"Design your Customer before you Design your Product" -- a presentation by David Taber

1. Before you design your product,
design your customer.
– Somebody Brilliant™
™ David Taber &Associates, all lefts reserved
Graphics courtesy PC Week © 2008 DOTnet CONSULTING

2. Who is David Taber?
• 25 years in Information Technology
• Now a consultant to startups
Product strategy, go-to-market, SFA best practices
• Virtually all experience in Software
Finance, Telecom, Manufacturing, & Defense industries
• MBA, BA from University of California
Instructor, UC Berkeley extension
© 2008 DOTnet CONSULTING

3. The Newtonian Model of Product Development
• Product design is an inbound process
• Product Marketing influences engineers
Engages prospective buyers
Makes mid-course corrections
Tweaks messages to fit product reality
© 2008 DOTnet CONSULTING

4. Problems with the Newtonian Model
• Engineers design for themselves
“Stupid customers”
• Marketers write requirement tomes
Nobody follows most of the Great Ideas
Documenting after the fact
• Customers don’t know what they need
Often follow ideas put in their heads by your competitor
Suffering from future shock (undigested shifts)
They don’t care the way you do…
• Which customer are you designing for?
© 2008 DOTnet CONSULTING

5. Infinite Loop / Simultaneous Equation
Segments
Customer
Response
Channel
Needs
Pitch
Features
Press
Story
Market Size
Value Prop
& Messaging
© 2008 DOTnet CONSULTING

6. Breaking the Infinite Loop
• Don’t use the waterfall model anywhere
• Recognize that the Business Case is part
of a large simultaneous equation
Who are we selling to?
Why will they buy?
What will they value?
What will they pay?
How many will we sell?
What’s the P&L?
© 2008 DOTnet CONSULTING

7. The Iterative Cycle
Value Proposition Target Market
Business
Thesis
Product Features Target User
© 2008 DOTnet CONSULTING

8. Define the Target User
The User is the person who
touches your product every day
• Not the purchaser, installer, or “business beneficiary”
• You need to know their business card title, who they work for,
Product
how they are measured, what other products they use
Thesis
• Age, sex, educational level, basic expectations, “cult”
expectations (e.g., Mac user)
• You need to understand what they value and what their
perceived problems are
• “A Day in the Life…”
Personas are different types of users
• Such as power user vs secretary or architect vs coder
• Personas may need to cover “operational” or “support” people
© 2008 DOTnet CONSULTING

9. Define the Target User
Roles
• Goals, intentions, and activities of the Personas
• Think roles through for details of access, occasions,
circumstances
Use cases & Stories
• How would users work with the product?
• What are the characteristics of the environment they use it in?
• What other products / services would they use at the same
time?
Relationship to purchase decisions
• How does the user evaluate this kind of product (e.g., trial)
• How do they make their personal purchase decisions?
• Whom else would they need to influence to get a purchase
© 2008 DOTnet CONSULTING

10. In Thinking About the Target User…
• It’ll has to be (or become) “in your blood”
Psyche, not just numbers
• Most of the time, forget about analysts
Except for questions of “alternatives” and “willingness to pay”
• Find and interview Domain experts
People who are gurus, practitioners, authors
Trend-setters at the root of a nascent fad
Consultants who mentor and advise on best practices
Boutique / specialist implementers for your users
© 2008 DOTnet CONSULTING

11. Designing the User First
• What is it?
A pen radio
• Who’s the customer?
A teenager?
• What’s their need?
Needs to listen to radio while taking a test
• What’s the product feature set?
One-color ink, one-channel FM radio
• What’s our message?
Ummmmm… it’s just $6.95!
• What’s the media / influencer capable of transmitting?
Ummmmm
• What’s the channel capable of selling?
Pens on aisle 3, radios on aisle 12
• Telltale sign of problems:
How come nobody shoplifts this thing?
© 2008 DOTnet CONSULTING

12. It’s Not Just Pen-Radios…
© 2008 DOTnet CONSULTING

13. Design the Target Market
Markets are defined by groups of customers, not vendors
Customers are companies or organizations that buy things
• They are the business beneficiaries
• They pay the bills
Markets are a collection of segments
• A segment is a group of customers who have similar needs and
buy for similar reasons
Target Markets are the core of your product’s business
feasibility
© 2008 DOTnet CONSULTING

14. Defining Segments Along the Right Lines
• Knee-jerk:
B2B: vertical industry, company size, geography…
B2C: age, family status, wealth…
• More interesting: something about the buyer
and their problems
B2B: Organization / role – CFOs needing SarBox compliance
B2B: Technology base – BEA WebLogic users
B2B: Business process – Order-to-cash cycle
B2B: Quality / Attribute – Industrial processes needing PPB purity
B2C: Family role
B2C: Psychographics / self-image / perceived needs
© 2008 DOTnet CONSULTING

