CUSTOMER DISCOVERY & MARKET DEVELOPMENTinnovation.ucsd.edu/wp...Customer...Presentation.pdf ·...

CUSTOMER DISCOVERY & MARKET DEVELOPMENT Dan Gilbert Gioia Messinger UCSD April 2016

“PICTURE A PEBBLE ON A BEACH AS VIEWED FROM THE MOON – YOUR MARKET VISIBILITY IS SMALLER THAN THAT.”

Investigation Design Launch In Market Ramp

Launch Day Discovery issues understood

Release to production

Market Opportunity – match your capabilities to a benefit

Customer – validate and understand their needs

Channels – reaching your customer

Market Development – developing customer awareness and desire

Gioia Messinger | Dan Gilbert Customer Discovery and Market Development UCSD

Market Opportunity



“How will you make money…and how much might you make?”

Market Opportunity Your opportunity landscape


New Market Category Competitive Product Market extension extension grab accessory

Oculus

Nest

HP OfficeJet

Vizio TVs

Phone cases




Consumer SMB Business

Product Product <->Service Service/App

Impulse purchase Considered purchase

Buy sight Touch Need trial Integration unseen product experience requirements

Use immediately Requires set-up Professional Installation

Market Opportunity Discovering your Target Market


Layout out the potential top down. •  Match your capability to broad

growing markets •  Understand existing players in that

ecosystem •  Articulate a benefit you can provide •  Start learning

Forecast the volume bottoms up. •  How you will reach your users. •  What you can afford

Your forecast ramp

Total market

Market for customer segment(s)

Market share

Units/partner

Partners + $$

Market share/partner

Channel partners addressing market

Market Opportunity Segmenting your market


Attitudinal Segmentation Behavioral Segmentation

“At least half of your customers will come from one segment”

Product research focus. How you reach your customers.

How customers think. What customers do.

•  I like The Walking Dead •  I read Wall Street Journal •  I regularly go to FIT club •  I shop at HomeDepot •  I like to cook

•  I feel secure in my home •  I love Apple gear •  Gen 1 products have issues •  I’m skeptical of most claims •  I seek value

Market Opportunity How will you make money?


• Standalone hardware • Product + Service • Subscription • Razor/Razor blade • SAAS variants • Freemium • Ad supported • And more….

Types of Business Models Business Model Determines: 1.  Investment required. 2.  Your success drivers:

•  User acquisition •  Profitability/customer •  Product usage •  Service connect rate •  Consumable connect rate

3.  Pricing strategy 4.  Partner dependencies

Market Opportunity Define your Product or Service


The spirit of this process lies in intuition: Develop an intuitive understanding of your targeted user’s need. •  What your target customers are doing now? •  What are the driving trends for your market? •  What does the future look like? •  What do you bring to the market? •  What are your external dependencies? •  How do your capabilities match Target Customer needs?

Market Opportunity Metrics & Gotchas


Measure: Watch for: Realistic Performa that outlines the market opportunity defined. Market share Forecast Financial metrics

•  Investment not matching a competitor’s investments.

•  Unrealistic growth rates. •  Team too lean, or too big. •  Thinking Marketing/Sales is free. •  Not hard enough on what

constitutes an offering someone else would buy.

•  Mistaking niche for mainstream

“You can have “time”, “schedule”, or “cost”, but you can’t have all three.”



Customer

“Achieve Product/Market fit, and then accelerate”

Customer Understanding your Customer


• Market research Market size, market dynamics, market need.

• Customer discovery Find customers early to test hypothesis.

•  Customer validation Is anyone willing to pay/use this?

•  Purchase criteria Understand how people buy, why they buy, when they buy and how they think about your product.

Customer Measuring User Needs


Customer Value Proposition


PRODUCT NAME provides PRIMARY B ENEFIT for EXPECTED COST

HP OfficeJet All in One printer provides home color printing, copying, and scanning for $129 (…plus the cost of ink cartridges)

Spotify music services provides free music streaming if you listen to intermittent ads (…unless you pay for monthly subscription)

Amazon web services provides secure and scalable computing infrastructure for very low-cost (…but you must be a very experienced programmer).

Customer Value Proposition


Examples of Costs: •  Product price •  Watching ads •  Providing permission •  Learning curve •  Reputation costs •  Integration costs •  Training of staff •  Migration off old process

PRODUCT NAME provides PRIMARY B ENEFIT for EXPECTED COST

Customer Assessing the Competition


Product/Service teardowns

Analysts and trade associations

Ecosystem partners/Suppliers

Call them

Customer interviews

Customer Positioning


PRODUCT NAME is a PRODUCT CATEGORY that helps PRIMARY AUDIENCE reach PRIMARY BENEFIT unlike the COMPETITION that requires SOME FORM OF COST

VUEZONE is a VIDEO CAMERA SYSTEM that helps WORKING MOMS keep an eye on their children at home from anywhere, unlike current WEBCAMS which require messy wires, complex setup and allow PC only viewing. Key Benefits •  Peel and stick wirefree cameras •  App supporting iOS and Android •  Simple setup •  Add more cameras easily

Customer Branding


DO ü  Treat your Brand as a promise. ü  Use a tagline. Brands are a handle given a name. ü  Have clear and supportive message points. ü  Give your Brand time -- brands are created by customers

over years. ü  Trust the value. Measuring brand value is difficult. DON’T •  None but the largest brands need sub-brands. •  Company name != Brand != mysite.com •  Be causal about your brand – can be destroyed in a fortnight.


