By Chip Schooler
Talking to potential customers is one of the most important activities an entrepreneur conducts on the road to success. As Steve Blank notes, “Facts exist outside the building, opinions reside within.” So when the opportunity presents itself to interact with future customers, what topics should an entrepreneur address?
The discussion needs to feature a combination of research and validation. Customer discussions are a loop-like process: information uncovered by research is taken back, “munched on by the team” and then validated in another conversation with the next (or same) prospect. According to Jakob Nielsen, “the guru of web page usability,” six customer discussions are the right number to confirm validation. To define the ideal balance between research and validation, set goals for the feedback before the meeting.
As you meet with potential customers, remember to discuss the three “Ps” – Product, Pricing and Peers.
An entrepreneur (and team) should be constantly validating product assumptions and revising the business model based on customer response.
The most important validation: does the prospect have a problem that the proposed product solves? Garnering feedback from multiple sources significantly improves the value proposition (i.e. the problem and solution).
Don’t wait for a finished product to begin this process. Solicit input at every opportunity. For example, user interface experiences can be tested in the conceptual stage through techniques as simple as sketches on paper.
However, it is important to keep feedback in perspective, especially during this early stage. I recommend using Geoffrey Moore’s Technology Adoption Life Cycle to determine the type of customer you are interviewing (innovator, early adopter, early majority, etc.) and set expectations to appropriately weigh the feedback.
Pricing discussions entail more than just presenting a dollar amount. All technology is sold by some kind of capacity measurement, including by user, machine, core, site, IP address, minute or gigabyte.
What is your prospect’s response to the intended capacity? What issues do they raise? How long does it take them to understand the pricing model? What are the pricing models of competitors? If the product is a service, then the type of capacity selected can have a significant impact on other areas of the company such as billing.
In addition to the pricing model, another part of the discussion should cover your product’s value assumptions. Learning how a prospect currently solves the problem you plan to solve – as well as its attendant cost – sets the stage for your marketing strategy.
Discussing the problem and solution may also reveal that the prospect values non-product feature capabilities such as annual billing or specific purchase terms.
A key element to growth is precise market segmentation. The most important aspect of this process involves developing a segment that can be reached through profitable marketing techniques. Now is the time to start defining both the segment (VPs of customer service for a packaged goods company, for example) and potential marketing strategies to efficiently reach the individual buyer. Research might include questions about professional association membership, the trade shows or webinars that were attended and relationships with like-minded peers in both competitive and complementary segments.
By covering these three Ps, an entrepreneur is taking a structured and comprehensive approach to one of the most important tasks in a startup – producing a successful product that a market segment will purchase.
A Community Catalyst at the Advanced Technology Development Center in Atlanta, Chip Schooler is a 30-year veteran of the technology industry focused on the commercialization of technologies that can be used to solve real-world problems. Chip has brought to market products as diverse as enterprise-wide laptop backup, security appliances
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