The Lean LaunchPad Lecture 3: Customers/Users/Payers Steve Blank Jon Feiber Jon Burke

Agenda Team Bus Model Presentations Customer Segments

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

Customer Types Saboteurs Intermediaries (OEM’s and resellers)

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 ” 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

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? Problem or a Need?

Customer Problem

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

If It’s a Multi-sided Market Diagram It!!

MammOptics Hospital purchasing decision tree

MammOptics Private practice purchasing decision tree

buzz group

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?

Archetypes

buzz group

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?

Market Type

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 MarketExisting MarketResegmented Market New Market

Market Type determines:  Rate of customer adoption  Sales and Marketing strategies  Cash requirements Market Type ExistingResegmentedNew CustomersKnownPossibly KnownUnknown Customer Needs PerformanceBetter fitTransformational improvement Competitor s ManyMany if wrong, few if right None RiskLack of branding, sales and distribution ecosystem Market and product re- definition Evangelism and education cycle ExamplesGoogleSouthwestGroupon

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 18 th Presentation Talk to 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

Examples

Ying Wang (Lead) Yu Lei (PI) Mike Wisniewski (Mentor) Landmine Clearance NSF / ICORP Program

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 and made calls ( ).  Feedback: No answer on the phone. Waiting for reply.  Action: Sent .  Feedback: Waiting for reply.  Action: Sent and called ( ) to Mr. Justin Brady, Acting Director, United Nations Mine Action Service  Feedback: Waiting for reply.  Action: Sent and called ( ) to Reno DeBono, Director of Chemistry and Applications.  Feedback: Waiting for reply.

Landmine Clearance Customer Discovery Customer Validation Pivot Customer Creation

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 Army 2. Other Gov. Entities 3. UN 1. Reliable 2. Cheap 3. Easy to use 4. Rapid 5. Large scale 1. Dedicate Personal Assistance 2. Demo 3. Training 1. IP 2. Chemicals 3. Facilities 1. Production 2. Distribution 1. Manufacture of machine Production Sensing materials Direct sales. Distribution 1  Machine sales

The Business Model Canvas 2 1.US Army 2. Other Gov. Entities 3. UN Airports 1. Reliable 2. Cheap 3. Easy to use 4. Rapid 5. Large scale 1. Dedicate Personal Assistance 2. Demo 3. Training Partner’s distribution channels 1. IP 2. Chemicals 3. Facilities 1. Manufacture of machine 2. Existing companies: Smiths Detection. Production Sensing materials 4. Wider spectrum Direct sales. Distribution 1  Machine sales 1. Production 2. 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 Total Available Market $4.8 B Served Available Market $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.

Thank You!