STARTUPS CUSTOMER DEVELOPMENT FOR

2

Motarme delivered real, measurable results in a

short timeframe“”

Customer Development

4

The process of achieving product-market fit by • testing with real customers and then • adding or removing features or • adjusting your target customer definition.

Definition

Once you've achieved product-market fit you then seek growth through a repeatable customer acquisition processes.

5

http://www.slideshare.net/venturehacks/customer-development-methodology-presentation

Definition

6

Definition

7

David Skok, Matrix Partnershttp://www.slideshare.net/DavidSkok/the-saas-business-model-and-metricshttp://www.forentrepreneurs.com

Definition

8

• Most of us focus too much on product development at the start

• We also wait too long before engaging seriously with customers

• Serious engagement = sale• When you start, you realise customer development and then

customer acquisition is as hard or harder than product development

Key Points

Therefore

1. You should start your Customer Development process at same time as product development.

2. Use lessons from other B2B and B2C startups to avoid reinventing the wheel

Customer Development II

10

Principles

Smoke Testing

Test Demand at Low Cost1

2 Proceed or Modify

11

InputsSmoke Testing

Target Customer Definition1

2 Value Proposition

3 Market – Existing, Resegmented, New

12

Who Are We Trying To Target?

i Where are they (countries, languages)i What do they like and dislike?i What industry sectors?i What types of organisation? i What size – revenue, number of employees ...?i Any specific named target companies?i What are the typical roles or titles?i How does your system relate to their job?i What are their key concerns/drivers/goals?i What are their demographics? i Where do they hang out online?i What sources of information do they use?

?

13

Who Are We Trying To Target?

• Draft “Personas” for your top 3 target customers• Brief descriptions representing 80% of your target visitors• Use them as way to describe and understand those customers• Also helps to identify ways to get in touch with these customers

OscarRole: Sales managerOrganization: SMEAge: 45Goals: have easy access to prospect information 24/7; get better quality leads; better pipeline

NoraRole: Marketing managerOrganization: multi-nationalAge: 32Goals: manage multiple channels; drive awareness of the company; produce more and better quality leads.

LiamRole: IT managerOrganization: SMEAge: 31Goals: reliability and availability; simplified architecture; security; cloud-based infrastructure

14

• Select some value proposition claims for your target audiences – VP1, VP2 etc.• Position them on the grid• “Appeal” means – how strongly do the target customers want this VP?• “Exclusivity” means – can people get this VP anywhere else?• The closer you can get to the upper right hand quadrant the better your VP is

The Value Proposition

1515

1. Talking about your company and its capabilities rather than focusing on the customer

2. Talking about features instead of the value provided by those features

3. Using marketing waffle like ‘leading global provider of X’

4. Highlighting benefits that your customers don’t care about

5. Lack of a single definition within a company – if you ask two different sales people you get two different answers as to what they do and why they’re the best.

Typical problems

The Value Proposition

16

Testing the Value Proposition

Three main options

i Inbound

i Outbound

i Via partners – potential delay

17

Why You Need Outbound As Well As Inbound

If your service is new, or you operate in a highly vertical/niche market then potential buyers may not be aware of or searching for your type of service.

This means there may not be a big enough volume of search traffic to generate sufficient leads

In that case, you will have to reach out to them in a targeted, efficient and cost effective process – Outbound Lead Generation

Web based leads can sometimes be lower quality, since the visitor may also be searching on competitor websites. With Outbound, there is a good chance you are the first supplier to talk to them.

For certain industries prospects may not use the web as a key part of their selection process. In this case, outbound is a better way to establish contact with them.

