Have you ever viewed a world map where South is up? It’s a useful frame of reference, since our Eurocentric view of North as “up” and South as “down” is really just an arbitrary one (a sphere has no top or bottom – nor left or right for that matter). Perspective affects our perceptions...
But what if we turn the funnel upside down?
For most entrepreneurs, the top of the [sales] funnel represents the world-at-large. It’s unfiltered; it’s not segmented. In a traditional funnel, the mouth at the top is wide open for attracting both suspecting and unsuspecting potential customers (aka suspects) into the sales process. Marketing’s job is to find and lure live bodies into the top, while sales is responsible for to pushing ‘em through. Continue Reading
The glow of a new, sure-fire idea is a wonderful feeling. You feel you’ve discovered something (or some angle) that no one has ever imagined before. As you expose that idea to the light of the day and begin vetting it and taking it to market, though, that enthusiasm can dim...Your product or solution fights more than just competitors. It also battles all of the other problems your prospective customer faces. While your awareness of the problem and the weight you grant it is relevant, that doesn’t accurately predict how important it is to others – even if they ‘fit your profile.’
you must conquer the “status quo coefficient”
In fact, one of the most difficult dilemmas entrepreneurs face is determining whether fading excitement is part of the natural decay of the creation process or because the idea – ultimately - is a bad one. Continue Reading
The last time I checked, the world’s population was around 6.8 billion. If only 0.1 percent were to visit your website… and if you were to convert only 1 percent of those to paying customers… and they each paid $2 for a Thneed, for example, then revenues would be over $135M. (And everyone knows you could get way more than 2 bucks for a Thneed, which everyone needs!)
I can prove anything by statistics except the truth.
To some, market research only goes as far as finding a really big revenue number to put on the TAM (Total Available Market) slide of their business plan or investment pitch… Continue Reading
As social media has reached mainstream consciousness this year, businesses have been inundated with the message that they must immediately get on board or risk doom and calamity. The hyperbole (and the frenzied buzz it creates) is confusing and many businesses could use a practical guide on how to evaluate social media and how to engage – if it’s appropriate.
It’s amusing to hear that “Word of Mouth” is new.
So the first benefit of using social media in your marketing efforts (and the first thing to keep in mind) is that social media systems are designed to facilitate person-to-person communication, as opposed to traditional media and most first generation web efforts, which are predominately one-way communication. Continue Reading
One of the more intriguing dynamics in startups and business in general, is customer communication. Customer Development is, of course, all about talking with customers to test fundamental business hypotheses, match product solution to customer problem, and in general, learn as much about them as possible in order more efficiently and effectively market and sell to them.
The tension comes from learning when to ignore your customers and when to take heed. Custdevguy reminds us that customers have their own agenda, which might not coincide with your own. Steve Blank reminds us that Customer Development is not just collecting web metrics and it's not about focus groups. I've written before that Customers own the pain, Founders own the vision, meaning that as an entrepreneur, you must tailor your vision to solve the customer's pain. That is the objective of speaking with your customers.
Sean Ellis perhaps says it best, describing the process as "honing in" on the "signal" that is the core value proposition of your product to your customer. What's valuable about this description to me, is that rather than looking at what you need to ask each customer, it provides a high-level perspective on what your objective should be and how to get there. It's talking to enough customer and asking whatever questions necessary to hone in on the core value of the product.
Thank you for your participation in the survey, especially if you were kind enough to tweet about it. (While the raffle is over, if you haven't responded, the survey is still open.) The purpose of the survey was two-fold.
First, we thought it would be interesting to see a little detail about who is involved with Customer Development. You can see those results here.
While the survey results add a bit of color to who is implementing Customer Development methodologies or thinking about doing Customer Development, I wouldn't draw any hard conclusions from the data. BTW for the those who read 4 Steps to the Epiphany, n ≈ 33. For those who didn't read 4 Steps to the Epiphany, n ≈ 28.
Second, we are thinking about tools, templates, and other resources to help people understand and implement Customer Development in their business ventures. Stay tuned, for in the coming months, we plan to make some of these resources available to you.
Thanks again to everyone. Happy holidays!
Thanks to all who have filled out the survey. I thought it would be fun to share some of the results!
(Updated 12/22/09: for those interested, the survey is still open, but the raffle is over.
==> I have read Steve Blank's The Four Steps to the Epiphany.
All personal information will be kept private.)
Now to some results.
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When I first started blogging about Customer Development, last February, I felt like there were only a handful of people talking about it. I'm sure that's just a matter of perception. The likes of Sean Ellis, Sean Murphy, Nivi at VentureHacks, Dave McClure, Hiten at KissMetrics, and Eric Ries had already thinking and blogging about it for many months (years?) before.
By March it was clear to me I had stumbled across something that was catching on. It's not insignificant that Twitter had just reached its "tipping point." Customer Development would ride the wave. I first learned the value of Twitter through the promotion of great posts written by start-up superstars, many of which contained elements of customer development. Rich Collins created the Lean Startup Google Group in June and it quickly grew to a couple hundred members. There are now over 1700 members!
All of which leads me to this question, done in full cliche-riddled, end-of-2009, year-in-review regalia:
What is the State of Customer Development?
Note: One of the more difficult aspects of customer development is understanding when to listen to customers/prospects and when not to. When should you rely on intuition and when is the customer right, if not always? Steve Blank's oft quoted clarion call to "get out of the building" demands that you listen to customers, but not that you necessarily heed what they say! You may have the wrong customer for your business. You may have the right customer who emphasizes the wrong root cause to a problem. As I tweeted the other day:
maybe your product focus should be what your current customers don't ask for or what your lost customers wanted.
I invited "CustDevGuy," author of the "Fake Screenshot/LOI" customer development case study, to write up a continuation of that story, which illustrates an easy trap to fall into when interacting with potential customers. Here's his story:
This guest-post is a follow-up to my original Case Study posted at the Lean Startup Circle. (Thanks Brant for lending me your digital soapbox.) I wanted to further flesh out an important insight that came out of conversations about my ongoing Customer Development experiences as well as address a common fallacy that keeps popping up in conversations and email threads with regards to what Customer Development is and isn't. The fallacy being that customers will simply hand over the Holy Grail (read: Product/Market Fit) if you go and chat a bit with them.
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In Andrew Chen’s recent post, “Does every startup need a Steve Jobs?”, he discusses IDEO’s “product framework for Desirability, Feasibility, and Viability.” Chen’s descriptions of business-, engineering-, and design-focused product perspectives reminded me of the work on companies’ “driving force” popularized by Michel Robert in his series of business strategy books. Understanding your “driving force” is critical to understanding what products to build and who to build them for. The driving force helps shape technology choices, importance of design, market segment, and business model as well as company culture, growth plan and exit strategy.
The basic point, is that while all companies employ technology, sell products or services, employ technology, market to specific segments and use certain distribution methods, one factor dominates (or should dominate) the others in terms of business strategy.
one component of the business is the driving force of the strategy — the company’s so-called DNA. This driving force, in turn, greatly determines the array of products, customers, industry segments, and geographic markets that management chooses to emphasize more or emphasize less
Here is a subset of driving forces Robert discusses: