3a customer validation.2013.q2

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Agenda *

Customer Validation – “Develop a repeatable sales process”

Day 3 (a)

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“It’s About People”

•  People buy products & solutions

•  Drucker’s High-Level Goals –  Create a customer –  Know the customer

•  …Make product sell itself

•  Customer Development –  Linking People’s needs to your Solution/Product

Review: Key Course Themes

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Customer Discovery

Customer Validation

Customer Creation

Scale Company

Customer Discovery “Last Week”

•  Stop selling, start listening •  Test your hypotheses

– Two are fundamental: problem and product concept

Review

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Customer Discovery

Customer Validation

Customer Creation

Scale Company

Today: Customer Validation

•  Develop a repeatable sales process •  Focus on “early-vangelists”

– Only they are crazy enough to buy

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Customer Discovery

Customer Validation

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We’re Attempting to

“Get Algorithmic”

We Are Trying to Build A Scaleable Company

•  Lifestyle {Work to Live Their Passion} •  Small Business {Work to Feed Family} •  Scalable {Born to be Big} •  Buyable {Born to Flip} •  Large Company {Innovate or Evaporate} •  Social – {Driven to Make a Difference}

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•  More - http://steveblank.com/2011/09/01/why-governments-don%E2%80%99t-get-startups/

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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

Sell:

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Build The Organization Map Dave Jones

CEO

Karen Rogers VP Marketing

Neil Garret VP Database Marketing

Suzanne Kellog VP Merchandizing

The potential customer In house competition

Issues to be addressed before a sale

Sell: Org’n Map

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One Step at a Time Dave Jones

CEO

Karen Rogers VP Marketing

Ben White VP Sales

Joe Black Dir. Sales Ops

Leslie Brown Financial Modeling

Neil Garret VP Database Marketing

Suzanne Kellog VP Merchandizing

The potential customer In house competition

Issues to be addressed before a sale

Sell: Org’n Map

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Organization Map Dave Jones

CEO

Karen Rogers VP Marketing

Roger Smith CIO

Ben White VP Sales

Joe Black Dir. Sales Ops

Leslie Brown Financial Modeling

Phil Winters Director IT

Geoff Smith Financial Tools Dev

Neil Garret VP Database Marketing

Suzanne Kellog VP Merchandizing

The potential customer In house competition

Issues to be addressed before a sale

Sell: Org’n Map

In Time

• Patterns will become clear

• You can prepare a Sales Plan (Sales Funnel )

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Sales Roadmap

Sell:

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The Influence Map

Functional Technical

High Executive CIO or Division IT Executive

Low End Users Corp IT Staff or Division IT

1 2

3 4

Sell: Influence Map

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The Sales Roadmap: Starts with Influence Map

Execs CIO

End Users

IT Staff

1 2

3 4

Educate & Present Solution

Sell: Influence Map

:think: This is different for each company. This is only an example.

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The Sales Roadmap: Add Access, Assessment, & Strategy

Finance

Prod Mgmt

Sales

Corp. Mktg

Support

IT

Intro Meetings

Account Strategy

Execs CIO

End Users

IT Staff

1 2

3 4

Educate & Present Solution

Strategy Assess Needs

Sell:

Access

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The Sales Roadmap

Finance

Prod Mgmt

Sales

Corp. Mktg

Support

IT

Intro Meetings

Account Strategy

Execs CIO

End Users

IT Staff

1 2

3 4

Implement Plan Proposal

Sell:

Educate & Present Solution

Strategy Assess Needs

Access Sell ! Sell ! Sell ! Sell ! Sell ! Sell !

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Roadmap becomes The Sales Pipeline

Sell:

Sales Roadmap/Pipeline

The Most Important

Process That You Will Develop

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[The Sharp End of the Stick « Steve Blank](http://steveblank.com/2009/05/04/the-sharp-end-of-the-stick/)

MammOptics Hospital purchasing decision tree

:Example:

MammOptics Private practice purchasing decision tree

:Example:

:Example:

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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

•  Refine/Revise Collateral Plan

Sell:

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Plan of Record

Applications Documents

Driver Software

System

* Sub-system Jitter Compliance testing * Present to User Group

Tested Reference Design

•  Intended audience:

Customer

V0.1 partner

V0.x partner

Optics, SerDes Front End

Chip (Product)

Alpha

Sampling

Standards * OIF Interface

Production

“Full Module” Paper Reference Design

•  ATMF interface

Full Compliance documentation “how to” & “results”

Q1 Q2 Q3 Q4 Q1 Q2

V1.0 partner

• Compliance Testing Plan Document

:think: What More Stuff do you need to support the sale? • This is focussed on actual user. •  ! Add in Rows for all the other “customer types” !

