Customer validation means test selling at every point in the process (all the while keeping costs low — it’s not the time to scale up yet):
<ul>
<li>Phase I. Get ready to sell.</li>
<li>Phase II. Go live. Try to sell.</li>
<li>Phase III. Refine your product. Position your company.</li>
<li>Phase IV. Analyze. Pivot or proceed.</li>
</ul>
Founders cannot lead from a distance here; they have to be directly involved in the process.

Customer Validation

At this point, go back and look at the Positioning Statement you wrote during the customer validation phase. How did it survive the validation process? 
If the customers didn’t love it, do you understand the reasons why? Also, meet with the key influencers that you identified back in the customer discovery phase. Now is the time to meet with them. Test to see if these influencers and other industry analysts will say good things about you.

Phase III — Positioning Phase

<ul>
<li>Partners Hypothesis: Involves listing all of the partners you’ll need and identifying what you need from them and what they’ll get in exchange.</li>
<li>Revenue and Pricing Hypothesis: It includes the following questions: 1) How many items will we sell? 2) What’s the revenue model? 3) How much will we charge? 4) Is there evidence that this is worth pursuing?</li>
</ul>

Business Model Planning: Other Hypotheses

This phase begins with making a positioning statement: a message (it should be pithy but compelling) that explains why people should buy your product.
Customer-focused sales and marketing materials should be developed largely from the information that you generated in the hypothesis you created for the customer discovery process.

Phase I — Get Ready To Sell

The Get Ready to Sell phase involves first refining plans and developing tools to acquire and activate customers. 
Remember: acquisition is when the customer first hears about the product and activation is when customers participate, enrol, or do something. Don’t launch the Acquire effort unless the Activation program is ready for customers, and the key to the latter is engagement. 
Tip: Measure Everything.

Get Ready To Sell

Following customer problem testing, this phase tests the solution:
<ul>
<li>Update the business model and team</li>
<li>Create a product solution presentation (physical) or high fidelity MVP test (web/mobile)</li>
<li>Test the product solution: See what customers think by asking them.</li>
<li>Update the business model (yes, again)</li>
<li>Find board members.</li>
</ul>

Testing Your Solution

A Customer Access Map can help you identify organisations that customers belong to (if you’re selling to the public) or key deciders in the organisation (if you’re selling to a business). 
Put all the maps next to each other, also considering the sales strategy, and write an Implementation Plan that shows everything that has to happen before selling your product.

Customer Access Map

<ul>
<li>Total Addressable Market (TAM): the universe where your product lives</li>
<li>Served Available Market (SAM): the people that can be reached via your sales channel</li>
<li>Target Market: those who are your most likely customers.</li>
</ul>
Look at industry reports, press releases, libraries — anywhere you can get metrics that help you gauge the size of the market. It’s going to be tricky to estimate brand new markets, so consider looking at adjacent markets and see if you can find any comparable companies.

The Size Of The Market

The old product roll-out process is totally wrong for startups. That process is appropriate when customers are known and the market is well-defined. This is often not the case for startups. Customer development, then, is very important for startups, and there are a number of phases in the framework:
<ul>
<li>Customer discovery: develop hypotheses and test them with customers.</li>
<li>Customer validation: test sales, see if people will buy, and see if you can scale up.</li>
<li>Customer creation: marketing.</li>
<li>Company building: transition to a sustainable enterprise.</li>
</ul>

Getting Started

Review and analyse all the material you’ve generated; make sure that there are solid answers to the hypotheses. Look at your business model and how it’s changed through this process. Do your metrics provide evidence that this is a scalable endeavour that could turn a profit?
Revenue growth curves are different depending on the market type: growth in a new market company will look like a hockey stick on a graph, slow at first and then taking off; an existing market shows a steady rate of growth. The numbers that you have are your best guess, but remember that nothing is certain.

Phase IV — Pivot And/Or Proceed

This describes how you will get, keep, and grow customers. For physical products, there are four “get” stages — Awareness, Interest, Consideration, and Purchase. 
Devise several different “get” strategies and test them. Customer retention programs come into play during the “keep” phase, and the “grow” phase focuses on selling more stuff to existing customers.

Business Model Planning: Customer Relationships Hypothesis

In this phase, you are validating your business model hypothesis, but you are still testing (by making real sales). Don’t try to scale up yet — the object of your sales is to test your business model.
For physical products, you don’t need a lot of customers, just a few. There are different kinds of customers (for example, early evaluators, earlyvangelists, scalable customers, and mainstream customers), each one demanding a separate strategy.

Phase II — Get Out Of The Building And Sell

Optimisation is all about getting more out of everything — for example, if you have a 6% activation rate, try to push it up to 10%. 
Try for measurable improvement in each thing you measure. This is a continuous process that won’t end until the business either folds or goes public. Optimisation should be focused on increasing volume, reducing cost per activated customer, and increasing the conversion of visitors to users.

Testing Phase: Optimisation

This describes physical, financial, human, and intellectual property resources. 
This component also includes a dependency analysis: what are all of the things that have to happen that the company can’t control, and what are the risks if the things you’re dependent on end up failing? Contingency plans are important here.

Business Model Planning: Key Resources Hypothesis

This describes which market a product fits into: established market, new market, extension of an existing market, re-segmentation, etc. 
Once you know the market, you know something about the competition, and you can come up with a preliminary plan for that.

Business Model Planning: Market-Type and Competitive Hypothesis

<ul>
<li>Know what you’re testing and why</li>
<li>Don’t over-test</li>
<li> Tests should be controlled and follow accepted protocols</li>
<li>Remember the value of the customer over their lifetime, not just for this one transaction.</li>
</ul>

Tips On Optimisation Testing

The next step is to develop a sales roadmap, which accounts for every step from the first sales call to the contract signing. 
Keep in mind what you’ve learned about the customer and revisit some of the materials (especially the organisation and influence maps) you developed back in the customer discovery stage. Make a model of the purchase process, and identify key influencers.

