2. VALUE PROPOSITIONS
what are you offering them? what is that getting
done for them? do they care?
images by JAM
3. Step 1. Spec. the Value Proposition
• Product(s)?
• Service(s)?
• Ecosystem?
• Is it a company or product?
4. 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!
5. 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
6. 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?
7. 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
8. 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
9. 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
10. 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
12. 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
14. Market Type & Ignoring Customers
• Clone Market?
• Existing Market?
• Resegmenting an Existing Market?
– niche or low cost
• New Market?
• When do I ignore customer feedback?
15. 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
17. 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?
24. Who’s the Customer in a Company?
• User?
• Influencer?
• Recommender?
• Decision Maker?
• Economic Buyer?
• Saboteur?
• Archetypes for each?
25. How Do They Interact to Buy?
• Organization Chart
• Influence Map
• Sales Road Map
26. 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?
27. How Do They Hear About You?
• Demand Creation
• Network effect
• Sales
33. 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?
36. Consumer Customers
• Do they buy it by themselves?
• Do they need approval of others?
• Do they use it alone or with others?
37. How Do They Decide to Buy?
• Demand Creation
• Viral?
• SEO/SEM
• Network effect?
• AARRR (Dave McClure)
38. 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?
39. 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?
41. 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
42. 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?
44. Definitions: Four Types of Markets
Clone Market Existing Market Resegmented New Market
Market
• 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
45. Market Type
Existing Resegmented New
Customers Known Possibly Known Unknown
Customer Performance Better fit Transformational
Needs improvement
Competitor Many Many if wrong, None
s few if right
Risk Lack of branding, Market and Evangelism and
sales and distribution product re- education cycle
ecosystem definition
Examples Google Southwest Groupon
Market Type determines:
Rate of customer adoption
Sales and Marketing strategies
Cash requirements
46. 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
47. 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)
48. 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)
49. Target Market
• Who am I going to sell to?
• Airports
• How large is the market be (in $’s)?
Total Served Target • $100 M
Available Available
Market
Market Market • How many units would that be?
$4.8 B $1 B
$100 M
• 200 M units