Vernon’s Razor ©2008 Patrick Vernon BUSI 701 Artistic Entrepreneurship Class 9 Customer Pain

Vernon’s Razor ©2008 Patrick Vernon Videos Verma: “Passion and Customer”Verma: “Passion and Customer Levinson “Talk to Customers”Levinson “Talk to Customers

Vernon’s Razor ©2008 Patrick Vernon Go or No-Go? Vernon’s Razor

©2008 Patrick Vernon Go or No-Go?

Vernon’s Razor ©2008 Patrick Vernon Vernon’s Razor 1.Value Proposition 2.Market Potential 3.Return 4.Team 5.Competitive Advantage 6.Business Model 7.Customer Pain Defining Opportunity Minimizing Risk

Vernon’s Razor ©2008 Patrick Vernon Customer Pain Will the dogs eat the dog food? Will the fish bite? Keyword: validation

Vernon’s Razor ©2008 Patrick Vernon 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

Vernon’s Razor ©2008 Patrick Vernon 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

Vernon’s Razor ©2008 Patrick Vernon 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

Vernon’s Razor ©2008 Patrick Vernon #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

Vernon’s Razor ©2008 Patrick Vernon Beta Testing Concept test Non-paying customers Small or scaled down product Customer feedback is key Validating Customer Pain Validating Pain 1.Paying customers 2.Beta testing 3.Competition 4.Surveys/focus groups 5.(LOIs) 6.Eyeballs

Vernon’s Razor ©2008 Patrick Vernon 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 Customer Pain Validating Pain 1.Paying customers 2.Beta testing 3.Competition 4.Surveys/focus groups 5.(LOIs) 6.Eyeballs

Vernon’s Razor ©2008 Patrick Vernon 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” 1 st step towards excellent customer feedback skill sets Validating Pain 1.Paying customers 2.Beta testing 3.Competition 4.Surveys/focus groups 5.LOIs 6.Eyeballs

Vernon’s Razor ©2008 Patrick Vernon Survey ArticleArticle 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

Vernon’s Razor ©2008 Patrick Vernon Survey ArticleArticle 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

Vernon’s Razor ©2008 Patrick Vernon 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 Customer Pain Validating Pain 1.Paying customers 2.Beta testing 3.Competition 4.Surveys/focus groups 5.LOIs 6.Eyeballs

Vernon’s Razor ©2008 Patrick Vernon Eyeballs Website traffic Showing any interest is more compelling than none If your business model is advertising, this moves to #1 Validating Customer Pain Validating Pain 1.Paying customers 2.Beta testing 3.Competition 4.Surveys/focus groups 5.LOIs 6.Eyeballs

Vernon’s Razor ©2008 Patrick Vernon 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

Vernon’s Razor ©2008 Patrick Vernon Segmentation Target Addressable Market 1 st Pin Influencers (Tipping Point) Crossing the Chasm (Geoffrey Moore) Early MarketMainstream Market Chasm

Vernon’s Razor ©2008 Patrick Vernon Product Attributes Atribute B Atribute A Kawasaki nitch thyself high right

Vernon’s Razor ©2008 Patrick Vernon “Marketing Mix” 4 Ps Price Product Promotion Place