1. The Lean LaunchPad
Lecture 3: Customers/Users/Payers
Steve Blank
Jon Feiber
Ann Miura-Ko
John Burke
Jerry Engel
Jim Hornthal
Oren Jacob

2. Agenda
• Team Bus Model Presentations
• Customer Segments

3. CUSTOMER SEGMENTS
which customers and users are you serving? which
jobs do they really want to get done?
images by JAM

4. CUSTOMER SEGMENTS
which customers and users are you serving? which
jobs do they really want to get done?
images by JAM

5. Corporate? Consumer?
• Business to Business (B to B)
– Use or buy inside a company
• Business to Consumer (B to C)
– Use or buy for themselves
• Business to Business to Consumer (B to B to C)
– Sell a business to get to a consumer
– Other Multi-sided Markets with multiple customers

6. Customer Types
• Saboteurs
• Intermediaries (OEM’s and resellers)

7. Market Type & Ignoring Customers
• Clone Market?
• Existing Market?
• Resegmenting an Existing Market?
– niche or low cost
• New Market?
• When do I ignore customer feedback?

8. General Heuristics
• You need to talk to more customers than you
ever thought possible – 100’s physically, 1000’s
on the web
• “I left a message” or “I sent an email” doesn’t
count – it’s confusing motion with action
• Do NOT start at the top. You only get one
meeting. You’ll almost certainly look like an idiot
– First figure out the order of battle

9. Corporate Customers
Business to Business (B to B)

10. What do they want you to do?
• Increase revenue?
• Decrease costs?
• Get them new customers?
• Keep up with or pass competitors?
• How important is it?
• Problem or a Need?

11. Customer Problem

12. Customer Problem

13. Customer Problem

14. Customer Problem

15. Customer Problem

16. Customer Problem

17. Who’s the Customer in a Company?
• User?
• Influencer?
• Recommender?
• Decision Maker?
• Economic Buyer?
• Saboteur?
• Archetypes for each?

18. How Do They Interact to Buy?
• Organization Chart
• Influence Map
• Sales Road Map

19. Pass/Fail Signals & Experiments
• How do you test interest?
• Where do you test interest?
• What kind of experiments can you run?
• How many do you test?

20. How Do They Hear About You?
• Demand Creation
• Network effect
• Sales

21. If It’s a Multi-sided Market
Diagram It!!

25. buzz
group

26. Consumer Customers
Business to Consumer (B to C)

27. What do they want you to do?
• Does it entertain them?
• Does it connect them with others?
• Does it make their lives easier?
• Does it satisfy a basic need?
• How important is it?
• Can they afford it?

28. Archetypes

29. buzz
group

30. Consumer Customers
• Do they buy it by themselves?
• Do they need approval of others?
• Do they use it alone or with others?

31. How Do They Decide to Buy?
• Demand Creation
• Viral?
• SEO/SEM
• Network effect?
• AARRR (Dave McClure)

32. Pass/Fail Signals & Experiments
• How do you test interest?
• Where do you test interest?
• What kind of experiments can you run?
• How many do you test?

33. The Consumer Sales Channel
• A product that’s bits can use the web
• But getting a physical consumer product into
retail distribution is hard
• Is Wal-Mart a customer?
• More next week

34. Multi-Sided Markets
Business to Business to Consumer
(B to B to C)

35. Who’s The Customer?
• Consumer End Users, Corporate Customers
Pay
• Multiple Consumers
• Etc.

36. Multiple Customer Segments
• Each has its own Value Proposition
• Each has its own Revenue Stream
• One segment cannot exist without the other
• Which one do you start with?

37. Market Type

38. Definitions: Four Types of Markets
Clone Market Existing Market Resegmented New Market
Market
• Clone Market
– Copy of a U.S. business model
• Existing Market
– Faster/Better = High end
• Resegmented Market
– Niche = marketing/branding driven
– Cheaper = low end
• New Market
– Cheaper/good enough, creates a new class of product/customer
– Innovative/never existed before

39. Market Type
Existing Resegmented New
Customers Known Possibly Known Unknown
Customer Performance Better fit Transformational
Needs improvement
Competitor Many Many if wrong, None
s few if right
Risk Lack of branding, Market and Evangelism and
sales and distribution product re- education cycle
ecosystem definition
Examples Google Southwest Groupon
Market Type determines:
 Rate of customer adoption
 Sales and Marketing strategies
 Cash requirements

