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Lean B2B by Garbugli - Coggle Diagram
Lean B2B by Garbugli
People
Chapter 4 — Where It Starts
The founding team
The only things that matter early on are P-M fit and not running out of money.
The only thing that matters in the first 12-18 months of a company is figuring out how to get your product in the hands of the right people.
P-M fit is when you have five passionate customers.
Two types of expertise
Functional
Development, sales etc
Industry
Retail or Edtech
Your edge can be:
•Insider information;
•Deep customer insights;
•Endorsements from market experts or celebrities;
•Personal authority;
•Strong branding;
•The dream team.
The starting point
Domain Expertise
Solution Expertise
Passion
Disruptions and the flip-side of the coin
Ignorance + Intent = Innovation. Not being an expert is not a bad thing.
Changing an industry’s business processes is much more difficult than selling into a well-established need.
Vision
Our Vision: Reduce CAC
Startup Pyramid
Vision
vision represents your founding team’s early agreement
Chapter 4
Market
What markets could be affected by your high-level vision?
Chapter 5
Jury
includes the decision makers, the influencers and your early adopters.
Chapter 6
Problem
pain you wish to solve for the jury
Chapter 9
Solution
the product, the usage or the benefits that are provided to solve the pain
Chapter 12
Minimum Viable Vision
10 step checklist
its simple
Start by solving one problem, with one product, for one customer
One revenue stream
Focus on one revenue stream to start, and if you cant identify a primary revenue stream, then its a bad business
You are passionate about it
See yourself working on it in 10 years
Few steps to revenue
The best ideas have a very small number of steps to revenue (steps from engagement to payment)
You know the customer
From the outset, you need to intimately know of one very specific archetype who desperately needs your product
You know the market
How can you possibly have a meaningful vision about the future of a market if you are not a leading domain expert on that market
Sufficiently large market
Any market with <10million people or multiple billions in annual revenue will be very hard to address
Original secret sauce
Is what you are doing unique or better, than everybody else? Do you know a secret that nobody else does?
You have tried to kill it
Find things that make your idea bad, and then eliminate them through iteration
You are sharing your idea
Nobody is going to steal your idea! Are you sharing it with as many people as possible
What you can do today
Chapter 5 — Choosing a Market
Reading up on secondary research
Blogs & reports
Forrester Research, Gartner, Forbes, Marketing Sherpa, Tower Watson or other independent analyst publications
understand the types of products currently being sold and their perceived value by customers
Understanding the competitive landscape
a lot of information that can be gathered just by speaking to salespeople and businesses already selling in a space. :check:
Meeting with third-party analysts
VCs and their perspectives
First hypotheses
Business model canvas
Lean B2B Canvas
Finding problems and opportunities that matter
Soft benefits :red_cross:
Not directly related to ROI
Hard Benefits :check:
Directly related to ROI
Easier to sell
Creating a money map
objectives
Key problems of your prospects
motivations for spending money to address these problems
prize or reward - budget for it
perceived alternative and competitive landscape
Step 1. Money map has 3 columns
Expenditure
Motivation
Monthly Budget
Creating value proposition hypotheses
Step 2. turning the motivations from the money map into problems and exploring opportunities around those problems.
three columns
Objectives
Reduce costs
Increase customer satisfaction
Increase revenue
Opportunities
Problem
Not knowing what other players are doing with digital marketing
How the users are converting
How to retain them
Not knowing which users to target with digital marketing
Elevator Pitch
Our product is for marketing teams in small retail chains that are dissatisfied with newspaper advertising. Our product improves revenue through greater reach. Unlike newspaper advertising, our product allows marketers to reach highly targeted customers faster.
What you can do today
Intro
Start a business where you can get access to customers easily.
Market is made up of
A number of potential customers
People who share a pain, problem or opportunity
Channels for these people to connect, discuss and share purchase decisions
start small and expand from your entry point.
Whether you’re
creating a new market
re-segmenting an existing market
start with a niche and take it from there
Attacking the market leader head-on is never a wise strategy
entering an already competitive market
Businesses in these large industries have money to spend.
