Market Research for the Start-up

For the Venture Greenhouse

10.23.14, San Rafael, CA

By: Chris Yalonis, President, Communiquechris.yalonis@communiquepartners.com

415-309-0331

Listen. Learn. Lead

Content

About CommuniqueWhy do Market Research?Types of research-purposeThe role of MR in the Customer Development processCustomer Identification/DiscoveryCustomer ValidationCustomer interviewsResources and tools

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About Communique Partners• Based in San Francisco Bay area• Specializes in eResearch and ePanels for Tech, B-B, Professional

and Low Incidence Consumer Markets• Over 50 years of collective experience in offline and online

market intelligence• Built 55+ ePanels and executed over 1000 online research

projects• Uses “Best in Class” Technology for panel management and

survey execution• Clients include:F1000, SME’s, other MR Partners, agencies

– Virtual Test Labs for concepts, in home usage tests, product, pricing, and marketing

– Market research, market and brand trackers – Customer satisfaction measurement and affinity building– Online/offline focus group recruiting

About Chris Yalonis• Over 25 years in tech marketing and sales line management, publishing,

market research and sustainability consulting• Founder/early team in 7 start-ups, advisor to hundreds of others in mobile

tech, software, healthcare, CPG, financial services, SaaS/Cloud, wireless, sustainability.

• Former Chief Research Officer at MarketTools, $100M market research software and services firm

• VP-Consulting at International Data Corporation (IDC), market strategy consulting for Global IT and telecomm industries

• Author of seven books on the computer industry, business planning, and market strategy.

• B.A. from Miami University (Ohio) and his M.B.A. from Indiana University, Presidio Graduate School post grad

• Teaches at SSU, Presidio Graduate School, Miami University (OH), U of Vermont: Green Entrepreneurship, Leading Sustainable Enterprises, Sustainability Performance Metrics and reporting

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A Selected Listing of Clients

Hundreds of SMB’s and start-ups

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Services for Clients• Full Service questionnaire design, programming, hosting, fielding, data

tables, online reporting/downloads• Analysis and management reports, presentations as needed• Hosting and management of online focus groups, bulletin boards and

blogs• ePanel Design, Set-up, Recruiting and Management• Set up and management of online customer multi-channel, multi-touch

point feedback programs

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Types of Studies Executed:• Concept Feedback and Creative Testing• Product and Service Evaluation• Awareness and Perception surveys• Competitive Analysis• Ad and Promotion tests, pre-post awareness/perception• Home Product Placement and IHUT’s• Usage and Attitude• Company, Product, Brand Awareness, Attitudes, Trial and Usage• Customer and Client Satisfaction Surveys • Website Usability• Public Policy, Attitudes and Perception Studies• Employee Surveys and Assessments

Why do Research as a start-up?

• Test concept for demand and value before development, expensive ramp-up and launch

• Lower risk of dud product• Identify most attractive customer segments• Identify features, price, packaging, promotion that

optimizes demand and profitability• Identify competition, their value and how you can

compete against them• Audiences: team, partners, investors

3 Key Questions For Research to Answer in Pre-Launch

• Who is our customer? (the more narrow and specific the better)

• What is our value Proposition? (make it compelling and unique)

• How do we sell it at a price and level to meet our financial goals?

Types of Research

• Concept tests• Customer needs discovery/pain points• Product feature and pricing tests• Marketing tests (ad and promotion testing, awareness

and perception)• Customer satisfaction and experience measures• Awareness and perception tracking• Competitive trackers• Competitive audits/profiles

Research Interventions

Methods

• Secondary (studies, syndicated, third party) Market sizing/forecasts)

• Primary– Qualitative (one on one interviews, focus group, etc.)– Quantitative (surveys, polls, crowdsourcing, social media)– New methods

• AB tests of product web page and subsequent feature and options page, pricing page, shopping cart page

• Online focus groups/forums, crowdsourcing• Social media pools, ID of early product testers and influencers

Helping you map it: The Lean Canvas

1: Customer Segments

For whom are we creating value?Who are our most important customers?

1: Customer SegmentsFor whom are we creating value?Who are our most important customers?

