lean startup how to learn from customers giles farrow v2
TRANSCRIPT
Lean StartupHow to learn from Customers
Giles Farrowv2
Giles Farrow● Marketing Consultant for Software Companies● 25 years IT & Software Marketing● Company size 1-50,000 employees● Smarter, reliable way for software to succeed
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Before Lean StartupStartup Mythology
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Create Business PlanBrilliant idea in a garage
Build Team
Raise Funds
Massive Launch Execute Stealthily
World Domination
Lean Startup Entrepreneur & EngineerScientific approach to writing software, increasing quality and speedBetter software made little difference to business success
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Eliminate UncertaintyStartup =
● Don’t : Plan and Pontificate● Do: Experiment and Learn● Trust facts not opinions
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“a human institution designed to create a new product or service under conditions of extreme uncertainty”
Minimum Viable ProductMVP: Only solves core problem ● Don’t : Over-Engineer● Do: Get it into customers’ hands ASAPZero Product MVPs● Concierge or Wizard of Oz● Landing pages or fake buttons
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Validated LearningScientific Method● Hypothesis● Design experiment● Record data● Analysis● Validated learning● New hypothesis
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CanvasBusiness Model on 1 Page
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CanvasOne-page business planLiving documentMakes strategy accessibleBlueprint for pitching / marketing
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Exercise 1Complete canvas for your business / idea- 5 mins- Name- Date
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1 CustomerCustomer segments- be specific- real peopleEarly adopters- likely first
customers
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2 ProblemTop problems you solve for customers
Existing Alternatives- what do people do
now?
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3 Unique Value PropositionUnique Value Proposition- What’s different- What’s valuable
High-level Concept- (e.g. YouTube =
Flickr for videos)
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4 SolutionSolution- Brief- Factual
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5 ChannelsPath to reach customers- Direct- Indirect
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6 & 7 Revenue & CostsRevenue Streams- Sources of
revenue- Add-on services?Cost Structure- Fixed- Variable
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8 & 9 Metrics & AdvantageKey Metrics- Key numbers that
show business health / growth
Unfair Advantage- What’s hard to
copy or buy
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10 AssumptionsAssumptions- What facts does
your business model rely on?
E.g.- Demand- Price- Partners
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Example - UberHailo
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PROBLEM● Need quick private ad
hoc transport● Minimal waiting,
minimal hassle● Fare should be clear
and easy to pay
SOLUTION● Mobile app matches
passengers to nearest available driver
● App tracks route, calculates fare and handles payment.
UNIQUE VALUE PROPOSITIONYour own chauffeur summoned at the touch of a button.
UNFAIR ADVANTAGE● Expertise handling
local legislation and unions
CUSTOMER SEGMENTS● Busy professionals in
London, New York, Paris
● International business travellers
● Young urban nighttime social
Existing Alternatives● Hail taxi on street● Call taxi / minicab● Car hire / zipcar● Public transport
KEY METRICS● Drivers signed up● Customers >5 trips
HIGH-LEVEL CONCEPTTaxis re-imagined for the 21st century
CHANNELS● Billboard advertising
at taxi stands● Livery on cabs● PR
EARLY ADOPTERS● Looking for new things
to try● Enjoy mobile apps
Example - UberHailo
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COST STRUCTURE● £x Develop app● £x Operations staff & Phone provision● £x Marketing
REVENUE STREAMS● 20% of fares● Phone rental● Admin fees e.g. cancellations
● Customers willing to trust an app to handle payments
● Getting a taxi quickly is very important for customers
● Customer will register and install app in advance
● Customers will regularly use service
● Customers will recommend to friends
● Can attract publicity at low cost
● Can keep supply of drivers in balance with demand
● App will be easy enough to just use occasionally
● Drivers will adopt “new” technology
● Drivers will agree 20% rate
● Does not break local laws
● Visa / Mastercard will accept payments
ASSUMPTIONS
Canvas → Marketing
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PROBLEM● Need quick private ad
hoc transport● Minimal waiting,
minimal hassle● Fare should be clear
and easy to pay
SOLUTION● Mobile app matches
passengers to nearest available driver
● App tracks route, calculates fare and handles payment.
UNIQUE VALUE PROPOSITIONYour own chauffeur summoned at the touch of a button.
UNFAIR ADVANTAGE● Expertise handling
local legislation and unions
CUSTOMER SEGMENTS● Busy professionals in
London, New York, Paris
● International business travellers
● Young urban nighttime social
Existing Alternatives● Find a taxi● Call taxi / minicab● Car hire / zipcar● Public transport
KEY METRICS● Drivers signed up● Customers >5 trips
HIGH-LEVEL CONCEPTTaxis for the 21st century
CHANNELS● Billboard advertising
at taxi stands● Livery on cabs● PR
EARLY ADOPTERS● Looking for new things
to try● Enjoy mobile apps
What they are thinking about when looking for a solution
and what the competition is
Which customers to target
Canvas → Marketing
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PROBLEM● Need quick private ad
hoc transport● Minimal waiting,
minimal hassle● Fare should be clear
and easy to pay
SOLUTION● Mobile app matches
passengers to nearest available driver
● App tracks route, calculates fare and handles payment.
UNIQUE VALUE PROPOSITIONYour own chauffeur summoned at the touch of a button.
