4 steps to the Epiphany

Cutomer Discovery and Validation

Customer discovery
 Phase 4a Phase 4b
Verify the Problem Verify the Product

Customer
Discovery
Phase 4d
Phase 4c
Summarize, Iterate, or Exit
Verify the Business Model
Verify the Problem
Goal: Validate your understanding of the customer's problem, solution
alternatives, and budget.
 Key questions to address

Did you accurately Does your solution What is the impact on Were your assumptions
identify the customer's effectively address their other stakeholders about the customer's
real problem? needs? within the customer's workflow correct?
company?
 Key questions to address

How severe is the Quantify the problem: Key takeaways from

problem for the Top 5 problems, Your customer visits: Biggest
customers you solution's ranking (Top 1 surprises and
or 2), Measure the disappointments
interviewed? (Scale:
problem's impact (cost
Latent, Active,
or time)
Visualized, Home-grown
solution, Budgeted)
EXAMPLE
A startup developing project management
software is undergoing Phase 4a. They have
interviewed 10 potential customers to better
understand their needs and challenges in
managing projects. They discover that most
customers struggle with tracking project
progress, communicating effectively with team
members, and keeping projects on time and
within budget. Based on these findings, the
startup validates that they are addressing a real
problem for their potential customers.
Verify the Product
Goal: Assess if your product aligns with the market needs and iterate if
necessary.
 Key questions to address

How well does your Does the initial feature Does the 18-month Quantify the customer's
product address the list resonate with feature list excite pain: Top 5 pain points,
customer's pain points? customers? customers? Your solution's ranking
(Top 1 or 2), Measure the
pain's impact (cost or
time)
 Key questions to address
Why is your product
Key takeaways from different? (New market,
customer visits: Biggest Better
surprises and features/performance/c
disappointments hannel/price)
Review product
specifications: Alignment
with market needs,
Feature emphasis, VP of
Product Development's
customer interaction,
Pricing strategy
EXAMPLE
After validating the problem, the startup in the
above example moves on to Phase 4b to verify
their product. They demo their project
management software to 10 more potential
customers and gather their feedback. Most
customers are impressed with the software's
features and functionality, but some raise
concerns about the ease of use of the interface.
Thanks to this feedback, the startup makes some
changes to their user interface to make it more
intuitive and user-friendly.
Verify the Business Model
Goal: Refine the financial model based on current market understanding and
validate its viability.
 Key questions to address

Service Model: Third-

Customer Model: Market Size: Size of party Development Model:
Average selling price, adjacent markets (new installation/configuratio Product development
Units purchased per market creation) or n costs, Cost per cost
customer (3 years), existing market size customer, Direct support
Customer lifetime value requirements
 Key questions to address

Customer Acquisition
Manufacturing Model: Distribution Model: Model: Customer
Total units sold (3 Customer acquisition awareness strategy,
years), Product channels, Distribution Customer acquisition
manufacturing cost channel cost cost
EXAMPLE
After verifying the product, the startup moves on
to Phase 4c to verify their business model. They
estimate the cost of developing and producing
their software, as well as the potential selling
price. They also identify the distribution channels
they will use to reach potential customers. Based
on this analysis, the startup determines that their
business model is viable.
Summarize, Iterate, or Exit
Goal: Evaluate the gathered information and decide on the next steps.
 Key questions to address

Startup type Rethink product Customer workflow Customer usage map

(New/Existing market, positioning based on (before and after (users involved)
Market resegmentation) learnings product)
 Key questions to address

Summarize findings
Distribution channel from worksheets 4a
map (year 1) (Problem Verification)
and 4b (Product
Verification)
 Iterations

Conduct further market Repackage the product

and user research if offering if necessary.
market understanding
or customer
enthusiasm is lacking.
 Exit Criteria

VP of Product
Customer validation of Understanding of the Customer confirmation Development's
your problem product's organizational that your product solves interaction with
understanding and impact within the their problem. customers and their
solution. customer's company. understanding of
customer issues.
 Exit Criteria

Identification of at least
A viable financial model.
5 potential customers
for initial sales.
EXAMPLE
After completing all phases of Customer
Discovery, the startup in the above example
summarizes their findings and makes a decision
on how to proceed. They decide to continue
developing and launching their product because
they believe they have a strong solution to a real
customer problem.
Customer Validation
What is customer
validation?
Customer validation is the process of getting
feedback directly from customers to confirm
if a product or service meets their needs.
Why validate
with customers?
• Ensure product or service meets
customer needs
• Reduce risk of building something
customers don't want
• Validate assumptions about customer
preferences
• Build stronger customer relationships
 Phase 1 Phase 2
Get Ready to Sell Sell to Visionary Customers

Customer
Validation
Phase 4
Phase 3
Verify
Develop Positioning for the Company
and Its Product
 Phase 1

Get Ready to Sell

A. Articulate a value
proposition
 Where does your
What were the top Did a phrase keep How significant is the
product impact
three problems your coming up to describe impact on how they
customers the most
customers said they this problem or the work?
based on their behavior
had? solution to the problem?
and usage patterns?