Some of the most successful B2B entrepreneurs target slow-moving industries (see the Spotfire case study).
Some of the most interesting market opportunities for B2B entrepreneurs can be found in traditional industries.
For example, in 2013 the global market size for the mining industry was $731B27, the domestic airline industry was $708B28, the corporate legal services industry was $650B29, the construction equipment industry was $143B30 and the oil and gas industry was more than $4,000B31.
Focus on people first :check:
Better success
Preliminary research
figure out whether opportunity is worth pursuing
be able to have engaging discussions with the people working in these industries
avoid one of these quick dismissals
We don’t need to do that (company doesn’t fit the identified process or doesn’t exist).
You don’t know ABC Inc.? They do just that (comparatives and competitive landscape not understood).
This has never been a problem for us (problem is too specific).
With the current freeze on expenditures, we don’t have the budget for new technology (timing and company reality not understood).
Research on prospect's market
LinkedIn
Twitter
industry-specific databases and analysts at your disposal
Markets can be understood from the outside in three ways:
Reading up on secondary research (e.g., surveys, reports, etc.)
Understanding the competitive landscape (who does what)
Meeting with third-party analysts (Venture Capitalists and industry analysts)
Chapter 6 — Finding Early Adopters
What you’re looking for
Early adopters and innovators know what they’re looking for. They can see the value in an incomplete solution and have the potential to help you find product opportunities in the enterprise.
may not always have a budget or turn out to be your customers, but they can help open doors for your product and direct you to the right people in the enterprise.
Signs of early adopters
•They’re actively looking for a competitive edge;
•They have the ability to find new uses for a technology;
•They seek out and sign up for early trials and betas;
•They like to be unique and share new products (it makes them feel good);
•They exert some kind of technological leadership in their companies (although they may not be in a leadership position);
•They will use a product that isn’t complete.
Crossing the chasm
As you grow take care that you satisfy each group
cross the chasm between the Early and Mainstream markets to reach critical mass
a beachhead customer — a first customer segment
Finding early adopters
Early adopters are market and solution specific;
A critical rule that applies to all the prospects you’ll interact with in this book is: the customer must not be friend or family.
CMOs have increasingly more influence in the technology purchasing decisions of their companies.
Managerial levels are best early adopters
People who have a previous understanding of customer development and startup life are ideal candidates to get the ball rolling.
looking for 50 potential customers you can test your ideas on :check:
LEVERAGING YOUR NETWORK AND REFERRALS
Selecting Early Adopters
Make a list of Early Adopters: The best way to find early adopters is through your personal network at one degree of separation.
Do you have contacts in your network that fit the profile of early adopters in your industry?
Take the time to go through all of your contact lists (email, mobile, LinkedIn, Facebook, Twitter, etc.).
Draft a list of potential early adopters working in your target market.
You start with the people you know and the people you can get recommended to as friends or close acquaintances.
Accountants, headhunters, investors, recruiters and lawyers are notorious for having large business networks.
Perhaps some of your partners or other startup founders can help identify a few early adopters to add to the list.
Beyond Professional Network: EVENTS, COLD-CALLS AND DROP-INS
Groups on LinkedIn are a great way to understand the interests of prospects beyond their work titles.
groups like “Recruitment 2.0” or “The future of recruitment,” for example, will most likely be interested in the evolution of recruiting.
Do these groups organize events? Do they promote events you could attend to in order to meet early adopters?
Are there companies that fit your target market, but that don’t seem to have any clear early adopters?
Did you know?
You can find out which public companies work with new vendors by looking at their annual report.
Social Media recruitment
Using a tool like Twitter, spend time looking at the links and services shared by people in your target market
Did they recently get excited by new tools or concepts?
Were these tools in your target market?
Start following these users and create a list of the people you suspect to be early adopters. Closely monitor the type of information they publish.
Tools like Twellow (twellow.com) or Moz’s Followerwonk (followerwonk.com) can help you find users for specific sociodemographic targets (industry, location, size of business, etc.) and discover many people you wouldn’t have thought of contacting.
