Lecture 11: Customer Creation - Part I
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Transcript of Lecture 11: Customer Creation - Part I
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Duke ECE 490L: How to Start New Ventures in Electrical and Computer Engineering
Poornima [email protected]
Jeff Glass [email protected]
Akshay [email protected]
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Review
Duke ECE 490L
• Stories to Features
• Usability Testing
• Paper Prototyping
• Interaction Testing
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Announcements
• Questions on Lab 2?
Duke ECE 490L3
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Idea Summary
Review Session:Wednesday October 23, 2013
DUHatch
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Agenda
Duke ECE 490L
• Customer Creation
• Concierge MVP
• Exercise
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Duke ECE 490L
Customer Discovery Validation Customer CreationBusiness/Company
Formation
Early AdopterPricing Product
Distribution
Mainstream AdoptersMoney for Marketing
Market Research
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Duke ECE 490L
Customer Discovery Validation Customer CreationBusiness/Company
Formation
Early AdopterPricing Product
Distribution
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We’ve conducted interviews to test across various segments and usability tests to test product.
Duke ECE 490L8
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Figured out market position: new, existing, re-segmenting.
Duke ECE 490L9
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Maybe outside factors that will limit growth.
Duke ECE 490L10
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Duke ECE 490L
Customer creation marketing activities necessary for customers to learn about product and create a desire to buy it.
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Duke ECE 490L
“Get big fast!”
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Duke ECE 490L
• Market adoption v. market share
• Education
• Not customer acquisition programs
• Earlyvangelist find product and spread the word
Demand Creation v. Early Adopter Launch
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Duke ECE 490L
• Not about marketing department
• Creation events
• Marketing programs depend on market
• Product launch
• Advertising, PR, trade shows
Customer Creation
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Duke ECE 490L
Market Share Cost of Entry Entry Strategy
Monopoly >75% 3x Resegment/New
Duopoloy >75% 3x Resegment/New
Market Leader >41% 3x Resegment/New
Unstable Market >26% 1.7x Existing/Resegment
Open Market <26% 1.7x Existing/Resegment
Table 5.2 from Four Steps to Epiphany
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Duke ECE 490L
• Year 1 Objectives
• Positioning: both the company and the product
• Launch: both company and product
• Demand creation: advertising, PR, trade shows
Four Building Blocks of Customer Creation
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Duke ECE 490L
What kind of company are we?
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Duke ECE 490L
• How do customers buy?
• What are their needs?
• What trade shows do they attend?
How Customer Will Interact with Your Company
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Duke ECE 490L
Describe life to a customer without your product.
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Duke ECE 490L
Need to set a budget for customer creation.
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Duke ECE 490L
Company Positioning
Product Positioning
Company Launch
Product Launch
Demand Creation Activities
Year One Objectives
Existing Market
Differentiation and credibility
Product Differentiation
(features)
Credibility and delivery
Existing basis of
competition
Create, drive demand into
the sales channel
Market Share
New Market
Vision and innovation in
the new market
Defining new market, the
need, and the solution
Credibility and innovation
Market education, standards
setting, and early adopters
Customer education, drive early
adopters into sales channel
Market Adoption
Resegment via Low-End
or Niche
Segmentation and
innovation
Redefining an existing
market and product
differentiation
Segmentation, delivery & innovation
New basis of competition
Educate users about what’s changed in
market, drive demand into
sales
Market reframing and new market
share
Table 5.3 from Four Steps to Epiphany
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Duke ECE 490L
First mover advantage.
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Duke ECE 490L
• 1921: Ford sold 900,000 Model T’s for 60% market share v. GM 61,000 Chevys at 6% market share
• 10 year period Ford focused on cost reductions, while GM diversified and differentiated product line
• 1931: GM had 31% market share v. Ford 28%. GM still has lead.
• 1964: Toyota...
• Today: Toyota is dominant American car company
Case Study #1: Ford v. GM v. Toyota
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Duke ECE 490L
Not enough to be 1st to market, need to understand the type of market your company is going to enter.
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Duke ECE 490L
1st year is all about customer creation.
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Duke ECE 490L
Serviceable market: subtract customer who bought competitor’s solution.
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Duke ECE 490L
They wanted a “whole product” (service, support, and other infrastructure).
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Duke ECE 490L
Given our pricing, how many customers can afford our product in year one?
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Duke ECE 490L
Revenue Number for Year One
# of qualified prospects to close 1 order?
How many raw leads do you need?
Paying full price?
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Duke ECE 490L
Where would most qualified leads come from?
