Customer Development/Lean Startup 092609 class 7 and 8

Customer Development in the
High Tech Enterprise

Customer Validation
Parts 1 & 2

September 26 2009

Steve Blank
sblank@kandsranch.com

9/25/09 1

Agenda

! Logistics/Questions
! Review
! Cases: HP Kittyhawk, Wildfire
! Customer Validation

Customer Development in the High-Tech Enterprise Fall 2009

HP Kittyhawk Questions

! How well do they execute product development?
! How competent was the development team?
! What Market Type could they chosen?
Which did they choose?
! What revenue curve did that choice result in?
! What revenue curve did they commit to?
! What were the consequences?


Kittyhawk Case
! Classic “Innovators Dilemma”
" New Market innovation in a large corporation
" Needs large forecasts to justify development
budget
" Unrealistic because its unpredictable and always
slower growth
" May steal resources from mainstream products


Today: Customer Validation

Customer Customer Customer Scale
Discovery Validation Creation Company

• Develop a repeatable and scalable sales process
• Only earlyvangelists are crazy enough to buy


Customer Validation:

Phase 3 Phase 4
Customer
Positioning Business
Validation
Model
Verified

From Discovery
To Creation

Phase 1
Phase 2
Get
Sell to
Ready
EarlyVangelists
to Sell


Customer Validation
Get Ready to Sell
Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan

Formalize
Sell to “EarlyVangelists” Advisory
Board
Contact Sell to Refine Sales Sell to Refine
Visionary Early Roadmap Channel Channel
Customers Customers Partners Roadmap

Develop Positioning
Product Company Present to
Positioning Positioning Analysts &

Verify Influencers

Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap
Customer Development in the Roadmap Enterprise
High-Tech Model Fall 2009

Customer Validation
Get Ready to Sell
Articulate
a Value
Proposition
Inside the Building
Prelim Sales
& Collateral
Materials
Prelim
Distribution
Channel Plan
Prelim Sales
Roadmap
Hire a
“Sales Closer”
Align Your
Executives

Formalize
Sell to “EarlyVangelists” Advisory
Board

Outside the Building
Develop Positioning

Verify Influencers

Roadmap
Customer Development in the Roadmap Enterprise
High-Tech Model Fall 2009

Phase 1:
Get Ready to Sell

Phase 3 Phase 4 ! Serious preparation
Positioning Business before 1st sales
Model
Verified " Another writing exercise
" Aligning Executives
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell


Get Ready to Sell
! Value Proposition
! Sales Collateral
! Distribution Plan
! Sales Roadmap
! Sales Closer
! Synchronize Execs
! Advisory Board

Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan

Formalize
Advisory
Customer Development in the High-Tech Enterprise Fall 2009 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

OEMs

System
Integrators

Direct
Sales Force

Value-Added Your
Your Customers
Resellers (VARs)
Company

Dealers

Distributors

Retail/Mass
Merchants/Online


Channel Diagram
Book Publishing Company

National
Publisher Wholesaler Distributor Retailer

Determine Merchandise
Deliver Books Allocations Titles
(from printer) Stock Books

Deliver Orders Sell Books
-Establish Identity Ship Books
-Create Demand

Dispose of Acknowledge
Returns Returns


Channel Margins
Book Publishing Company

Publisher National Customer
Distributor Retailer
Wholesaler

% of 35% 15% 10% 40%
Retail

$s $7.00 $3.00 $2.00 $8.00 $20.00


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

EarlyVangelist

Has / Or can Acquire
a Budget

Has Put Together a Solution
out of Piece Parts

Has Been Actively Looking For a Solution

Know They Have a Problem

Has A Problem


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

Phase 3 Phase 4 ! First sales
Business
Positioning
Model
! First channel sales
Verified
! Scalable and Repeatable

Phase 1
Phase 2 Get
Sell to Ready


Sell to EarlyVangelists
! Contact Visionaries
! Sell
! Refine Sales Roadmap
! Sell to Channel Partners
! 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
Dave Jones
CEO

Karen Rogers
VP Marketing

Neil Garrett Suzanne Kellogg
VP Database VP Merchandizing
Marketing

Our Potential
Customer


One Step at A Time
Dave Jones
CEO

Ben White Karen Rogers
VP Sales VP Marketing

Joe Black Neil Garrett Suzanne Kellogg
Dir. Sales Operations VP Database VP Merchandizing
Marketing