15. McKenna’s Marketing Influence Pyramid
Customer
and their
friends
Trusted Neutral Sources
(Gurus, Experts, Colleagues)
Industry Sources
(Press, Partners, Associations, Government)
Vendors, Channels, Advertising
© 2008 DOTnet CONSULTING

16. Describe the Target Market
What’s the target count?
• Unit volumes key to quality, price functions
What’s the feasible price range?
• Be brutally honest!
• Watch out: customer’s don’t know what they’re willing to pay
What’s is the customers’ purchase / decision cycle
• How long is the cycle?
• How many steps / moving parts are involved?
How do you sell to them?
• Direct / high-touch sales cycles?
• Distributor / dealer networks?
• eCommerce / web / viral?
© 2008 DOTnet CONSULTING

17. Case Study: Fahrvergnugen?
© 2008 DOTnet CONSULTING

18. Case Study: VW Phaeton
• 5400 pounds, 12 cylinders, $110,000
Subject to both the Gas-Guzzler and Luxury tax
• Telltale sign: ad agency is lost
• Results: <1000 cars sold, CEO bounced
© 2008 DOTnet CONSULTING

19. What’s a Value Proposition?
The statement of what value your product brings to
customers
This is what the customer actually pays for
A logical hierarchy
That’s pretty consistent for all customers
That drives engineering, marketing, sales, and YOU
The Value that YOUR CHOSEN MARKET will perceive
Value propositions are often confused with
Messaging
Market Positioning
Competitive Differentiation
Tagline
…but a customer never pays you for those things
© 2008 DOTnet CONSULTING

20. Forming a Value Proposition
Customer Perspective
Purchaser
User
On-looker
Competitive Perspective
Get the competitions’ product and play with it
Talk to users about it
Know what’s real, what’s rubbish
Think through your outbound positioning
Iterative, has a short life
Try to keep the foundation stable for 18 months
Tweak the words every six months
The message has to be realistic, but show vision
© 2008 DOTnet CONSULTING

21. A Value Proposition Is…
• Just a supposition unless you can
prove it with real customer data and
references
• Powerless unless it is:
“Unique”
Relevant to the target audience
Credible
Substantiable
Achievable by mortals
© 2008 DOTnet CONSULTING

22. Product Features
Focus on this LAST
Develop Iteratively
Think Agile Development / eXtreme Programming
Talk with prospects, but don’t take them literally
Do not focus on feature lists / competitive parity
If you chase the bad guys on their own terms,
you will always be behind
Do not focus on the “how”
Better to focus on the “what”
Even better to focus on the “who, when…”
Best to focus on the “why”
© 2008 DOTnet CONSULTING

23. Product Features
Instead, develop a coherent thesis
The core: your theory about what the customer
values most
• “Our product is best in the world at doing X for users who
need to do Y inside customer Z.”
Use your thesis to keep scope focused
Do a few things exquisitely well
Version 1.0 will inevitably be incomplete, but it
must not be fragmentary
Does enough of the job to show value
It can never be too easy to use
© 2008 DOTnet CONSULTING

24. Look Beyond Product Features
Product boundary
Will the customer think of your 5 line-items as one product?
Will they think of your one product as 3 things bundled?
Will customers need other stuff to make your product usable?
Product boundary determines the scope of competitors &
substitutes
Pricing and licensing
Pricing (and licensing) model
Price points
Discounts, bundles, and allowances
Packaging and OOBE
How is the product delivered and installed?
What is the initial user experience?
© 2008 DOTnet CONSULTING

25. The Best MRD…
• Write a 2-page press release for the
product before the team begins
What’s the opening gambit?
Who gets quoted and what do they say?
Who is the channel selling to?
What are the visible benefits, and for whom?
What’s the pricing, packaging, and distribution?
• And have a Wiki for a dynamic view of
the product details
© 2008 DOTnet CONSULTING

26. Pulling It All Together
Value Proposition Target Market
Business
Thesis
Product Features Target User
• P&L Model
Market size, scope & segments
Engineering, Marketing and Sales budget
Schedule
• Impact on Company identity
Message and brand
© 2008 DOTnet CONSULTING

27. Your Take-Aways
• Design your customer first, feature-list last
Micro: personas, roles, use cases, stories
Macro: awareness model, decision model, influence model, purchase
model, consumption model
• Develop a “whole product” thesis
How customers get it and use it
Scope of market and size of forecast
You value prop and positioning / messaging
What you’re building
• Develop/engage a (gated?) community
Whether design partners or just enthusiasts
• Iterate on product & customer design
“Fail faster, succeed sooner.” -- David Kelley
© 2008 DOTnet CONSULTING

28. Thank You!
David@TaberConsulting.com
www.taberconsulting.com/download/archives.htm
650-326-2626
© 2008 DOTnet CONSULTING