What needs are these people expressing?
Explicit needs? E.g., “We need to expand the business in South America.”
Implicit needs? E.g., “Help us increase revenue in the face of stagnant business growth in the United-States.”
Who are they following? Who has influence over them?
Tools like Zintro (zintro.com), Ask Your Target Market (aytm.com), Amazon’s Mechanical Turk (mturk.com) or Clarity (clarity.fm) can also help you find and qualify early adopters in exchange for a small contact fee.
LinkedIn will also allow you to find people by the expertise and keywords (e.g., “recruitment,” “social media”) from your elevator pitch.
Finding the influencers
if you’ve been doing your research properly you should have 50, 100 or more early adopters on your list. This list should look a bit like this:
separate the prospects that are setting the trends from the ones that follow them.
There are two aspects to this:
1.Personal influence — how many people can this early adopter influence?
2.Company (or employer) influence — how many companies can be influenced by a case study from their employer?
For each contact, you’ll look at:
•The number of followers they have on Twitter ;
•The number of followers of their followers on Twitter;
•The number of contacts they have on LinkedIn ;
•The rank, role and network size of their contacts on LinkedIn;
•Their activity level in groups on LinkedIn;
•The number of articles or publications they have;
•The number of talks they gave (# of SlideShare presentations);
•The number of blog posts they’ve written;
•The popularity of their blog (comments, shares, etc.);
•Their visibility on search engines (# of links on Google );
•The number of times other people have quoted them (e.g., Google search “James McCarron”);
•Their Klout score;
•The word-of-mouth in the industry; etc.
IDEAL PROSPECTS
Do all mid-sized insurance companies’ marketing departments have the same needs?
Early adopters are a sub-group of your target market.
Looking at the five to ten most influential early adopters on your list, what do you find they have in common?
•Are more of them male or female?
•What is their typical job title?
•What is their common academic background?
•What interest groups do they share?
•What are some of the content they enjoy?
•What are some of the goals they share?
•What is their common approach to social media?
•How often do they publish quality content?
Do all mid-sized insurance companies’ marketing departments have the same needs?
if you’re unable to find a lot of early adopters for your ideal customer profile in your target market, you might have to do one of two things:
1.Revise your ideal customer profile. Make sure you’re not being too restrictive.
2.Reconsider the target market. Was it segmented properly? Is it of sufficient size?
SELECTING EARLY ADOPTERS
You’re a sniper, not a fisherman with a net. Act like it.
You may wish to start with a broad group of early adopters to get a full understanding of the opportunities and needs of your target market, but you’ll soon need to focus on the voices that matter most.
Case Study
Vontu → Finding the appropriate early customers
What you can do today
Sell to Ideal customer profile
•Has a problem;
•Is aware of the existence of the problem;
•Has already tried to solve the problem;
•Is unhappy with the current solution to the problem;
•Has a budget to get the problem fixed.
Chapter 7 — Leveraging Domain Credibility & Visibility
Why you need domain credibility
Prospects look for client referrals to purchase
For prospects, it can feel like a waste of time and resources meeting with unproven entrepreneurs.
Businesses want to work with other businesses that are in it for the long haul
five things that entrepreneurs need to demonstrate to be perceived as credible
Personal Credibility – Do you know what you’re talking about?
Commitment – Are you in it for the long haul?
Reliability – Are you doing what you say you’re going to do?
Passion – Do you really care about solving our problem?
References – Who can vouch for you?
credibility of your startup and your personal credibility must be established from the first interactions forward.
Great, you’re an expert
If you’re an expert, prospects will want to meet to exchange ideas as they would with colleagues.
Not an expert? Start here
If you’re small, admit that you’re small. You look small by acting big. People can see straight through that.
If you don’t have a PhD or haven’t been blogging on your target industry for the last five years, don’t worry; there are many other ways to build personal credibility.
