Rethinking Customer Development

I'm a huge fan of Steve Blank his theory of Customer Development.  I've found his writing always inspirational and insightful.  However, has been a little to dense for me to use as a clear roadmap.  Many in the Lean Startup movement point to the Business Model Canvas as a cure - which, try as I might, I've never been able to actually follow in a real live business.

The issue was that each of these pieces is part of a flow - not a discrete map.  So, here at Contastic we started using a variant that models the business as a process rather than as a map:

This covers same essential areas as the Business Model, but slightly re-arranged to fit the process of validating a startup.  Generally, each stage from left-to-right is dependent on the next and should be evaluated in that order.  At each milestone the company should seek to find a path through.  I like to have at least two stages written out to look at: general themes, and then specific actions/sources to test:

While by no means complete, this model serves as a basic roadmap of our plan.  We also often use  third level for tactical tests to confirm items in level 2 (ie acquire 20 customer per day at Dreamforce).  As they are confirmed the fact bubbles up to the next level.  As we develop the company we continually edit this knowing that the dependencies flow from left to right and then top to bottom.  

Hope this helps you all bring a strong evidence-based approach to your ventures.  We're continually evolving this model, so if you have any ideas for improvements or cases where it fails let me know in the comments below!

Customer Acquisition Tips from Andy Payne Co-Founder of OpenMarket

Entrepreneurs that come through his office have passion and are thoughtful about product, design and team, but not marketing.  In this day and age, when the online marketing channels are so crowded – reaching the customers is the primary challenge (at least as if not more important than the engineering).

Lifetime Value > Cost Per Acquisition

When the lifetime value starts to really exceed the cost per acquisition you have a real business.  For more Andy recommends you check out http://www.forentrepreneurs.com/(from David Skok at Matrix Partners)

Create a Culture of Experimentation

Treat your marketing like an MVP.  Do the minimal amount necessary to test the ROI for a new channel.  Ghetto testing is a big piece to this – just make a landing page for a product idea – and see if you can get pre-registration.  This will give you a feel for the product need before it’s even launched.

Ways to market

• Paid Search/Banner Ads.  Pretty easy to try, but hard to compete because you’re bidding directly against experts (or at least you should assume they are).  Just like playing poker at a casino – be ware.
• Inbound Marketing/SEO. Make content that people will find on Google.  Use Google analytics/webmaster tools to manage and boost your rankings in the organic search results.  First result for “startup equity” on Google is Andy’s Blog
• Viral Marketing. Hard to plan for, but worth a shot.  Make great content (video/picture/post) that hits that human nature that is simple and sharable.  Then, make sure it connects back to your business (tricky!).  You can also create a project that is inherently viral (dropbox). 
• Email Marketing.  Soothes out acquisition process. If you can get them to buy, great.  If not, what can we do that maintains contact?  You start with a opt in (small customer commitment) and enables you to message to lead up to a sale (big customer commitment).  Opt-in is critical. If you get market as a spammer by too many people email providers (gmail/yahoo/hotmail) will start to ban you.

Book Recommendations:

Inbound Marketing – Get Found Using Google Social Media and Blogs

The New Rules of Marketing and PR – David Scott

All in all the advice boils down to – work smart (use hard data/analysis) and work hard (leverage every personal contact you have and send out a lot of personalized emails to get traction).