYN

PCP OB/GYNsIncreased revenue

More complete patient care

PatientImproved healthcare

Comfort

MammOpticsRevenue

ACOGACS

Doctor specialty

committee


on

Technician

Insurance

Radiologist

Mammography


MammOptics

Patient

PCPOB/GYN

Reimbursement PartnersMammOptics

Insurances

CPT Codes$75-$150

Team ExerciseTeam Exercise

Deliverables for Next Week

• User / customer hypotheses? • Did you learn anything different? • Did your Value Proposition change?• What are your customer acquisition cost hypotheses? • What are the benefits (economic or other)? • If part of a company, who’s the decision maker, how

large is the budget and how will the buying decision be made?

• Web/mobile startups: Site is Up

class 2 berkeley/columbia lean launchpad xmba 296t

Education

market type market type

market size

value customers

type of market changes

customer problem

product problem statement

solution test market

technology market insight