Transparency is key in the beginning. It’s okay not to know everything. Pretending that you’re big is a huge mistake;
Secondary research
The first thing you can do to develop your credibility (and this one is a must do) is to sign up for all the newsletters, blogs and websites that your prospects read.
You can find these publications by looking at the links they share on social networks like LinkedIn, Twitter, etc.
Find the relevant research reports (Gartner, IDC, Forrester, etc.) that everyone refers to. Some stats and ideas are gospel in the industry;
SlideShare presentations are a great way to make these data points surface.
You might also want to set up a few Google Alerts and Twitter keyword alerts with terms from your initial elevator pitch to follow the trends
will be more relevant if you keep up with the latest news of the industry.
Leveraging the team
fastest and most effective way to gain credibility is to leverage your team’s network or to recruit advisors who have already earned the respect of your prospects.
With the right expert on board, it is possible to sell a product on credibility or social proof alone.
Adding advisors can quickly create an equity nightmare if their contribution will ultimately only be required in the early days of the company.
Personal network
It’s important to know where you want to go and build a network in this direction.
Your personal network can also help you gain credibility with prospects.
LinkedIn is a great tool to find out how prospects are connected with your current connections
The best introductions always come from the people who have the most influence over your prospects. This influence can be a mix of:
Fame – Is this person a known influencer or a well-respected figure?
Power – Was this person ever the manager of your prospect?
Longevity – How long have they known each other?
Proximity – Do they play golf together? Do they have many mutual acquaintances? Do they interact frequently?
Trust – Do I trust that this person has my best intention at heart?
Building on previous successes
Your first few clients may not be in the market you’re targeting. You can build credibility and references one step at a time by starting with the easier — or faster — markets
What you bring to the table
Perhaps you worked on major accounts or high-profile projects, perhaps you wrote a book or you’re an active member of the local community, or perhaps your contributions to open source are being used all over the internet.
Traction in B2C and then B2B
Ranjith Kumaran and Mehdi Ait Oufkir had built a very successful business together before starting in B2B
Active blogger and social media contributor
Becoming one of them
You want to put yourself in a “thought leadership” position fairly quickly: blogging is a good way of doing that; white papers or e-books as well.
What you can do today
To be persuasive we must be believable; to be believable we must be credible; to be credible we must be truthful.
there’s a strong claim that you gain an edge from the experience you acquire over time
Young founders have to develop domain and solution expertise while building credibility
Chapter 8 — Contacting Early Adopters
What you can offer
Initially, there are two ways to convince early adopters to meet with you:
Create interest in your profile or the story of your founding team.
An interesting founding story can help cut through the noise and generate curiosity with early adopters.
As a founder seeking face time with prospects, you must be able to answer the age old WIIFM (What’s In It For Me).
Create interest in the benefits of the contribution.
top ten things you can offer to motivate early adopters to meet with your team:
Visibility
Discovering the next trend can give them great personal visibility and help their self-image.
Discussions
Early adopters enjoy the process of brainstorming solutions to their problems
Competitive edge:
driven by the possibility of innovation
Action
chance to be part of the action and contribute to something real
Intelligence
You can share insights from other parts of the industry and make them smarter
Fun
Meeting with you might be the most fun thing they do during their day
Networking
Meet new people
Ownership
contribute to the decision making and creation of a new product
Promotion
If your product becomes successful and provides a competitive edge, they might get promoted.
Equity
they can become advisors, earn equity or join the company board
Have landing page and social media sites
Reaching out to them
Customers don’t care about your solution. They care about their problems.
few important notes
It’s about them
need to speak to their ego and make them feel smart and esteemed. It’s about their expertise and interests and it’s on their terms.
Their time is important
has to sound like it’s a short meeting. Twenty minutes means half an hour and 30-40 minutes means an hour
You’re not selling
have to build a relationship before you attempt to sell anything. Think how much you like receiving cold emails
It’s not for them
You’re solving the problem for other members of the industry, not directly for them. It also has to be clear from the start that you’re not in the business of creating custom solutions :check:
Value proposition should be simple, focus on benefits and value
A good value proposition is compelling, quantifiable, provable, referencable and easily explainable.
