E245 Demand CreationAnn Miura-Ko

January 2011

Agenda

Demand Creation Definition Direct customer relationship Indirect customer relationship Metrics and Experimentation

3images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

Test Hypotheses:• Problem• Customer• User• Payer

Test Hypotheses:• Demand Creation

Test Hypotheses:• Channel

Test Hypotheses:• Product• Market Type• Competitive

Test Hypotheses:• Pricing Model / Pricing

Test Hypotheses:• Size of Opportunity/Market• Validate Business Model

Test Hypotheses:• Channel• (Customer)• (Problem) Customer

Development Team

Agile Development

CUSTOMER RELATIONSHIPS

what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

Demand Creation

How will customers segments hear about your product?

How does market type impact my strategy? How much will it cost to acquire a customer

using these strategies?

Market TypeExisting Resegmented New

Customers Known Possibly Known Unknown

Customer Needs Performance Better fit Transformational improvement

Competitors Many Many if wrong, few if right

None

Risk Lack of branding, sales and distribution ecosystem

Market and product re-definition

Evangelism and education cycle

Examples Google Southwest Groupon

Market Type determines: Rate of customer adoption

Sales and Marketing strategies Cash requirements

How does market type influence demand creation?

Demand Creation by Market Type

Create, drive demand into your sales channelExisting

Resegmented

New

Educate the market about what’s changed

Drive demand into your sales channel

Educate the market Identify and drive early

adopters into your sales channels

Who needs to hear about you?

Suppliers

Channels

Government

Partners

End User

Influencer / Recommender

Economic Buyer

Decision Maker

Demand Creation Feeds the Sales Funnel

PayingCustomers

$

Demand

Creation Acquisition

Agenda

Demand Creation Definition Direct customer relationship Indirect customer relationship Metrics and Experimentation

Getting Free Users

SEO (without consultants) Blogging / Sharable content Social Media / Gaming

Mechanics Communities Proven viral coefficient > 1

NOTE: “Viral” isn’t a strategy, it’s a product feature you either have or you don’t

Demand Creation

Paid Channels PR Demand Capture

- SEM- “Free” products (e.g. widgets)- Biz Dev- Affiliate Marketing

Market Education- Webinars- Email marketing- Trade Shows- Analyst Reports- Direct Sales- TV / Radio

Demand

Creation

How many come through the first step?

How much does that cost?

What is the conversion between each level?

How much in revenues can you get out of each acquired customer?

Agenda

Demand Creation Definition Direct customer relationship Indirect customer relationship Metrics and Experimentation

Example: Healthcare

Healthcare – system requirements

FDA

Payer Approval of product category Compelling clinical benefits

and cost reduction

Product approval Manufacturing approval Quality control process

approval

Healthcare & Marketing Free samples Professional papers Speeches by leading academics and

influential doctors Leading institution as reference

customer Conference presentation Continuing medical education

Product Champions

FDA

Restrictions on user generated content- Adverse event postings- Off label use postings

Restrictions on direct selling to doctors

Critical questions

What are critical regulations and approval processes that need to happen prior to launch of product?- Industry- Federal / State

Are there regulations on marketing efforts as well?

Who influences the purchasing decision and how can they become an ally?- What is required to be endorsed?

Agenda

Demand Creation Definition Direct customer relationship Indirect customer relationship Metrics and Experimentation

Customer Acquisition Cost

PayingCustomers

$

Demand Creation

Acquisition

To get one customer here

How much do you have to spend here

The Sales FunnelEnterprise Software

Leads

PayingCustomers

$

Qu

alif

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Le

ad

Fir

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ale

s C

all

De

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tra

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Fe

asib

ility

Pro

po

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l Purchase Order

Other Sales Funnels

What does your funnel look like? How long does each part of the funnel

take? What % converts between each section?

Visit Sign Up Activate Upgrade

Informational Meeting

TrialContract

NegotiationSigned

Contract

1.

2.

Cost of Customer Acquisition Calculation

David Skok

Cost of Customer Acquisition Calculation

Demand Creation Pivot