40. Market Type - Existing
• Incumbents exist, customers can name the mkt
• Customers want/need better performance
• Usually technology driven
• Positioning driven by product and how much value
customers place on its features
• Risks:
– Incumbents will defend their turf
– Network effects of incumbent
– Continuing innovation

41. Market Type – Resementing Existing
• Low cost provider (Southwest)
• Unique niche via positioning (Whole Foods)
• What factors can:
– you eliminate that your industry has long competed on?
– Be reduced well below the industry’s standard?
– should be raised well above the industry’s standard?
– be created that the industry has never offered? (blue ocean)

42. Market Type – New
• Customers don’t exist today
• How will they find out about you?
• How will they become aware of their need?
• How do you know the market size is compelling?
• Which factors should be created that the industry has
never offered? (blue ocean)

43. For Oct 18th Presentation
• Talk to 10-15 customers face-to-face
• What were your hypotheses about users and
customers? Did you learn anything different?
• Did anything change about Value Proposition?
• What do customers say their problems are? How do they
solve this problem(s) today? Does your value proposition
solve it? How?
• What was it about your product that made customers
interested? excited?
• If B-B, who’s: decision maker, size of budget, what are
they spending it on today, how will this buying decision
be made?
• Update your blog/wiki/journal

44. Examples

45. Landmine Clearance
NSF / ICORP Program
Ying Wang (Lead)
Yu Lei (PI)
Mike Wisniewski (Mentor)

46. Technology Application
Surveying, mapping
and marking of
hazardous areas
Sensing
Materials
Removal of
landmines and
Unexploded
Ordnance (UXO)

47. Contacting…
• Flir (Fido).
 Action: Sent email and made calls (703-678-2118).
 Feedback: No answer on the phone. Waiting for email reply.
• CEIA (metal detector company in Italy).
 Action: Sent email.
 Feedback: Waiting for email reply.
• United Nations (UN).
 Action: Sent email (bradyj@un.org) and called (212-963-3344) to Mr.
Justin Brady, Acting Director, United Nations Mine Action Service (UNMAS).
 Feedback: Waiting for reply.
• Smith Detections.
 Action: Sent email and called (973 496 9280) to Reno DeBono, Director
of Chemistry and Applications.
 Feedback: Waiting for reply.

48. Landmine Clearance
Customer Customer Customer
Discovery Validation Creation
Pivot

49. Landmine Clearance
Customer Customer Customer
Discovery Validation Creation
Pivot
Speed: Government entities too slow for this process/program
Minimum feature set: Included too many variables (environmental, deployment)
Pivot
Obtain Near instantaneous customer feedback
Be: Fast, agile and opportunistic and formulated a dramatically new model

50. Landmine Clearance
Explosive Detection for Transportation Hubs
Customer Customer Customer
Discovery Validation Creation
Pivot
Speed: Government entities too slow for this process/program
Minimum feature set: Included too many variables (environmental, deployment)
Pivot
Obtain Near instantaneous customer feedback
Be: Fast, agile and opportunistic and formulated a dramatically new model

51. The Business Model Canvas 1
1.US Army
1. Manufacture of 1. Production 1. Dedicate Personal 2. Other Gov. Entities
machine 2. Distribution 1. Reliable Assistance 3. UN
2. Cheap 2. Demo
3. Easy to use 3. Training
4. Rapid
5. Large scale
1. IP
2. Chemicals Direct sales.
3. Facilities
1  Machine sales
Distribution Production Sensing materials

52. The Business Model Canvas 2
1.US Army
1. Manufacture of 1. Production 1. Dedicate Personal 2. Other Gov. Entities
machine 2. Distribution 1. Reliable Assistance 3. UN
2. Existing 2. Cheap 2. Demo
companies: Smiths 3. Easy to use 3. Training
Detection. 4. Rapid Airports
5. Large scale
4. Wider spectrum
1. IP
2. Chemicals Direct sales.
3. Facilities Partner’s distribution
channels
1  Machine sales
Distribution Production Sensing materials

53. Target Market
• Who am I going to sell to?
• Airports
• How large is the market be (in $’s)?
Total Served Target • $100 M
Available Available
Market
Market Market • How many units would that be?
$4.8 B $1 B
$100 M
• 200 M units

54. From Canvas version 1 to version 2
• What we thought: Government entities get to need
landmine clearance techniques.
• What we did: contacted with the major demining
organizations and the UN.
• What we found: Government entities too slow for
landmine clearance program.
• What we have done: modified our business model.
• Here’s what are going to do: Contact with airports and
Smith Detection.