Good sales funnel
Microcommitments
Success ratios
Cold calls and Cold emails have low success ratios
Some of the entrepreneurs interviewed recommend paying for early adopters’ time.
leads to a higher response rate and is respectful of people’s time, but engaging prospects as consultants doesn’t establish the same kind of relationships with prospects. Getting early adopters to help you for free is validation in itself.
As a rule of thumb, you should be spending more time researching prospects than doing actual calls or sending messages. This phase is about understanding early adopters, not blasting people with emails. :<3:
What you can do today
Businesses are easier to find (than consumers); they’re in the phonebook.
If you did your homework, you thoroughly researched what the early adopters on your list care about so that you can find common ground with these prospects.
If an early adopter isn’t getting paid to meet with passionate startup founders (he most likely isn’t), your offer must be interesting enough to convince him to spend extra time away from his work and his family.
The best salesperson is the founder. Others won’t have the passion for it.
shouldn’t hire a salesperson until those processes can be repeated.
Don’t look for an easy way out of customer development. Sales are a big part of it.
Solutions
Chapter 12 — Finding a Solution
Real and false validation
Solution Interview phase is a startup graveyard :!:
It’s not uncommon to meet entrepreneurs that have been in this phase for the last one or two years and that eventually run out of money. :forbidden:
can never turn that intelligence into a scalable market opportunity — forever being stuck in a consulting model. :no_entry:
The reason why most startups fail at this stage is that they can’t tell the difference between real and false validation
you need to figure out is whether you are solving this problem the right way and whether you can get paid for it
only way to do this is by trying to close prospects on a sale or a pilot project
When you get a “no,” it doesn’t necessarily mean that (your solution) is invalidated. You need to get a payment, the real validation. Go the furthest you can go for validation
To do :check:
Not withstanding the expected deal size of your solution, you should expect that the first few sales will be taken at a loss; success stories are more important than revenues.
For your first few customers, you might decide to ask for an amount that does not trigger the need for budget escalation or complex negotiations instead of asking for fair value.
Although you never want to lie to prospects, it is your responsibility to do whatever it takes to sign a first customer. Be more aggressive. Take them to lunch, promise extra services and don’t be afraid to charge too little even on long-term deals.
Money up-front :fire: :explode:
Most successful B2B entrepreneurs ask to get paid up-front. They realize that they are providing value, and if that value won’t lead to revenues, it’s best to know sooner rather than later.
It doesn’t matter that your price is lower for your first few customers, but (some) money has to change hands
Looking for your first case study
Being endorsed by a prominent customer in your target market can put your technology on the map almost overnight.
To vouch for a product, there must be real value transacted
Case studies typically need to be worked into the deals
The first company you convince to take a chance on you will be the hardest, but with a first endorsement in hand, the second, third and fourth sales will be much easier.
one or a combination of the following, and you should always push for the highest form of endorsement possible
Using the company name and logo on collateral
This is the most common form of endorsement. Simply displaying customer logos on a website helps create social proof — the positive influence created when someone finds out that others are doing the same thing.
Writing a testimony
A personal endorsement from a prominent stakeholder can help establish likeness and increase social proof. Video testimonials typically have more impact than text testimonies and can be interesting to explore
Publishing a press release about the deal
A good PR agency can help get your article republished by other media groups for great exposure.
Writing a blog post or technical paper about the experience
Working with a prospect to explain the reasons why they bought and decided to trust your company shows passion and is a great way to give visibility to your prospect
Taking a call a month from other prospects
This is the least public form of endorsement. Making a current customer available to answer prospects’ questions is a very effective way to build trust and counter hesitations
Writing a case study
As stated earlier, case studies are an essential currency in B2B. A well-researched case study can help explain why clients decided to buy and demonstrate the ROI of your solution.
