Business Plan Toolkit: Session 2, Customer Discovery

Transcription

1 Business Plan Toolkit: Session 2, Customer Discovery Winter 2016 WESST, 2016 except where other copyrights noted

2 Business Plan Toolkit 1.Intro Session objectives - Understand WHY customer discovery is the #1 priority of any entrepreneur wishing to start (or grow) a business. - Learn the four steps of customer discovery. - Write a customer discovery plan. Image from Pixabay

3 Business Plan Toolkit Customer Discovery What is a market? Image from Pixabay

4 Business Plan Toolkit Customer Discovery A market is any structure that allows buyers and sellers to exchange any type of goods, services and information. (Wikipedia) Your market is the group of customers who will buy your product.

5 Business Plan Toolkit Customer Discovery Why should you get out of the building and discover who your customers are, and what they want, BEFORE you start (or change) your business?

6 Business Plan Toolkit Customer Discovery Customer discovery helps you identify: - What your market looks like right now, if it s in the process of changing, or if it may change in the near future - The size of your market (and if it s large enough to support the business you re trying to build) - Why people in your market buy products; what attracts them to a certain product or brand (or repels them) - How much demand there is for your product or service, and what people are willing to pay

7 Business Plan Toolkit Customer Discovery AZQuotes.com

8 Business Plan Toolkit Customer Discovery The job of entrepreneurs is to find a business model that works before running out of money. - Ash Maurya, Running Lean

9 Business Plan Toolkit Customer Discovery You can't be smarter than the collective intelligence of your customers. - Steven Gary Blank, Entrepreneur

10 Business Plan Toolkit Customer Discovery Questions?

11 Business Plan Toolkit Common Customer Fallacies Image from Pixabay

12 Business Plan Toolkit Common Customer Fallacies Common problems in customer discovery: Everyone drinks water! 1% of China fallacy Blue ocean vs. red ocean I don t have any competition!

13 Business Plan Toolkit Common Customer Fallacies Everyone drinks water! 1. There are six billion people on the planet 2. Everyone needs to drink water 3. I sell water bottles 4. I have six billion potential customers!

14 Business Plan Toolkit Common Customer Fallacies 1% of China 1. China has 1 billion people 2. 1% of 1 billion is 10,000, If we can just sell to 10,000,000 people at $10 per transaction, we ll make $100,000,000 in our first year!

15 Business Plan Toolkit Common Customer Fallacies Blue ocean vs. red ocean - The red ocean is red because all the sharks are fighting over the same prey! - The blue ocean is calm, because the sharks are all over in the red ocean - Can you fight the sharks in the red ocean for your little piece of the market? Or should you try to create a market (or serve an underserved market) with your business? - Red ocean risk: restaurants, food products, consumer tech, web-based services, salons

16 Business Plan Toolkit Common Customer Fallacies Blue Ocean products: Cirque du Soleil and the ipod Images from Pixabay

17 Business Plan Toolkit Common Customer Fallacies I don t have any competition!

18 Business Plan Toolkit Common Customer Fallacies - Everyone has competition - EVERYONE HAS COMPETITION - EVERYONE HAS COMPETITION

19 Business Plan Toolkit Common Customer Fallacies - Basic laws of economics: Opportunity Cost - Resources are finite - Buying X means you cannot buy Y - There is ALWAYS an X someone can buy - You may have a UNIQUE product that does not make it NECESSARY Images from Pixabay

20 Business Plan Toolkit Common Customer Fallacies When researching your market, think bottom up, not top down! Images from Pixabay

21 Business Plan Toolkit Common Customer Fallacies READ: Case study, CleanBottle (10 min) WESST

22 Business Plan Toolkit Common Customer Fallacies CleanBottle Bottom-Up Analysis: 1) Where are bike bottles typically sold? 2) How many bike shops are there in the US? 3) How many of them would stock my product? 4) How many water bottles does each shop sell in a year? 5) How many CleanBottles would each shop sell in a year?