UNFAIR ADVANTAGE● Expertise handling
local legislation and unions
CUSTOMER SEGMENTS● Busy professionals in
London, New York, Paris
● International business travellers
● Young urban nighttime social
Existing Alternatives● Find a taxi● Call taxi / minicab● Car hire / zipcar● Public transport
KEY METRICS● Drivers signed up● Customers >5 trips
HIGH-LEVEL CONCEPTTaxis for the 21st century
CHANNELS● Billboard advertising
at taxi stands● Livery on cabs● PR
EARLY ADOPTERS● Looking for new things
to try● Enjoy mobile apps
Marketing campaigns / tactics
Brief factual description of what you actually do
e.g on home page
Headline or tagline - quickly grab attention
Canvas → Marketing
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PROBLEM● Need quick private ad
hoc transport● Minimal waiting,
minimal hassle● Fare should be clear
and easy to pay
SOLUTION● Mobile app matches
passengers to nearest available driver
● App tracks route, calculates fare and handles payment.
UNIQUE VALUE PROPOSITIONYour own chauffeur summoned at the touch of a button.
UNFAIR ADVANTAGE● Expertise handling
local legislation and unions
CUSTOMER SEGMENTS● Busy professionals in
London, New York, Paris
● International business travellers
● Young urban nighttime social
Existing Alternatives● Find a taxi● Call taxi / minicab● Car hire / zipcar● Public transport
KEY METRICS● Drivers signed up● Customers >5 trips
HIGH-LEVEL CONCEPTTaxis for the 21st century
CHANNELS● Billboard advertising
at taxi stands● Livery on cabs● PR
EARLY ADOPTERS● Looking for new things
to try● Enjoy mobile apps
How to measure marketing effectiveness
Possible way to build trust / credibility
ExperimentHow to get validated learning
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Riskiest Assumption = Core to business but least data
Riskiest Assumption
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● Customers willing to trust an app to handle payments
● Getting a taxi quickly is very important for customers
● Customer will register and install app in advance
● Customers will regularly use service
● Customers will recommend to friends
● Can attract publicity at low cost
● Can keep supply of drivers in balance with demand
● App will be easy enough to just use occasionally
● Drivers will adopt “new” technology
● Drivers will agree 20% rate
● Does not break local laws
● Visa / Mastercard will accept payments
UberHailo ASSUMPTIONS
Validated LearningScientific Method● Hypothesis● Design experiment● Record data● Analysis● Validated learning● New hypothesis
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Experiment Hypothesis
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Riskiest Assumptionriskiest = we have least datait is fundamental to viability
Getting a taxi quickly is very important for customers
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Customer / Problem Hypothesise.g. I believe [customer segment] has a significant problem achieving [goal / objective]
I believe young urban professionals out late in London for parties, nightclubs… desire a service that is comparable to taxis but finding a cab is much faster
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Problem / Solution Hypothesise.g. I believe this solution will result in [quantifiable outcome]
Experiment Test & Measure
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Test Methodthe least expensive way to test my assumption is to…
Hire a black cab Friday / Saturday night. Stand at back of taxi lines and offer to summon a cab instantly but it will cost 10% extra.
Success Criteriae.g. I will run experiment with X customers and Y will respond by...[It must be possible for test to fail]
10 of 50 young urban professionals queuing for a taxi pay extra 10% for instant cab, where expected wait time is at least 5 minutes.
Experiment Results
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Result 10 of 25 agreed. Police moved us on three times. People who declined were concerned about safety and legality. Cold / rain seemed to encourage most people.
Decision Data is conclusive - getting a cab quickly is an important factor. Should be used in marketing. Means need large pool of drivers to provide quick response
Learning Quick pickup importantSafety / legality are concernsAdverse weather will increase demand
Learn from CustomersHow to ask “good” questions
Learning from CustomersNormal Approach● Explain idea● Ask opinion● Would they buy?
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People lie all the time● Polite● Want to look good● Abysmal predicting
Customers hold the truth - the facts.We need a different way to learn.
Talk about their life, not your idea● Past not future● Fact not opinion● Specifics not general● Relaxed not questionnaire
Learning from Customers
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Mom TestA good question is one your mother could say “no” to
Exercise 2 - Customer Questions
● Select Riskiest Assumption related to customers really caring about the problem
● Write Customer / Problem Hypothesiso I believe [customer segment] has a
significant problem achieving [goal / objective]
● Write 5 Questions to ask Customer33
Good or Bad Question?
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Do you think UberHailo is a good idea?
Bad
Good or Bad Question?
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Would you sign up for UberHailo when it becomes available?
Bad
Good or Bad Question?
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How do you currently get taxis?
OK
Good or Bad Question?
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The last time you got a taxi, how did you get it?
Good
Good or Bad Question?
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When do you have a problem getting a taxi?
OK
Good or Bad Question?
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Tell me about the last time you had a problem getting a taxi.
Good
Good or Bad Question?
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What problems do you encounter when getting a taxi?
OK
Good or Bad Question?
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Tell me about a time when you had a big problem getting a taxi.
Good
Good or Bad Question?
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What have you tried to do about making it easier to get taxis?
Good
Good or Bad Question?
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Please help me understand why you...
Good
Good or Bad Question?
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How much would you pay for a taxi service you can summon quickly?
Bad
Good or Bad Question?
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How much did you spend on taxis last month?
Good
Good or Bad Question?
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What would you need to see before signing up?
OK
Good or Bad Question?
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Who else should I talk to?
Good
RecapWhat did we cover?
Recap● Eliminate uncertainty● Canvas, 1-page business model● Validated learning
o Hypothesiso Experimento Measure
● Learning from customers
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Resources● Slides, handouts at sm8.co/lean ● or email Giles [email protected]● Lean Startup Eric Ries● Running Lean Ash Maurya● The Mom Test Rob Fitzpatrick● The Lean Entrepreneur Brant Cooper
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