Presenting at a conference or event about the partnership
Presentations are the highest form of endorsement. Not only do they give your company a lot of credibility, they also demonstrate how passionate your customers are
crucial that you validate early that companies have money to invest and that you are talking about a real business problem :warning:
Five lighthouse customers - five customer successes
Although this phase is also about getting paid for your solution, it is not about accepting money from any company
For your first customers, honest feedback is more important than sales; you should never force a solution down the throat of your prospects
it is possible to ride relationships and land your first five deals without really learning anything
However, riding relationships doesn’t lead to a scalable and repeatable model. At some point, even the best professional networks dry up. :red_cross:
first customers you seek should genuinely
1.Be willing to spend money for your product;
2.Benefit from your solution;
3.Agree to endorse your company with a case study.
Of course, not everyone will agree to write a case study. It might take ten to twelve customers in order to get five good endorsements and, that’s alright.
The solution interview phase is very time consuming. Don’t underestimate the work and time required to go through it.
You will get rejected a lot, but if you’re following our process, you will also learn what it takes to reach P-M fit in your target market.
Chapter 13 — Creating a Minimum Viable Product
Defining your problem owner
It’s about being very focused on the problem you’re solving, your exact target personas, your total addressable market, your beachhead market, and then executing on that
Initially, you must be laser-focused on a single market, a single problem and a single customer profile. Absolute focus is the key to reaching P-M fit in your target market :check: :check:
Choosing an entry market is a decision you must make
Looking at the interview results, you’ll identify common patterns and average the differences for your demographic data
Go through the data and ask yourself the following questions and build a pesona
What is their common role?
•What are their responsibilities?
•How many people report to them?
•With which department are they affiliated?
•How long have they been working in this company?
•What character traits do they share?
•What are their common objectives?
•What other problems do they share?
•What tasks are they trying to accomplish?
•What are their personal and professional goals?
•How do they measure themselves?
•Who has influence over them?
•Whom do they work with?
•What technology do they use?
•What values do they share?
•How are decisions made in their company?
•What is their work like?
•What is their day like?
•What is their lifestyle (married, single, urban, suburban, etc.)?
•Are they decision makers?
•Do they have budget? Whom do they have to work with?
•How are they evaluated?
•How would they calculate ROI?
•How comfortable are they with technology?
•How mature is their company?
Finding your Fit
… though rarely perceived as a competitor, Microsoft Excel is almost always an actual competitor for software startups
In large companies, the core business functions are well served by technology vendors. They have Intuit for finance, Taleo for recruitment, Salesforce for CRM and Microsoft for almost everything else
Even these companies started with a subset of what their products can do today.
Are businesses quickly changing the way they do marketing? Are there ways to capture those new processes?
you must figure out how your solution is differentiated and whether that differentiation is valued by prospects
Think less about the direct competitors and more about how your solution can fit in their technology mix. Substitute products and the status quo are typically more dangerous competitors than large incumbents.
Understand the technology mix, play nice with the existing solutions, find your fit and then expand to take over the world
Creating a test plan
Don’t put limits too early. Don’t close yourself off to new discoveries
Your goal is to solidify the things you know into validated learning while leaving room for discovery, growth and serendipitous outcomes. Optimizing too early might mean missing out on better business opportunities
SOLUTION RULE
Thou shalt not fall in love with thy solution
As you brainstorm, ask yourself for every decision you make, “Do we know whether this is the right approach?” “How do we know this?”
startup should start answering the hardest questions and validating the riskiest parts of its product and business model first
You’ll create a test plan with specific and testable hypotheses that you’ll rank from high risk (can kill your solution) to low risk (improvement opportunity).
Hypothesis
Validation
Risk
Because most people are visual57, it’s much harder to get feedback on a feature or an idea if prospects have to imagine how it’s going to work. You need to put something concrete together for validation
Make sure to include your riskiest assumptions in your first product demo. Moving forward, you’ll adjust your hypotheses and your product until it matches the needs of your prospects
Features
Must haves
Nice to haves
Delighters
Building the MVP
Version 2.1 was actually the first version of our product (perception game).