1

2

3

1818

Why Outbound As Well As Inbound

Inbound• Website• Email• Search Marketing

Outbound• Email marketing• Inside sales• Telemarketing• Executive events• Direct MailEf

fect

iven

ess

Adoption

19

Inbound Testing

i Website design i Contenti Landing pagesi Social Mediai Pay per click

i Keyword Researchi Split Test

http://www.quicksprout.com/2013/09/26/7-things-every-great-landing-page-needs/

20

Inbound: Drive Traffic to Your Website

20

Content1

Pay-per-click2

Search Engine Optimization

3

Social Media4

Email Marketing5

21

Outbound as well as Inbound

Source: Predictable Revenue by Aaron Ross

22

Outbound Testing

i Find lists of people who match your target profilei Send them a short business emaili Be “politely persistent” – send 3 or 4 follow-up emails in

a consistent processi This will be useful for any B2B companies in their long

term customer acquisition process

23

Principles

Smoke Testing

Test Demand at Low Cost1

2 Proceed or Modify?

Not always a simple yes or no

24

• An unsuccessful attempt to sell doesn’t mean there is no demand - could be because you didn’t execute correctly

• When you are unsuccessful after repeated attempts across different channels then time to rethink

• But don’t pivot too early – i.e. Don’t give up too easily

Observations

• When have you achieved Product-Market fit?

• Good definition from David Cummings (www.davidcummings.org) – when you have sold 10 units to non-friends who share some commonality i.e. There is the beginning of a pattern

• http://davidcummings.org/2013/07/04/5-ways-to-identify-product-market-fit/

25

• 1st factor in success is targeting a big market – small markets are too tough

• Resilience and persistence are key factors – don’t give up. See Paul Graham (Ycombinator)

Observations

• Start selling as quickly as possible – i.e. Get someone to pay for your product

• As you try to sell, you’ll start learning about your longer-term Customer Acquisition Process

26

• No textbook or blueprint will guarantee success – we are all reading the same books, but not everyone makes it

• But it’s great to have a guide or model that explains what is happening

• Also great to (a) learn from other people’s mistakes and (b) avoid re-inventing the wheel

Observations

• When reality is not matching your model then react – don’t keep executing a formula that isn’t working

27

• Agile development is really important, and is the basis of Lean Startup

• But a lot of startups don’t seem familiar with how Agile works

• Important to learn how to execute correctly

• However, JFDI is always best advice

Observations

• Prioritization by Business Value vs. Cost & Risk

• Iterative, Time boxed

• User Stories

• Backlogs and Sprints

• Planning Poker

• Standups ,Scrums, Playbacks

28- 28 -

Agile Manifesto 2001

We value:

Individuals and interactions over processes and tools Working software over comprehensive documentation

Customer collaboration over contract negotiation Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more.

Observations

29

The Twelve Principles of Agile DevelopmentWorking software is the primary measure of progress.

Agile processes promote sustainable development.

The sponsors, developers, and users should be able to maintain a constant pace indefinitely.

Continuous attention to technical excellence and good design enhances agility.

Simplicity--the art of maximizing the amount of work not done--is essential.

The best architectures, requirements, and designs emerge from self-organizing teams.

At regular intervals, the team reflects on how to become more effective, then tunes and adjusts

its behaviour accordingly.

www.agilemanifesto.org

Our highest priority is to satisfy the customerthrough early and continuous delivery

of valuable software.

Welcome changing requirements, even late in development. Agile processes harness change for

the customer's competitive advantage.

Deliver working software frequently, from a couple of weeks to a couple of months, with a

preference to the shorter timescale.

Business people and developers must work together daily throughout the project.

Build projects around motivated individuals. Give them the environment and support they need,

and trust them to get the job done.

The most efficient and effective method of conveying information to and within a development

team is face-to-face conversation.

Observations

30

“”

“People are more important than any process.

However good people with a good process will outperform good people with no process every time”

Grady Booch

Customer Acquisition

32

A Repeatable Customer Acquisition Process

Our Goal

Predictable1

2 Scalable

3 Automatable

33

Generate more leads at the top of the sales funnel using • Outbound Lead Generation email,

phone, social media, events• Inbound Lead Generation website,

SEO, Google pay-per-click, social media

Use Lead Nurturing to profile and manage these leads more effectively so more become ‘sales qualified’

Our Goal – Increase Lead Generation and Conversion

€ $ £

Use your CRM system to manage the sales process / sales team and convert opportunities to customers.

