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3/27/10 1
Customer Development in the High Tech Enterprise
Customer Validation Part 1 & 2
Steve Blank [email protected]
Agenda
Logistics/Questions Review Case: HP Kittyhawk Guest: Hiten Shaw Kissmetrics Customer Validation
Today: Customer Validation
Customer Discovery
Customer Validation
Customer Creation
Scale Company
• Develop a repeatable and scalable sales process
• Validate your business model
• Only earlyvangelists are crazy enough to buy
Customer Validation:
Phase 1 Get
Ready to Sell
Phase 2 Sell to
EarlyVangelists
Phase 4 Business
Model Verified
Phase 3 Positioning
From Discovery To Creation
Customer Validation
Customer Validation
Product Positioning
Company Positioning
Present to Analysts & Influencers
Develop Positioning!
Sell to “EarlyVangelists”!Sell to
Channel Partners
Contact Visionary
Customers Sell to Early
Customers Refine Sales
Roadmap Refine
Channel Roadmap
Prelim Sales Roadmap
Hire a “Sales Closer”
Articulate a Value
Proposition
Prelim Sales & Collateral
Materials Prelim
Distribution Channel Plan
Align Your Executives
Get Ready to Sell!
Formalize Advisory
Board
Verify!
Verify the Business
Model
Verify the Product
Verify the Sales
Roadmap Verify the Channel
Roadmap
Iterate or Exit
Sell to “EarlyVangelists”!
Customer Validation
Prelim Sales Roadmap
Hire a “Sales Closer”
Articulate a Value
Proposition
Prelim Sales & Collateral
Materials Prelim
Distribution Channel Plan
Align Your Executives
Get Ready to Sell!
Sell to Channel Partners
Contact Visionary
Customers Sell to Early
Customers Refine Sales
Roadmap
Product Positioning
Company Positioning
Present to Analysts & Influencers
Develop Positioning!
Verify the Business
Model
Verify the Product
Verify the Sales
Roadmap Verify the Channel
Roadmap
Verify!
Formalize Advisory
Board Refine
Channel Roadmap
Iterate or Exit
Inside the Building!
Outside the Building!
Phase 1: Get Ready to Sell
Serious preparation before 1st sales Another writing exercise Aligning Executives
Phase 1 Get
Ready to Sell
Phase 2 Sell to
EarlyVangelists
Phase 4 Business
Model Verified
Phase 3 Positioning
Get Ready to Sell Value Proposition Sales Collateral Distribution Plan Sales Roadmap Sales Closer Synchronize Execs Advisory Board
Prelim Sales Roadmap
Hire a “Sales Closer”
Articulate a Value
Proposition
Prelim Sales & Collateral
Materials Prelim
Distribution Channel Plan
Align Your Executives
Formalize Advisory
Board
Get Ready to Sell: Articulate a Value Proposition
Create Value Proposition Is it emotionally compelling? Does it make or reinforce an economic case? Does the it pass the reality test?
Varies by Market Type
Get Ready to Sell: Preliminary Sales Collateral
Create collateral roadmap What you need and when you need it Supports the sales roadmap Ensure the collateral matches the internal audiences
Create all selling materials Presentations Data sheets White Papers
How would collateral differ by Market Type?
Get Ready to Sell: Preliminary Channel Road Map
Channel Food Chain and responsibility Channel discount and financials Channel Management How would channel plan differ by Market Type?
Channel Alternatives Pick One
Your Company
Your Customers
System Integrators
Direct Sales Force
Value-Added Resellers (VARs)
Dealers
Distributors
Retail/Mass Merchants/Online
OEMs
Channel Diagram Book Publishing Company
Acknowledge Returns
Sell Books Deliver Orders
Determine Allocations
-Establish Identity -Create Demand
National Wholesaler Distributor Retailer
Merchandise Titles
Dispose of Returns
Stock Books Deliver Books (from printer)
Publisher
Ship Books
Channel Margins Book Publishing Company
35% 15% 10% 40%
$7.00 $3.00 $2.00 $8.00 $20.00
% of Retail
$s
Customer National Wholesaler Publisher Distributor Retailer
Get Ready to Sell: Preliminary Sales Road Map
Built around key insights about the selling process Answers
Who decides the sale? Influencers, recommender, decision makers Where is the
budget? How many sales call to the sale? To who? What is the script for each?
Consists of: Organization Map Influence Map Customer Access Map Sales Strategy Implementation Plan
Early Sales
Get Ready to Sell: Hire a “Sales Closer”
Identify need for a “Sales Closer Founders have experience “closing” business? Do they have a “world-class” set of contacts? Bet the company on their ability to close sales?
If not, hire a “Sales Closer” Do NOT hire a VP of Sales Typical background would be a regional manager
How does Market Type effect this hire?