There are different types of Customer Segments.Here are some examples:

Mass marketNiche marketSegmentedDiversifiedMulti-sided platforms (or multi-sided markets)

2: Value Propositions

The Value Propositions Building Block describesthe bundle of products and services that createvalue for a specific Customer Segment

What value do we deliver to the customer?Which one of our customer’s problems are we helpingto solve? Which customer needs are we satisfying?What bundles of products and services are we offeringto each Customer Segment?

2: Value Propositions

NewnessPerformancesCustomization‘Getting the job done’DesignBrand/status

2: Value Propositions

What value do we deliver to the customer?Which one of our customer’s problems are we helpingto solve? Which customer needs are we satisfying?What bundles of products and services are we offeringto each Customer Segment?

PriceCost reductionRisk reductionAccessibilityConvenience/usability

A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs.

The First 2 Steps to the Epiphany

Why Customer Development?

• Move faster• Reduce risk• Bring process to chaos• Stay in tune with customers• Replace HiPPO & opinions with data• Discover the best market opportunities

Customer Discovery

Who is Your Customer?

Phase 1:State

Hypothesis

Phase 4: Verify

Phase 3:Test Product

Concept

Phase 2:Test Problem Hypothesis

The Hypothesis : C-P-S• Customer–Who is using your product?

• Problem–What problem do they have?

• Solution–How will you solve the problem?

Be Specific. It’s better to be wrong than vague.

Map Your Ecosystem

• Who are the entities in your business?

• Connect the entities based on the flow of $$

• How does the product move through channels to meet users?

The Intermediate Minimal Viable Product

• Map out the basics of your MVP based on the solutions from C-P-S

• Identify the riskiest parts & test them • This is before you build anything…just map out

what you think is the solution

BUILD

Why all this work?!?

• Save Time and Money by discovering early on if something won’t work.

• Make course adjustments before you build a large product.

Tools/Resources

AYTM• 1. AYTM AYTM (Ask Your Target Market)

– enables you to create surveys on the fly and send them to your own lists or to the AYTM panel of more than 4.5 million people.

– You can choose targeting criteria, such as gender or geographic region, and include a variety of closed and open-ended questions, as well as images and videos.

– Pricing, which starts at 95 cents per completed survey, depends on the number and types of questions and the targeting criteria.

– Most consumer panel surveys are completed within 24 hours, and you can watch your results as they come in.

– Results can be cross-tabulated and shared through your website, blog or other online medium.

– AYTM also offers qualitative research through one-on-one online video interviews; the cost depends on the size of the project.

Gutcheck

• GutCheck is a qualitative market research tool that enables you to conduct 30-minute one-on-one online video interviews with some of the 3.5 million members of its U.S. consumer panel. You can target respondents through a variety of criteria, such as age and income, to ensure you're talking to the right audience.

uSamp• uSamp With 6.5 million global panel members, uSamp

provides custom targeting, as well as pre- defined consumer lists you can survey using its SurveyBuilder tool. Targets could include a specific country, a business-to-business audience, or an industry panel, such as food, automotive and travel. You also can survey your own lists.

• Results are provided in real time, so you can see the data coming in. You must contact uSamp to obtain price quotes, which will depend on the range and focus of your study.

SurveyMonkey

• SurveyMonkey SurveyMonkey is best known for enabling you to send online surveys to your own lists. But it also offers a consumer panel that includes hundreds of thousands of survey respondents.

• You can create and send custom surveys to the SurveyMonkey consumer panel using the targeting criteria of your choice. Results are provided within seven days for $3 per completed survey, or in 3 days for $5 per completed survey.

Itracks

• Online focus groups and discussion forums, online panels and surveys

• Qualitative tools for distant in depth group interviews

• Enhanced Web conferencing platform optimized for focus groups

The Customer Development Interview

The Structure

3. Solution

2. Problem

1. Person

The MVP House

The Structure – 1. Person

• Who are they? What’s their role?• How is your budget handled?• How do you find new products?• How much time do you spend on

[Task X]?

Goal: Get a baseline background of the person you’re talking to. Be broad.

Learn about them and their role in your industry.