1

2

3

4

3434

Why Inbound Is Important

Savo Group Research Study 2012 via PepperGlobal.com

• 41% of Business Buyers said they engaged with sales only after their initial research was conducted

• 25% said they initiated contact after they had already established a preferred list of vendors

Source: DemandGen White Paper “The New BtoB Path to Purchase”, 2012

of the buying process is completed before talking to a vendor.

58% – 70%

3535

ABC, 1234

“What are you selling?” Your Value Proposition

“Who are you selling to?”

Your target buyers

A B“How will you sell?”

Your customer acquisition process

C

Bring people to

your website

1

Traffic

Persuade them to pay for your

service

3

Subscription

Convince them to renew each year –

retain your customers

4

Retention

2

Conversion

Persuade them to sign-up, register or

download

3636

A: Your Value Proposition

“Who are you selling to?”

Your target buyers

“How will you sell?”

Your acquisition process

B C

i What value do you deliver?i How quickly can I see the value?i Why is your product better than competitors?i Why is it better than what I do at the moment?

Value Proposition: Why should I buy something from you?

“What are you selling?” Your Value Proposition

A

3737

B: Your Target Buyers

“What are you selling?” Your Value Proposition

“Who are you selling to?”

Your target buyers

“How will you sell?”

Your acquisition process

A B C

i What do they want?i What do they like and dislike?i Where are they (countries, languages)i What industry sectors?i What types of organisation? Size, location ...i What are their typical roles or titles?i Where do they hang out online?

Who are your buyers?

3838

C: Your Acquisition Process - Online

“What are you selling?” Your Value Proposition

“Who are you selling to?”

Your target buyers

A B“How will you sell?”

Your customer acquisition process

C

Bring people to

your website

1

Traffic

Persuade them to pay for your

service

3

Subscription

Convince them to renew each year –

retain your customers

4

Retention

2

Conversion

Persuade them to sign-up, register or

download

39

Outbound Lead Generation

Outbound Lead Generation

Automate

Automate Prospecting Emails

Automate Finding Prospects

Automate Follow-up Actions

Sales Team

LeadNurturin

g

Automate handover to Sales Team (CRM) or Lead Nurturing

Useful Links

41

Resources

• David Cummings• Great presentation “Building a Sales and Marketing” Machine from David Skok, Matrix Partners-

http://www.forentrepreneurs.com/slides-sales-marketing-machine/• Reid Hoffman’s notes on investment hypothesis• Brad Feld• OpenView Partners blog / newsletter – sign-up at http://openviewpartners.com/• Hiten Shah• Lincoln Murphy’s blog Sixteen Ventures - http://sixteenventures.com/ - advice on pricing for SaaS• MarketingSherpa – fantastic source of advice and information on B2B technology marketing –

www.marketingsherpa.com• Neil Patel’s blog QuickSprout (www.quicksprout.com) has excellent information on getting found

on the web• Scott Brinker, Chief Marketing Technologist blog – www.chiefmartec.com• Moz.com – great blog on SEO – also check out Bruce Clay www.bruceclay.com• Growthhackers central resource - http://growthhackers.com/• Sean Ellis’ advice on Product Market Fit for startups -

http://www.startup-marketing.com/the-startup-pyramid/

Links

42

BooksResources

Also• “The Hard Thing about Hard Things”• “With Winning in Mind”• “Crossing the Chasm”, Geoffrey A. Moore – classic guide to product marketing, good

intro to marketing for technologists

43

Presentation Zen

Bonus Advice

44

Thank YouMotarme Marketing Automation

T: +353 1 969 5029M: +353 86 383 8981W: www.motarme.com

Twitter: @motarme