Vernon’s Razor ©2008 Patrick Vernon BUSI 701 Artistic Entrepreneurship Class 9 Customer Pain.
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Transcript of Vernon’s Razor ©2008 Patrick Vernon BUSI 701 Artistic Entrepreneurship Class 9 Customer Pain.
Vernon’s Razor©2008 Patrick Vernon
BUSI 701Artistic Entrepreneurship
Class 9
Customer Pain
Vernon’s Razor©2008 Patrick Vernon
Videos
• Verma: “Passion and Customer”
• Levinson “Talk to Customers”
Vernon’s Razor©2008 Patrick Vernon
Go or No-Go?
Vernon’s Razor
Vernon’s Razor©2008 Patrick Vernon
Go or No-Go?
Vernon’s Razor©2008 Patrick Vernon
Vernon’s Razor1. Value Proposition2. Market Potential3. Return4. Team5. Competitive Advantage6. Business Model7. Customer Pain
DefiningOpportunity
MinimizingRisk
Vernon’s Razor©2008 Patrick Vernon
Customer Pain
• Will the dogs eat the dog food?
• Will the fish bite?
• Keyword: validation
Vernon’s Razor©2008 Patrick Vernon
Brook Byers, KPCB
• If you don’t have any customers yet, you need to show that you know who your customer is going to be and that you have gone out and talked to them.”
• “Acid test” for early entrepreneurs: resonance with customers
Byers: know your customers
Vernon’s Razor©2008 Patrick Vernon
Value Proposition
• Recap: the reason to create a new venture is to create value
• “Customer Pain” is a validation that somebody will directly benefit from that value
Vernon’s Razor©2008 Patrick Vernon
Ways to Validate Customer Pain
1. #1 – paying customers
2. Beta testing
3. Competition
4. Surveys and focus groups
5. Letters of Intent (LOIs)
6. Eyeballs
Vernon’s Razor©2008 Patrick Vernon
#1 – Paying Customers
• Like Team is #1 for lowering risk, paying customers validate pain
• Understanding this is #1, strategize to make it happen
• Consider rolling out early imperfect product to start customer relationships
Validating Customer Pain
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.(LOIs)
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Beta Testing
• Concept test
• Non-paying customers
• Small or scaled down product
• Customer feedback is key
Validating Customer Pain
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.(LOIs)
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Competition
• The existance of competition validates the customer pain– May create other problems
• You still must validate that your venture is differentiated to capture x% of that market
Validating Customer Pain
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.(LOIs)
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Surveys and Focus Groups• Moving from qualitative assertions
(gut feelings) to quantitative data points– From “This seems like it would work”
to “95 out of 100 software engineers were likely to buy”
• 1st step towards excellent customer feedback skill sets
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.LOIs
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Survey Article• What is the purpose of the survey?• Title the survey• Do not make the survey any longer than it needs to be• Use plain English• Avoid long questions• Ask one question at a time• Avoid influencing the answer• Ensure that the answer format allows meaningful answer• Consider how the compiled data is going be analyzed• Ensure that the questionnaire flows• Target your respondents
Vernon’s Razor©2008 Patrick Vernon
Survey Article• Allow the respondent to expand or make comments• Be confidential if needed• Consider anonymity• Give careful consideration to the best response format• Give the respondent an idea of how much time the
survey will take.• Inform the respondents of the survey end date• Pilot the survey• Before publishing the survey proof read the survey
several times• Remember to say thank you
Vernon’s Razor©2008 Patrick Vernon
Letters of Intent (LOIs)
• Shows a commitment from potential customers
• Particularly relevant with:– Very high price points – Long-term contracts– Long sales cycle products/services
Validating Customer Pain
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.LOIs
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Eyeballs
• Website traffic
• Showing any interest is more compelling than none
• If your business model is advertising, this moves to #1
Validating Customer Pain
Validating Pain
1.Paying customers
2.Beta testing
3.Competition
4.Surveys/focus groups
5.LOIs
6.Eyeballs
Vernon’s Razor©2008 Patrick Vernon
Business Model & Customer Pain
• Specific target segment
• Roadmap to future segments
• Verticals and horizontals
• Decision makers (do you solve pain for the wrong people?)
Kawasaki: create something great
Vernon’s Razor©2008 Patrick Vernon
Segmentation
• Target Addressable Market
• 1st Pin
• Influencers (Tipping Point)• Crossing the Chasm
(Geoffrey Moore)
Early Market Mainstream Market
Chasm
Vernon’s Razor©2008 Patrick Vernon
Product Attributes
Atribute B
Atr
ibut
e A
Kawasaki nitch thyself high right
Vernon’s Razor©2008 Patrick Vernon
“Marketing Mix” 4 Ps• Price
• Product
• Promotion
• Place