BUSI 701
Artistic Entrepreneurship
Class 9
Customer Pain
Vernon’s Razor
©2008 Patrick Vernon
Videos
• Verma: “Passion and Customer”
• Levinson “Talk to Customers”
Vernon’s Razor
©2008 Patrick Vernon
Vernon’s Razor
Go or No-Go?
Vernon’s Razor
©2008 Patrick Vernon
Go or No-Go?
Vernon’s Razor
©2008 Patrick Vernon
Vernon’s Razor
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Value Proposition
Market Potential
Return
Team
Competitive Advantage
Business Model
Customer Pain
Defining
Opportunity
Minimizing
Risk
Vernon’s Razor
©2008 Patrick Vernon
Customer Pain
• Will the dogs eat the dog food?
• Will the fish bite?
• Keyword: validation
Vernon’s Razor
©2008 Patrick Vernon
Brook Byers, KPCB
• If you don’t have any customers yet, you
need to show that you know who your
customer is going to be and that you have
gone out and talked to them.”
• “Acid test” for early entrepreneurs:
resonance with customers
Byers: know your customers
Vernon’s Razor
©2008 Patrick Vernon
Value Proposition
• Recap: the reason to create a new venture is
to create value
• “Customer Pain” is a validation that
somebody will directly benefit from that
value
Vernon’s Razor
©2008 Patrick Vernon
Ways to Validate Customer Pain
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#1 – paying customers
Beta testing
Competition
Surveys and focus groups
Letters of Intent (LOIs)
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Validating Customer Pain
#1 – Paying Customers
• Like Team is #1 for lowering risk,
paying customers validate pain
• Understanding this is #1, strategize
to make it happen
• Consider rolling out early imperfect
product to start customer
relationships
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
(LOIs)
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Validating Customer Pain
Beta Testing
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Concept test
Non-paying customers
Small or scaled down product
Customer feedback is key
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
(LOIs)
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Validating Customer Pain
Competition
• The existance of competition
validates the customer pain
– May create other problems
• You still must validate that your
venture is differentiated to capture
x% of that market
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
(LOIs)
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Surveys and Focus Groups
• Moving from qualitative assertions
(gut feelings) to quantitative data
points
– From “This seems like it would work”
to “95 out of 100 software engineers
were likely to buy”
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
LOIs
Eyeballs
• 1st step towards excellent customer
feedback skill sets
Vernon’s Razor
©2008 Patrick Vernon
Survey Article
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What is the purpose of the survey?
Title the survey
Do not make the survey any longer than it needs to be
Use plain English
Avoid long questions
Ask one question at a time
Avoid influencing the answer
Ensure that the answer format allows meaningful answer
Consider how the compiled data is going be analyzed
Ensure that the questionnaire flows
Target your respondents
Vernon’s Razor
©2008 Patrick Vernon
Survey Article
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Allow the respondent to expand or make comments
Be confidential if needed
Consider anonymity
Give careful consideration to the best response format
Give the respondent an idea of how much time the
survey will take.
Inform the respondents of the survey end date
Pilot the survey
Before publishing the survey proof read the survey
several times
Remember to say thank you
Vernon’s Razor
©2008 Patrick Vernon
Validating Customer Pain
Letters of Intent (LOIs)
• Shows a commitment from potential
customers
• Particularly relevant with:
– Very high price points
– Long-term contracts
– Long sales cycle products/services
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
LOIs
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Validating Customer Pain
Eyeballs
• Website traffic
• Showing any interest is more
compelling than none
• If your business model is
advertising, this moves to #1
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Validating Pain
Paying customers
Beta testing
Competition
Surveys/focus groups
LOIs
Eyeballs
Vernon’s Razor
©2008 Patrick Vernon
Business Model & Customer Pain
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Specific target segment
Roadmap to future segments
Verticals and horizontals
Decision makers (do you solve pain for the
wrong people?)
Kawasaki: create something great
Vernon’s Razor
©2008 Patrick Vernon
Segmentation
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Target Addressable Market
1st Pin
Influencers (Tipping Point)
Crossing the Chasm
(Geoffrey Moore)
Early Market
Chasm
Mainstream Market
Vernon’s Razor
©2008 Patrick Vernon
Atribute A
Product Attributes
Atribute B
Kawasaki nitch thyself high right
Vernon’s Razor
©2008 Patrick Vernon
“Marketing Mix” 4 Ps
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Price
Product
Promotion
Place
Vernon’s Razor
©2008 Patrick Vernon