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Duke ECE 490L
External Audit QuestionnaireRecognitionHave you heard of the company? Do you know what they do?Market ForcesAre there other products int he market that are similar to the company’s? If so, how are the company’s products different?Which do you like best? Why?Customer FocusAre you familiar with the types of customers the company is calling out?Product FocusDo you know that the top three features of the company’s product are?Are these “must have” features?PositioningHave you heard the company describe its positioning? Do you believe it? Is it right?Have you heard the company describe its mission? Do you believe it? Is it right?CompetitionWho do you think the company will compete with in the first year?Sales and DistributionIs the company’s distribution strategy the right way to reach customers?Strength/WeaknessesWhat are the strengths of the company?TrendsWhat tech/product trends should the company worry about?Acquisition InformationWhat do they think is the best way for the company to get product info to customers?
Figure 5.5 from Four Steps to Epiphany
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Duke ECE 490L
In customer validation phase you should have understood needs and who buys or influences markets.
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Duke ECE 490L
Messengers.
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Duke ECE 490L
Messengers: reach a few experts, evangelists, and connectors.
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Experts
Duke ECE 490L
• Know industry and product in detail.• Others rely on their opinions.• Some may not proselytize product and will charge for advice or consulting.
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Evangelists
Duke ECE 490L
• Cheerleaders and salespeople.• Typically paying customers• Some may not proselytize product and will charge for advice or consulting.
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Connectors
Duke ECE 490L
• Maybe bloggers or write for magazine or newspaper column.
• “Thought leaders” because of their ability to bridge across multiple worlds.
• Need to have already established a relationship with them.
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Duke ECE 490L
Messages need to be memorable and sticky.
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Duke ECE 490L
Media Checklist
Which media did my earlyvangelists tell me they rely on?
Which media do I believe my potential mainstream customers rely on? Are they the same as the media that reach earlyvangelists?
Which media do others in the influence map rely on?
Which medium offer the best return on investment?Table 5.7 from
Four Steps to Epiphany
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Duke ECE 490L
May have trouble getting traction.
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Duke ECE 490L
“Our app has been downloaded 10,000 times!”
“We have 1M users!”
“We were featured on TechCrunch.”
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Duke ECE 490L
Some time passes...
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Duke ECE 490L43
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Duke ECE 490L
Keep building!
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Duke ECE 490L45
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Duke ECE 490L
What happened?
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Duke ECE 490L
Validate early adopters and value proposition.
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Duke ECE 490L
MVP Fails
1. Don’t know who you’re early adopter is?
2. Don’t have a simple value proposition.
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Duke ECE 490L
Resist the urge to build before you validate!
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Duke ECE 490L
Concierge MVP.
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Concierge MVP
Duke ECE 490L
• An experience is a product• Questions
• Do consumers recognize they have the problem you are trying to solve?
• If there was a solution, would they buy it?• Would they buy it from you?• Can you build the solution for that problem?• How can you build a simple version?
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Duke ECE 490L
Concierge MVP validates value proposition.
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Case Study #2: Food on the Table
Duke ECE 490L
• Creates weekly meal plans and grocery lists, and hooks into grocery stores to find best deals for ingredients
• Began with a single customer!• Interviewed customers are local super markets.• Signed up 1st customer and dropped off groceries weekly.
• Collected $9.95 on each visit!
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Case Study #3: Dropbox
Duke ECE 490L
• Built a prototype: no one believed it.• Validated concept through a video.
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Duke ECE 490L
Not the time to focus on growth!
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Duke ECE 490L
Customers care about a product solving their problems or servicing their needs.
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Duke ECE 490L
Who are your customers?
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Duke ECE 490L
Not just product, but entire experience!
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Duke ECE 490L
Can you bounce back?
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Case Study #4: BizeeBee
Duke ECE 490L
• Initially a tool for ALL small business owners• 100+ email signups - no one came back!• I called EVERYONE• No clear early adopter or value proposition• Focused on yoga studios first
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Duke ECE 490L
Will I grow?
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Duke ECE 490L
Eventually!
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Case Study #5: Femgineer
Duke ECE 490L
• Blog that became a business• Bootstrapped through customers• Concierge MVP
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Case Study #6: Zappos
Duke ECE 490L
• e-commerce platform• Started with brick and mortar stores• Focused on one market: shoes• Simple site with same inventory that was in stores
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Case Study #7: AirBnB
Duke ECE 490L
• Marketplace• Started with concierge MVP• Early adopters were people who crashed with friends & family
• Simple value proposition to rent a bed, room, or apt for a short stay
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Duke ECE 490L
What about quality?
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Duke ECE 490L
Customers care about a product solving their problems or servicing their needs.
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Duke ECE 490L
If design is an issue that will be revealed in testing on early adopters.
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Duke ECE 490L
Throw away your work!
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Duke ECE 490L
Exercise!
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Review
Duke ECE 490L
• Customer Creation
• Concierge MVP
• Exercise
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