Value / ROI Why Us? .ppt “early”

Why Us? .ppt & .doc

Sell:

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Plan of Record

Technology Gatekeepers

Deal Signer

Coach

• 

• Intended audience:

Internal

Sales Docs

Influencers

• 

Q1 Q2 Q3 Q4 Q1 Q2

:think: What More Collateral/Stuff do you need to support the sale? •  List it all out.

• What does it “really” take

•  Make it available •  You’re trying to make it a “recipe”

Exec

many … Price list, Quote Form, NDA,Contracts, …

Sell:

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Example: Direct Sales Collateral Plan

“SOM” Table 9.2 Page 301 “Four Steps” Table 4.1 Page 88

Sell:

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Customer Creation – All - Step by Step

Customer Discovery

Customer Validation

Customer Creation

Year One Objectives

• Type Of Startup Distribution Model

• Revenue Model • Channel Model

• Launch Model • Sales Model

Positioning • Articulate Problem & Product concept • Understand customers view of the competitors

• Initial company & Product Positioning • Test w/ Early Adopters

• Company/Product Positioning by PR Agency with audit

Launch • Day in the life • Attend Shows/Confs • Estimate Mkt Size

• Company & product launch strategy • Test w/ early adopters

• Launch/Introduce • Launch type depends on “mkt type” of startup

Demand Creation

• Press, Analysts, Influencers List • How do customers make buying decisions?

•  How do customers purchase? • Understand analysts/influencers view

• Implement demand creation • Type depends on “mkt type”

Reference

END

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Customer Validation

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Customer Validation

Inside the Building

Outside the Building

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Customer Validation Loop

Phase 1 Get Ready To Sell

Phase 2 Sell to “Early-Vangelists

Phase 3 Develop Positioning

Phase 4 Business Model Verified

From Discovery To Creation

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Phase 2: Sell

•  First sales •  First channel sales •  Scalable and Repeatable

Sell:

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Sell to EarlyVangelists

•  Contact Visionaries •  Sell •  Learn

–  Refine Sales Roadmap –  Refine Collateral Plan/Material

•  Sell to Channel Partners –  Refine Channel Roadmap

Sell:

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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:

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Phase 3: Company & Product Positioning

•  Market Type driven •  Company & Product •  Based on real-world facts •  Test it out with Analysts and Influencers.

Positioning:

Why Now? * You now have “real facts” about why

customers buy. * You now have “real” customers to test it out

on.

Ries & Trout [Product Positioning](http://www.quickmba.com/marketing/ries-trout/positioning/)

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“Develop” Positioning

•  Product Positioning •  Company Positioning •  Present to Analysts & Influencers •  Builds “product” & “company” positioning

briefs for demand creation activities

Positioning:

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Positioning: Product Positioning

Fyi … doesn’t need to be perfect .. Get the ball rollin’

Positioning:

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Positioning: Company Positioning

Positioning:

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Phase 4: Verify, Iterate, or Exit •  The Product

–  ? Did you do custom versions for everyone ?

–  ? How much did it really cost ?

•  Sales Roadmap –  ? Did you get orders ? –  ? Is it really repeatable ?

•  Channel Roadmap –  ? Do they really add

value ? –  ? How do you drive

demand into channel ?

•  Business Model –  ? Are you really

Profitable ? –  ? How much more

money do you need ?

Iterate … or exit

Re-Group

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Customer Validation Loop

Phase 1 Get Ready To Sell

Phase 2 Sell to “Early-Vangelists

Phase 3 Develop Positioning

Phase 4 Business Model Verified

From Discovery To Creation

Time To Prep

•  Let’s go back to Phase 1.

•  A lot of this prep is not possible on the first pass. ( You don’t have the information - yet )

•  But you will need to know it all to “exit” this stage and become a “real company”

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MORE

•  The next slides are on preparing for Customer Validation.

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Phase 1: Get Ready to Sell

•  Serious preparation before 1st sales – Another writing exercise – Aligning Executives – Aligning all stakeholders.

