4 Steps to the Epiphany, Steve Blank
CUSTOMER DISCOVERY
- Have we identified a problem a customer wants solved?
- Does our product solve these customer needs?
- If so, do we have a viable and profitable business model?
- Have we learned enough to go out and sell?
Find customers who buy into the startup’s vision: earlyvangelists.
(Those who spread the good news about unfinished and untested products but will also buy them.) Basically customers who:
- Have a problem,
- Understand they have a problem,
- Have been actively looking for a solution,
- Have put together a semi-solution (and/or) have committed budget dollars to solve that problem.
Start Development Based on the Vision
“Develop for the few, not the many.”
Product development starts on day 1, based on founder’s vision and experience.
Meet customers not to gather feature requests, but to find customers for the product you are already building.
(Feature request is by exception, only if there are no customers for product.)
Phase 1: Hypothesis should include:
- Product
- Customer & Problem
- Distribution & Pricing
- Demand Creation
- Market Type
- Competitive Advantage
Product:
- Features
- Benefits
- Dependency Analysis
- “for us to sell our product in volume, here’s what has to happen that is out of our control.”
- Total cost of Adoption
- do customers need to change their purchasing or usage behavior?
- Do they need to stop doing something they do today?
Customer & Problem:
- Types of customers
- Users < Influencers < Recommenders < Economic Buyers (< Decision Makers)
- Solving a problem or extra or luxury? Marketing and convincing is different.
- Customer problems
- How customers experience problem, and how much it matters to them.
- “If you could wave a magic wand and change anything at all, what would it be?”
- Is the problem:
- A Latent need? Have a problem and understand they have the problem
- An Active need? Recognize a problem, and are searching for a solution
- A Vision? Have an idea of the solution and have cobbled together one.
- (then…is this product have-to-have or nice-to-have?)
- A Day in the life of a customer
- How does the world look from the customer’s perspective? What products do they use? How much time do they use it for?
- Customer Influence Map
- Understand the relationships among recommenders, influencers, economic buyers, and saboteurs.
- How would a sale be made?
- Return on investment justification
- Decide what to measure in calculating ROI.
- Increased revenues? Cost reduction? Intangibles? Avoided costs?
- Minimum Feature Set
- The smallest feature set customers will pay for in the first release.
- What is the smallest problem the customer will pay us to solve?
Distribution & Pricing:
- Distribution:
- How will customers initially buy from you?
- Distributor? Partner? Orders? Internet?
- Pricing:
- How much do customers spend on similar products/problem today?
- “Lifetime value” of customers (could you go back next year and sell again/more?)
- Great pricing dialogue:
- “If the product were free, how many would you actually use?”
- “Ok… it’s not free. Imagine I charged you $1 million. Would you buy it?”
Demand Creation:
- Marketing: learn how your customers would hear about your product by learning from them.
- Learn about the influencers in the community of your customers.
Market Type:
Are we entering an existing market, resegmenting an existing market, or creating a new market?
- New Market: Customers don’t exist!!!
- What are adjacent markets?
- What compelling need will make customers use/buy this product?
- What compelling feature will make customers use/buy this product?
- What will stop competitors?
- You need to convince your customers that that the product solves a real problem they have or could be convinced they have.
Competitive Advantage:
- Does your product allow customers to do something they could never have done before? Is this because of performance, price, or channel?
- If this were a grocery store, which products would be shelved next to yours? (these are competitors)
- What do people do today without the product? Do they not do something, or do it badly?