The Structure – 2. Problems

• NOT about the problems you think they have.

• What are your top 3 challenges you face in your job or life related to [industry X]?

• If you could wave a magic wand…what would the solution be?

Goal: Get them to say the problem you want to solve is a problem they have (prefer unprompted)

Learn about the problems they recognize first.

The Structure – 3. Solution

• “That’s interesting” = Kiss of Death.• If they’re not anxious to use right

away, they’re not a key target. • Read body language, voice

inflection and energy level for signals of interest.

• Best reaction is actually following through after the meeting or calls.

Now you tell them about your product concept.

Goal: Discover if they’re interested in your solution and gather feedback.

Share mockups, designs or MVPs.

Tips for making the most of Interviews1. Take good notes.2. Involve other team members.3. Be conversational. 4. Go off script.5. Ask to see any MVPs they’ve made/use.6. If they’re excited about something, ask if they’ll pay for it.7. Show them mockups or early concepts if you have them

and pay attention to their reactions/feedback.8. Always Follow up.9. End with an ask.10. Be open to new problems and opportunities!11. Summarize and review your notes with your team.

Where do you find people to interview?

5-10% Response Rate

The Best Place to Find Candidates:

30-40% Response Rate

Help not Sales

Now what?• Interview in groups of 8-10

people per customer type.• Summarize notes and review

with others.• Look for common patterns

matching C-P-S (Customer – Problem – Solution).

• Compare to your high level metrics to see if anecdotes match data.

• Iterate if there’s no match.

Customer Discovery Wrap UpTo Exit means you’ve:• You’ve identified a problem a

customer wants solved.• Your product solve the customer’s

needs.• You believe you have a viable and

profitable business model.• You feel you’ve learned enough to

go out and sell.

Step II of Customer Development: Customer Validation/Acquisition

Can You Sell It?

Phase 1: Get Ready

to Sell

Phase 4:Verify

Phase 3:Develop

Positioning

Phase 2:Sell to Visionary

Customers

Break Down Your Sales Road Map

• Who influences a sale?• Who recommends a sale?• Who is the decision maker?• Who is the economic buyer?• Who is the saboteur?• What is the budget for purchasing your type of

product?• How many calls does it take to make a sale• What is the profile of an early customer?

The Word According to Blank – Phase 1 : Get Ready to Sell

Goal: Take what you learned from Customer Discovery and apply to development of Sales Process

Map out the Food Chain of your Sale

Find out how to (reliably) get your foot in the door…

• At what level do you want to enter?

• How many people on the org chart need to say yes?

• Does each department perceive the problem the same way?

• In what order do you need to call on people?

• Who can derail the sale?

The Word According to Blank – Phase 2: Sell to Visionary Customers

Goal: Get someone to Pay for your product and learn how to repeat the process.

Free != Customer

Customer =

Build Your Sales Roadmap

The Word According to Blank – Phase 3: Develop Positioning

Goal: Based on problem and sales lessons, optimize positioning for your product & company.

Positioning

• Speak the language of your customer• Written by those that interact directly with the

customer• Verify with Product team to ensure what’s built

meets expectations set

The Word According to Blank – Phase 4: Verify

Goal: Verify all the work you’ve put into Customer Validation to iterate or move onto Customer Creation.

Questions to Ask…Product:-Are you repeatedly losing any deals? Why?-Are customers satisfied? What else do they

expect?-Are you building the right features?-Were there any pricing issues? Did you lose

customers on pricing?

Sales: - Can you verify the sales process and accurately

project its success rate?- Can you realistically map your sales pipeline?-Are you closing deals?

More Questions to Ask…Channel:-Did you factor in the channel costs to the

overall costs of your product?-How do various channels affect the sales

time?-What does your sales force look like?

Business Model: -Based on known factors, how profitable is the

business?-Will costs be the same as you grow?-How much funding do you need to reach

profitability?

Customer Validation Wrap Up

To Exit means you’ve- Proven you found a Customer

Problem- Found early evangelists that will pay

you- Found a repeatable and scalable

sales process- Demonstrated a viable business

model

Common Sense + Diligent Process + Thought =

Appendix: Research resources