A Sales Roadmap

You have to get out of the building to discover: How well you understand the customers’ problem, how important the problem is to the customers, and exactly how many customers are talking about it, if the customers care enough about it to tell their friends.
The Customer Discovery process has five steps:
<ul>
<li>Design experiments for customer tests</li>
<li>Get ready for customer contact</li>
<li>Test how customers perceive the problem</li>
<li>Understand the customer's mind</li>
<li>Get information on the market and competition.</li>
</ul>

Testing Customer Problems

Startups should aim to develop the first product for a small target market via a Minimum Viable Product (MVP). The object of the MVP is to get a product out there for the early adopters (called earlyvangelists here) to play with. 
Putting out an MVP forces developers to focus on the important features, not the bells and whistles. The product can be refined once there’s customer feedback.

Customer Discovery

This pre-launch phase of the customer discovery process involves answering three critical questions:
<ul>
<li>Have you found a product-market fit? You have to be sure your product is a good fit for the market. Is this something a lot of people need? How well does it solve the problem it’s made to solve? How many people would buy this thing?</li>
<li>Who are your customers and how do you reach them?</li>
<li>Can you make money and grow the company? Figure out if your solution is a winning proposition. </li>
</ul>
Crunch the numbers and do a rough estimate to see if there’s any chance that you can make money with your new product.

Verifying The Business Model

Using the information you’ve gathered to build previous versions, you’re going to build a high fidelity MVP, which will have more features than the last one. It’s definitely more polished, but it’s still not the complete, finished product. 
Be sure to capture as much data as possible on customer reaction to the new MVP. From there, collect data, analyse and optimise — so it goes from the moment a web/mobile business opens its virtual doors until the day it dies.

A High Fidelity MVP (Minimum Viable Product)

This includes customer problems, needs or passions, customer types (for example, end users, influencers, recommenders, buyers, etc.), customer archetypes, a day in the life of a customer, and a customer organization and influence map.

Business Model Planning: The Various Customer Segments

For physical products, this includes a description of how the product gets to the customer. Think about the suitability of channels for your product, and the authors recommend that startups pick just one channel that has the most potential for your product. 
For web/mobile products, consider the advantages and disadvantages of different channels.

Business Model Planning: Channels Hypothesis

This includes product vision, features and benefits, and a description of the smallest number of features it would take to make a stand-alone product (i.e., the MVP). 
Along the web/mobile track, the low fidelity MVP is used to test if you’ve identified a problem people care about and it employs user stories instead of feature lists.

Business Model Planning: Value Proposition Hypothesis

How to Start a Business: A Startup Guide for Entrepreneurs

startup

Startups

entrepreneurship

Entrepreneurship

business

Business

leadershipandmanagement

Leadership & Management

moneyandinvestments

Money & Investments

personaldevelopment

Personal Development

The Startup Masterclass

The organization can be confusing. While this manual takes the reader sequentially through the necessary tasks of starting up the startup.

More than 100,000 entrepreneurs rely on this book for detailed, step-by-step instructions on building successful, scalable, profitable startups. The National Science Foundation pays hundreds of startup teams each year to follow the process outlined in the book, and it's taught at Stanford, Berkeley, Columbia and more than 100 other leading universities worldwide. Why? The Startup Owner's Manual guides you, step-by-step, as you put the Customer Development process to work. This method was created by renowned Silicon Valley startup expert Steve Blank, co-creator with Eric Ries of the "Lean Startup" movement and tested and refined by him for more than a decade. This 608-page how-to guide includes over 100 charts, graphs, and diagrams, plus 77 valuable checklists that guide you as you drive your company toward profitability. It will help you: • Avoid the 9 deadly sins that destroy startups' chances for success • Use the Customer Development method to bring your business idea to life • Incorporate the Business Model Canvas as the organizing principle for startup hypotheses • Identify your customers and determine how to "get, keep and grow" customers profitably • Compute how you'll drive your startup to repeatable, scalable profits. The Startup Owner's Manual was originally published by K&S Ranch Publishing Inc. and is now available from Wiley. The cover, design, and content are the same as the prior release and should not be considered a new or updated product.

books

Books

More than 100,000 entrepreneurs rely on this book. The National Science Foundation pays hundreds of startup teams each year to follow the process outlined in the book, and it's taught at Stanford, Berkeley, Columbia and more than 100 other leading universities worldwide. Why? The Startup Owner's Manual guides you, step-by-step, as you put the Customer Development process to work. This method was created by renowned Silicon Valley startup expert Steve Blank, co-creator with Eric Ries of the "Lean Startup" movement and tested and refined by him for more than a decade. This 608-page how-to guide includes over 100 charts, graphs, and diagrams, plus 77 valuable checklists that guide you as you drive your company toward profitability. It will help you: Avoid the 9 deadly sins that destroy startups' chances for success Use the Customer Development method to bring your business idea to life Incorporate the Business Model Canvas as the organizing principle for startup hypotheses Identify your customers and determine how to "get, keep and grow" customers profitably Compute how you'll drive your startup to repeatable, scalable profits. The Startup Owners Manual was originally published by K&S Ranch Publishing Inc. and is now available from Wiley. The cover, design, and content are the same as the prior release and should not be considered a new or updated product.

Customer Discovery

Similar ideas to Customer Discovery

Minimum Viable Product

Squads are encouraged to apply Lean Startup principles

Launching Your Product