Get Ready to Sell: Synchronize Your Execs
Product Development Schedule Deliverables “Good-enough” Philosophy
Engineering’s role in sales, installation, post-sales support Sales Collateral review
Get Ready to Sell: Formalize Advisory Boards
Advisory boards are critical in nascent stages of a startup To sell to industry specific customers requires an industry
advisory board Multiple Advisory Boards
Use at different times Different purposes
Phase 2: Sell
First sales First channel sales Scalable and Repeatable
Phase 1 Get
Ready to Sell
Phase 2 Sell to
EarlyVangelists
Phase 4 Business
Model Verified
Phase 3 Positioning
Sell to EarlyVangelists Contact Visionaries Sell Refine Sales Roadmap Sell to Channel Partners Refine Channel Roadmap
Sell to Channel Partners
Contact Visionary
Customers Sell to Early
Customers Refine Sales
Roadmap Refine
Channel Roadmap
Sell: Contact Visionaries
Looking for people with problems They are few are far between They need to become your
cheerleaders… while paying you to do so
Sell: Turn Visionaries into EarlyVangelists
Very few are early customers Visionaries will emerge to buy an unfinished
product if it truly solves a painful problem A lack of these early purchasers is a red-flag Market Type effects ease of execution
Build the Organization Map
Our Potential Customer
= in house competition
= issues to be addressed before a sale
Neil Garrett VP Database
Marketing
Suzanne Kellogg VP Merchandizing
Karen Rogers VP Marketing
Dave Jones CEO
One Step at A Time
Our Potential Customer
= in house competition
= issues to be addressed before a sale
Leslie Elders Financial Modeling
Joe Black Dir. Sales Operations
Ben White VP Sales
Neil Garrett VP Database
Marketing
Suzanne Kellogg VP Merchandizing
Karen Rogers VP Marketing
Dave Jones CEO
Organization Map
Geoff Smith Financial Tools Development
Phil Whitry Director IT
Roger Smith CIO
Our Potential Customer
= in house competition
= issues to be addressed before a sale
Leslie Elders Financial Modeling
Joe Black Dir. Sales Operations
Ben White VP Sales
Neil Garrett VP Database
Marketing
Suzanne Kellogg VP Merchandizing
Karen Rogers VP Marketing
Dave Jones CEO
The Influence Map
Functional Technical
High Executive 1
Low
The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low
The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3
The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3 4 Corp. IT staff or Division IT
The Sales Roadmap: Starts with Influence Map
Execs
End Users
Operational
High
Low
Educate & Present Solution
Technical
CIO
IT Staff
The Sales RoadMap: Adds Access, Assessment & Strategy
Finance
Product Mgmt
Support
Corp. Mktg
Sales
IT
Intro Meetings
Execs
End Users
Operational
Account Strategy
High
Low
Access Assess Needs
Strategy Educate & Present Solution
Technical
CIO
IT Staff
The Sales RoadMap
Finance
Product Mgmt
Support
Corp. Mktg
Sales
IT
Intro Meetings
Execs
End Users
Operational
Implement Plan
Proposal Account Strategy
High
Low
Access Assess Needs
Strategy Educate & Present Solution
Technical
CIO
IT Staff
Sell, Sell, Sell, Sell
RoadMap becomes The Sales Pipeline
13. Close!
2. Initial Meeting • Ask tough questions • Do Buy - In Demo 3. Qualify?
4. Understand Existing Situation a) Technology b) Organization c) Competition
The im
5. Custom Pitch • Prepare! • Get NDA signed 6. Win Over IT
• Tech deep dive 7. Define Problem • Develop Action Plan
8. ROI Pitch • Prove the Value!
11. Formal Pricing Proposal
• No surprises! 12. Negotiate
• Sales • Finance • Support
10. Solution Session
• • Detailed Tech discovery
1. Prepare • Hoovers, One Source, Web
9. Exec Session • Set expectations for this meeting early on.
Sell: Sell/Refine Channel Roadmap
Early channel partners need to be “Visionaries” Indirect channels/integrators have $ minimum Indirect channels/integrators just fulfill Market Type affects channel adoption
Phase 3: Company & Product Positioning
Market Type driven Company & Product Based on real-world facts
Phase 1 Get
Ready to Sell
Phase 2 Sell to
EarlyVangelists
Phase 4 Business
Model Verified
Phase 3 Positioning
Develop Positioning
Product Positioning Company Positioning Present to Analysts & Influencers Builds briefs for demand creation activities
Product Positioning
Company Positioning
Present to Analysts & Influencers
Positioning: Product Positioning
Market Type affects positioning
Positioning: Company Positioning
Market Type affects positioning
Existing Market New Market Resegmented Market Company Positioning Statements
Compare your company to your competitors. Describe how your company is both different and credible.
It’s too earlier for customers to understand how different your company is, since in a new market there are no other companies to compare it to. Therefore, company posi tioning is about communicating a vision and passion of what could be.
Company positioning for this type of market communicates the value of the market segment you’ve chosen and the innovation your company brings to it. What is it that customers value and want and need now.
Phase 4: Verify, Iterate or Exit
Market Type driven Company & Product
Phase 1 Get
Ready to Sell
Phase 2 Sell to
EarlyVangelists
Phase 4 Business
Model Verified
Phase 3 Positioning
Verify
Product Sales Roadmap Channel Roadmap Business Model
Verify the Business
Model
Verify the Product
Verify the Sales
Roadmap Verify the Channel
Roadmap
Iterate or Exit