•  Investors, team, friends, family

Get Ready to Sell:

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Phase 1: Get Ready to Sell

•  Value Proposition •  Sales Collateral •  Distribution Plan •  Sales Roadmap •  Sales Closer •  Synchronize Execs •  Advisory Board

Get Ready to Sell:

:Think: * Our Idea is “firm” * We’re gonna put a stake in the ground * “all hands on deck”

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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 –  Existing - “incremental” –  New - “transformational”

Get Ready to Sell:

:Think: “Elevator Pitch” You’ve got “One Sentence”

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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 of your

prospect. –  :idea: make a collateral plan-of-record similar to product PoR

•  Create all selling materials –  Presentations –  Data sheets –  White Papers –  Demo –  Price List, Quote Form, Contracts, NDAs, etc

•  How would collateral differ by Market Type?

Get Ready to Sell:

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Example: Direct Sales Collateral Plan

Get Ready to Sell:

“SOM” Table 9.2 Page 301 “Four Steps” Table 4.1 Page 88

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Plan of Record

Applications Documents

Driver Software

System

* Sub-system Jitter Compliance testing * Present to User Group

Tested Reference Design

• 

• Intended audience:

Customer

V0.1 partner

V0.x partner

Optics, SerDes Front End

Chip (Product)

Alpha

Sampling

Standards * OIF Interface

Production

“Full Module” Paper Reference Design

•  ATMF interface

Full Compliance documentation “how to” & “results”

Q1 Q2 Q3 Q4 Q1 Q2

V1.0 partner

• Compliance Testing Plan Document

:think: Collateral can require significant Engineering Effort

Value / ROI Why Us? .ppt “early”

Why Us? .ppt & .doc

Get Ready to Sell:

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Preliminary Channel Road Map

•  Channel Food Chain and responsibility •  Channel discount and financials •  Channel Management

•  How would channel plan differ by Market

Type?

Get Ready to Sell:

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What’s the Price? Page 182-184 SOM

•  That’s what you’re gonna figure out in this phase by trying to win some real deals.

•  Your first guess may be based on existing products, segment margins, typical discounts, your costs, and other stuff. • Market Type makes a difference

– Existing • … price expectation is known.

– New Segment • … price bar is set by existing.

– Are you Lower or Higher?

– New Market • … is just …. “difficult”

:Aside: page 108 “Four Steps” -- I really like this “you need to pay list price because you are going to be the first person to use it.”

Get Ready to Sell:

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Who’s Doing the Buying?

•  The buyer and user may not be the same •  Who is the:

–  Economic buyer –  Technical evaluator –  Recommender –  Deal signer –  Actual users –  Saboteur –  Coach

Miller - Heiman is great resource on this topic Title: The New Strategic Selling: The Unique Sales System Proven Successful by the World's Best Companies (Paperback) by Robert B. Miller (Author), Stephen E. Heiman (Author), Tad Tuleja (Author)

Get Ready to Sell:

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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

Get Ready to Sell:

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Definition: EarlyVangelist

Get Ready to Sell:

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Example: Organization Map Dave Jones

CEO

Karen Rogers VP Marketing

Neil Garret VP Database Marketing

Suzanne Kellog VP Merchandizing

Get Ready to Sell:

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The Sales Roadmap

Finance

Prod Mgmt

Sales

Corp. Mktg

Support

IT

Intro Meetings

Account Strategy

Execs End Users

Implement Plan Proposal

Educate & Present Solution

Strategy Assess Needs

Access Sell ! Sell ! Sell !

Get Ready to Sell:

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Sales Economics Understanding your Sales Pipeline

•  Timing –  How long, on average, from lead-to-deal

•  Dollars –  Average order size –  Lifetime value

•  Get, Keep & Grow –  Acquisition –  Churn, retention, loyalty –  Cross-sell & Upsell

Get Ready to Sell:

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:idea: Hire a “Sales Closer”

•  Identify need for a “Sales Closer –  Do Founders have experience “closing” business? –  Do they have a “world-class”set of contacts? –  Would you 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:

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Synchronize Your Execs

•  Product Development –  Schedule –  Deliverables –  “Good-enough”Philosophy

•  Engineering’s role in sales, installation, post-sales support –  Yes, they have a role. –  Makes “customer” tangible for them.

•  Sales Collateral review – Eng fact checks.

Get Ready to Sell:

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Formalize Advisory Boards

•  Advisory boards are critical in the 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

•  :Aside: book has good commentary on Sales/Marketing egos.

–  Meet these guys one-on-one. –  There’s not enuff air-space for two in a room :-)

•  :Aside: Key Customers can become advisors –  Otherwise Note … Advisors are NOT YOUR CUSTOMERS. –  You are the customer expert ( or are becoming one )

Get Ready to Sell:

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Advisory Board Roles

Reference:

“4 Steps” page 102 - Table 4.2 “SOM” page Page 353 – Table 9.5