23 Business Plan Toolkit Common Customer Fallacies 1) Where are bike bottles typically sold? (Bike shops) 1) How many bike shops are there in the US? (5,000) 2) How many of them would stock my product? (5% of shops, or about 250 shops) 3) How many water bottles does each shop sell in a year? (About 150) 4) How many CleanBottles would each shop sell in a year? (About 40) 250 shops x 40 bottles per shop = 10,000 bottles

24 Business Plan Toolkit Common Customer Fallacies Questions?

25 Business Plan Toolkit Interviewing Customers Image from Pixabay

26 Business Plan Toolkit Interviewing Customers Four steps to the customer discovery process: 1. Formulate a hypothesis for your company: My product/service solves <problem> by providing <solution>. People will use my product or service because <reason>. People will love my product or service because it offers <benefit>. 2. Develop a list of questions to ask yourself about your product, and a list of questions to ask customers.

27 Business Plan Toolkit Interviewing Customers Four steps to the customer discovery process: 3. Create a sample size of at least 10 people, and try to meet them in person for interviews. 4. Look at the data you have gathered and identify patterns. Which of your hypotheses were correct? Which were incorrect? What do you need to change about your business model, or your product or service, or your other assumptions?

28 Business Plan Toolkit Interviewing Customers How do I find people to interview?

29 Business Plan Toolkit Interviewing Customers =PLcdm0yqdmhJopRkThQ16Wc8LXqSoQg15m&index=2

30 Business Plan Toolkit Interviewing Customers What the heck do I ask people???

31 Business Plan Toolkit Interviewing Customers TU3JW4

32 Business Plan Toolkit Interviewing Customers ACTIVITY - For 10 minutes, write down your answers to the questions on your worksheet. - Find a partner it CANNOT be the person you paired with last week - For 5 minutes, discuss your answers to the questions. Get their feedback, reactions and suggestions. - For 5 minutes, listen to their answers. Give your feedback, reactions and suggestions.

33 Business Plan Toolkit Interviewing Customers Formulate a hypothesis for your company: My product/service solves <problem> by providing <solution>. People will use my product or service because <reason>. People will love my product or service because it offers <benefit>.

34 Business Plan Toolkit Interviewing Customers Questionable sources of customer discovery data: - Your mother or father, stepmother/stepfather - Your grandma, grandpa, uncle, aunt, cousin - Your husband/wife, partner, boyfriend/girlfriend, friend with benefits - Your best friend - Your best friend s cousin s uncle s roommate - Your online buddies from World of Warcraft - People you ask at the bar (unless you re opening a bar)

35 Business Plan Toolkit Interviewing Customers What other questions should you answer through the discovery process? - Who is my customer, really? - How many potential customers (realistically) are out there? - Where do they live? - How do they purchase goods or services? - What other companies out there are offering products/services similar to mine? - What are they charging? (Is my price point realistic for my market?)

36 Business Plan Toolkit Interviewing Customers Questions?

37 Business Plan Toolkit Using Customer Discovery Data Image from Pixabay

38 Business Plan Toolkit Using Customer Discovery Data How do you use your customer discovery data? Steven Gary Blank, 4 Steps to the Epiphany

39 Business Plan Toolkit Using Customer Discovery Data How do you use customer discovery data? - Refine your product/service - Use it to inform or create your differentiation strategy or positioning - Figure out the optimal place to locate your business, or the optimal design for your website/web store - Determine who your competition is, and research them - Use your research to develop realistic sales projections, which then inform profit and loss/income statement and cash flow

40 Business Plan Toolkit Using Customer Discovery Data Questions?

41 Business Plan Toolkit End of class Review our Session Objectives: In this class, we will: - Understand WHY customer discovery is the #1 priority of any entrepreneur wishing to start (or grow) a business. - Learn the four steps of customer discovery. - Write a customer discovery plan.

42 Business Plan Toolkit End of class Please fill out your class evaluation forms Thank you!