First step
 Where does your
Does your value Does it have economic How significant is the
product impact
proposition make or impact? impact on how they
customers the most
reinforce an economic work?
based on their behavior
case? and usage patterns?

Second step
 Are your capabilities
Does the value Is your company a Are your solutions
congruent with your
proposition pass the credible supplier for the attainable and
claims?
reality test? product you’re compatible with
describing? customers’ current
operations?

Final step
B. Prepare a Preliminary
collateral plan
EXAMPLE
 Some recommend materials

Website Sale presentation Demos

Data sheet Contract

C. Develop a Preliminary
Distribution Channel Plan
 Channel “Food Chain” and Responsibility

Direct

Indirect
Channel Responsibility Map
Channel Discount
Channel Financials
D. Develop a Preliminary
Sales Roadmap
The element used
to build:
• Organization and influence maps
• Customer access map
• Sales strategy
• Implementation plan
Organization and Influence Maps
Organization and Influence Maps

Can you reach customers through organizations they

belong to, such as the PTA, book clubs, antique car
clubs? Are there Web-based groups that may be
interested?
 How many people on
At what level do you Do you sell high to Does each department
the organizational map
enter the account? executives? Or low to the perceive the customer
need to say yes for a
operational staff? problem in the same
sale?
way?

Sale strategy
In what order do you
need to call on these What is the script for What step can derail the
people? each? entire sale?

Sale strategy
Does the CFO and or
CEO need to approve Does Mom or Dad need Does the customer need
Does the board need to
to approve the sale? to get a loan to finance
the sale? approve the sale?
the sale?

Sale strategy
E. The Imperative of
Hiring a Proficient Sales
Closer
What is a sale closers?

This person will help the company complete the

signing of sales contracts after the startup/company
has found business opportunities.
• Does anyone on the • Do they have a • Are you confident in
founding team have strong network of their ability to secure
experience closing contacts in the target the first sales?
market?
business deals?

Identifying the Need

What is the most important
Qualities of a Sales Closer?
 Adapting Strategies by Market Type
• Discuss how the roadmap and revenue
plan may vary based on different market
types.

Example: The approach for selling medical

technology may differ from selling consumer
electronics, requiring adjustments in strategy
and revenue forecasts.
E. Realigning Executives for Successful Product
Sales
1. Review and Update Engineering
Deliverables
• Update the 24-month engineering
release schedule.
• Agree on committed features for each
release.
• Integrate changes from customer
feedback into the product
specifications.
EXAMPLE
• The engineering team updates the release
schedule for a software update, incorporating
feedback from beta testing and customer
surveys.
 3. Pricing Strategy:

$ Ensure pricing reflects product value and includes installation/integration costs.

$ Estimate post-sales support time and cost adequately.
 Phase 2

Phase 2a: Sell To Visionary Customers

Goal: : Identify and sell to visionaries, Customers willing to buy unfinished
products with a clear vision of problem and solution.
Finding Visionaries

• Understand pain points.

• Articulate a vision.
• Identify key characteristics from Customer
Discovery.
• Avoid engineering alpha tests; target paying
customers.
• No free products; betas are paying
customers.
 Building Potential Customer List
• Prioritize individuals over brand names.
• Avoid title biases.
• Get leads from investors, founders, lawyers,
headhunters, trade magazines, and business
reference books.
Phase 2b. Validate the Sales Roadmap
 Customer Validation Overview
• Objective: Validate the sales roadmap by securing 3-5 visionary customers pre-product launch.
• Target Audience: Earlyvangelists – high-level executives, decision-makers, and risk-takers.
• Method: Intensive 30-60 day calling effort by VP Business Execution
Sales Performance Analysis

Win/Loss Statistics:
• Track sales process rejections (introduction, product
presentation, organizational, technical, pricing).
• Reevaluate issues to refine sales strategy and
approach for success.