Leslie Elders
Financial Modeling
Our Potential
Customer

= in house competition

Organization Map
Dave Jones
CEO

Ben White Karen Rogers Roger Smith
VP Sales VP Marketing CIO

Joe Black Neil Garrett Suzanne Kellogg Phil Whitry
Dir. Sales Operations VP Database VP Merchandizing Director IT
Marketing

Leslie Elders Geoff Smith
Financial Modeling Financial Tools
Development
Our Potential
Customer

= issues to be addressed before a sale
= in house competition

The Influence Map

Functional Technical

High Executive 1
Low


The Influence Map


High Executive 1 2 CIO or Division IT executive
Low


The Influence Map


Low End Users 3


The Influence Map


Low End Users 3 4 Corp. IT staff or Division IT


The Sales Roadmap:
Starts with Influence Map

Educate & Present
Solution

Operational Technical

High Execs CIO

End IT
Users
Low Staff


The Sales RoadMap:
Adds Access, Assessment & Strategy

Access Assess Strategy Educate & Present
Needs Solution
Finance

Product Operational Technical
Mgmt
High Execs CIO
Sales
Intro Account
Meetings Strategy
Corp. End IT
Mktg Users
Low Staff
Support

IT


The Sales RoadMap

Access Assess Strategy Educate & Present Sell, Sell, Sell, Sell
Needs Solution
Finance

Product Operational Technical
Mgmt
High Execs CIO
Sales Implement
Intro Account Proposal
Meetings Strategy Plan
Corp. End IT
Mktg Users
Low Staff
Support

IT


RoadMap becomes The Sales Pipeline

4. Understand
1. Prepare 2. Initial Meeting Existing Situation
• Hoovers, One • Ask tough questions a) Technology
Source, Web • Do Buy- In Demo
3. Qualify?
b) Organization
c) Competition

5. Custom Pitch
• Prepare! 6. Win Over IT 7. Define Problem 8. ROI Pitch
• Get NDA signed • Tech deep dive • Develop Action Plan • Prove the Value!

9. Exec Session
• Set expectations for
this meeting early on.

10. Solution 11. Formal Pricing 12. Negotiate
Session Proposal • Sales
• Detailed Tech discovery
• 13. Close!
• No surprises! • Finance
• Support


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

Phase 3 Phase 4 ! Market Type driven
Business
Positioning
Model
! Company & Product
Verified
! Based on real-world facts

Phase 1
Phase 2 Get
Sell to Ready


Develop Positioning
! Product Positioning
! Company Positioning
! Present to Analysts &
Influencers
! Builds briefs for demand
creation activities

Influencers


Positioning:
Product Positioning

! Market Type affects positioning

Existing Market New Market Resegmented Market
Product Compare your It’s too earlier fo r Compare your product to
Positioning product to your customers to your competitors Describe
Statements competitors. understand what your how some feature o r
Describe how products features will attribute of the product
some feature or do for them. Instead, solves the problem your
attribute of the describe the problem customer has in a way
product is your product will solve comparable products do
better, faster, and the benefits that not. Describe the benefits
cheaper, the customers will get that the customers will get
easier. from solving it. from solving their problem
this new way.


Positioning:
Company Positioning

! Market Type affects
positioning

Existing Market New Market Resegmented Market
Company Compare your It’s too earlier for Company positioning for
Positioning company to your customers to understand this type of market
Statements competitors. Describe how different your communicates the value
how your company is company is, since in a of the market segment
both different and new market there are no you’ve chosen and the
credible. other companies to innovation your
compare it to. Therefore, company brings to it.
company posi tioning is What is it that customers
about communicating a value and want and
vision and passion of what need now.
could be.


Phase 4:
Verify, Iterate or Exit

Phase 3 Phase 4 ! Market Type driven
Business
Positioning
Model
! Company & Product
Verified

Phase 1
Phase 2 Get
Sell to Ready


Verify
! Product
! Sales Roadmap
! Channel Roadmap
! Business Model

Roadmap Roadmap Model


Customer Development/Lean Startup 092609 class 7 and 8

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (9)

Similar to Customer Development/Lean Startup 092609 class 7 and 8

Similar to Customer Development/Lean Startup 092609 class 7 and 8 (20)

More from Stanford University

More from Stanford University (20)

Customer Development/Lean Startup 092609 class 7 and 8