Happy farm value prop and segments bd

Key Building Blocks:Value PropositionCustomer Segments

Bob [email protected]

VALUE PROPOSITIONS

images by JAM

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

Step 1. Spec. the Value Proposition

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

• Is it a company or product?

Value Proposition – Common Mistake

• Is it just a feature of someone else’s product• Is it a “nice to have” product• Is it a “got to have” product• Can it scale to a company?• …THE IMPORTANCE OF ENTHUSIASM

– It’s viral thus economical– It’s the only road to success– Find it NOW, not after you build!

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: Where does your product fit in the world?

What do customers do today?

Why would they buy from you instead of…..

» at do customers do today?

• Product: How do you do it? How do you make it?

Step 2: What’s the Minimum Viable Product – Physical

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

Step 2: What’s the 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

Step 2: What’s 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

Step 2: What’s the 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

CUSTOMER SEGMENTS

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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

• Don’t ever forget face-to-faceWEB contact: you need to see them smile, get lost, mess up

• “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

B-to-B 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

Customer Problem

Customer Problem

Customer Problem

Customer Problem

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!!

MammOpticsHospital purchasing decision tree

buzzgroup

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

buzzgroup

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?

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• Multiple, Distinct Discovery efforts• Beware “false positives”• Follow the people…then follow the money

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 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)

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

QUESTIONS?