Nest Cam Wi-Fi video camera

Nest Learning Thermostat

Nest Protect smoke plus carbon monoxide alarm

Customer Getting customer feedback


Rule #1: Don’t believe what customers tell you.

Rule #2: Not all research is worth doing.

Rule #3: Research is expensive and hard – think about the analysis before you launch.

Rule #4: Be very careful not to lead your respondents – watch for bias.

Product concept testing Messaging research Beta testing UI and usability Win-loss Competitive compare AB testing Focus groups Surveys 1:1 interviews Industry experts

Customer Map research to phase


Investigation Pre-launch In market Primary objective “Understand user

need” “Deliver Value Proposition”

“Product/market fit”

Consumer & SMB 1:1 interviews Focus groups

UI studies Reseller discussions Beta tests

Quantitative surveys Tracking usage

B2B Partner discussions Experts and analysts

Use a development partner Selective trials

Ecosystem involvement

Tools: Mock-ups Posters & powerpoints Tech demos

Plastic models UI mocks Beta units

Customer panels Customer support


Customer Metrics & Gotchas


Measure: Watch for: NPS – Net Promoter Score that tracks Customer satisfaction Product turn on rate Product usage attrition rate Specific feature usage

•  Treating early adopters as mainstream – the ‘chasm’

•  Spread across too many segments •  Internal bias that ignores customer

feedback •  Ignoring customer learning curve/

adoption costs •  Treating customer support as a cost

to be minimized.



Channels

“You can have ‘too much’ – retailers do not create demand.”

Telemarketing store.mySite.com

Inbound sales

Direct sales force

Specialty resellers

Mass Merchandisers

Affiliates

Amazon

Big box

Manufacturing reps

Distributers Online resellers

Channels The test of ‘Product category’


Position in-store requires volume or $$ Product discovery is very difficult online

Channels Motivating your partners


Their financials •  Product margins •  Revenue generated per sqft or shelf space •  Paying for their programs: Circulars, Endcaps, onsite ads Their initiatives •  Generate additional store traffic •  Amazon – A+ pages •  Customer value •  Exclusivity -- Differentiation against their competitors Their appeal •  Contribution to their brand image •  In-store experience •  Category expertise – Demo days, associate training, information •  Deals and discounts

Channels store.mySite.com


Now you own: •  Traffic generation •  On site promotions •  Pricing conflicts •  Order processing •  Site refresh •  Returns

“There is no easy money.”

Channels Metrics & Gotchas


Measure: Watch for: Units/mo/channel partner Lift/promotion Returns In-stock inventory Consistency of retail environment

•  Channel power. •  Disrespecting reseller business

model. •  Over-hyped channel marketing

programs. •  Using price as promotional tactic •  Dependency on Internal sales for

new product launches.



Market Development

“ It all comes down to customers telling their friends.”

Customer

$ $ $ $

Driving customer referral

Market Development Focus on customer retention


1. Poor product quality - you miss your Brand promise 2. Poor customer support 3. Poorly executed price increases or product rollovers 4. You fall behind the market 5. You don’t show your customer you care

What drives your customers away?

Market Development Accelerate via ‘Growth Hacking’


Growth hacking lives at the intersection of marketing, product, and data science. Brian Balfour, VP Growth HubSpot

1.  AirBNB leveraged Craig’s List API, letting uses easily dual post their listings. 2.  Twitter redid site early-on based after quantifying customer UI interactions. 3.  LinkedIn public Profiles greatly increased their user’s online visibility. 4.  YouTube share button adds any video to your site via an embed link. 5.  Buffer offers site tools allowing easy content sharing by Buffer users. 6.  HotMail added to every email a “PS – I Love You” Hotmail link. 7.  Dropbox incents friend recruitment via extra storage space. 8.  Facebook (and others) offer embeddable FB widgets back to your profile.

Market Development Court influencers


PR: Effective tactic early in lifecycle Increases in value with time Very cost effective Keeps your ear to the “market” rail Extremely flexible – let’s you react to

‘stories’ in your industry Allows you to manage a crisis Influencers: Analysts Bloggers Tech reporters Trade Associations Key ecosystem players VC and Investment community

Market Development Building brand equity


Earned media PR Email marketing Site optimization (SEO) Blogs Content marketing Video White papers

Paid media Radio and TV advertising SEM – Google, etc Affiliate - % of sales Tradeshows and Conference New product showcases Event/mall marketing

Channels POP display Circulars End-caps In-aisle display Demo days

Builds long-lasting value. When you stop investing, the impact quickly ends.


Market Development Customer Support

Measure: Watch for: Cost per customer acquisition Cost per sale PR coverage Influencer growth Conversion rate on store.mysite.com

•  Spending too early before product market fit achieved.

•  Reaching for the moon –unrealistic expectations for sales ramp.

•  Messy product rollovers that ignore gen 1 customers.

•  Addressing Customer Reviews solely with empathetic responses (or bribes).

•  Unsold units slowing down the next product launch.

•  Forgetting that WOM is ultimate driver of business success.

Market Development Metrics & Gotchas



Market Opportunity

Customer

Channels

Market Development


Repeat...

Customer Discovery & Market Development

Dan Gilbert Gioia Messinger

“THANK YOU.”

Ecosystem Enabling capabilities(and dependencies)


“Few products standalone, and those that do are making a mistake.”

Data services (e.g Google Translate)

Products you enhance (e.g mobile phone)

Standards required WiFi/BlueTooth

Infrastructure players (e.g. IOT…everyone….)

APIs and integrations (e.g. Sales Force API)

Major Players in Market Ecosystem

(e.g Auto markers)

Vendors & Competitors

Certifications & Approved vendor lists

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