Minimum Desirable Product
smallest feature set prospects will pay for in the first release
Showing your prospects an MVP is the first demonstration of your ability to deliver a solution
three things that your MVP must say about your company are
You can solve this problem
You have the technical know-how to create a solution to the problem. This MVP is just the tip of the iceberg
You can provide the value they seek
You understood the problem and the value sought by the company. This product will provide real benefits
You’re different
You’re better than the current solution or the solutions on the company’s radar. You can provide something they don’t currently have
Don’t wait for a perfect product. An MVP with just a few screens will get prospects to fill the gaps more than a full-fledged application; prospects will do the work of imagining the rest of the solution
Concierge MVP :check:
minimum viable product where you charge a customer for manually performing the service without any product development
client may or may not be aware of the work being handled manually
short-term solution to help you learn how to solve customer’s problems that can help drastically reduce the amount of development
In B2B, this could mean creating a business intelligence dashboard that the founders update manually throughout the pilot
scope of your MVP should be no more than the two or three core features that will solve the customer pain
three parts to a valuable MVP
The data – What data are you collecting about your experiment?
The success criteria – What determines the success or failure of the experiment?
The experiment– What are you trying to learn with this particular MVP?
Committing to your MVP
The other prospects and their problems will still be there later, but for now, you need to fully commit to your prototype
Building a minimal version of a product doesn’t mean that you should not commit to it
If you’re not committing, why should businesses commit?
What you can do today
it’s time to show that you understand their problems.
A complete product is not required to start selling. You need just enough to communicate the vision and benefits of your solution. You can be as lean as possible
Chapter 14 — Preparing Your Pitch
The Jury
The place you should start any Complex Sale is the place where you have the greatest degree of credibility
The person you want to sell to is the person with the pain and/or the money.
Start with the prospects that had the strongest pain or felt the highest level of urgency to have their pain removed
To analyze which prospects are more likely to buy, you must understand their company’s situation
There are four situations it can be in: :unlock:
The company is in growth mode. They seek optimization looking for more, better, faster, nicer, etc.;
The company is in trouble. They wish to bridge the gap between reality and what they’re trying to accomplish;
The company is satisfied with their current solution. They — wrongfully or not — perceive that their current solution meets their objectives;
The company is over confident. They over estimate the situation they’re in, misreading the trouble they’re in
People buy when, and only when, they perceive a discrepancy between reality and their desired results
your first customers are more likely to come from companies seeking growth or a way out of trouble :star:
You must understand the roles of your prospects to avoid barking up the wrong tree
Would they be the ones buying the solution or would they help influence others to buy?
During your problem interviews, you met with one or more of these buying influencers :silhouettes:
Economic Buyer – concerned with ROI
through a form of veto over purchases — acts as gatekeeper of the budget
As generalists, economic buyers almost always know less than you do about many areas of the
they don’t have the time to keep up with all the developments in their business
The most valuable contribution you can bring to an economic buyer is knowledge. :fire:
Economic buyers typically care about the long-term and risk-mitigation aspects of a deal :star:
if your company goes out of business, loses a key executive, or is acquired
User Buyer – concerned with user experience and day-to-day impact
tend to consult with peers in user groups or community sites to see what others who have implemented your solution are saying about it
They want to know about specific use cases, features and processes.
To user buyers, there’s a direct relationship between their success and your solution’s success
onsumerization of enterprise software and the success of user-centric companies like Box, Yammer and Dropbox, expect the user buyer’s influence to increase :<3:
Technical Buyer – concerned with security and feasibility:
doesn’t typically have final approval, but they have the power to reject your proposal
They bring specialized expertise to the evaluation team and typically play different roles. Their approach is often that of skepticism.
Technical buyers care that your solution does what you say it does. Their concerns relate to the measurable and quantifiable aspects of a proposal
They’ll ask questions about the specifications implementation and expected challenges in transitioning to your solution.
Any of the previous buyer influencers can also take on the following roles
Coach (the recommender) – concerned with seeing your solution implemented
The coach desires your success. He’s convinced that your solution will help the company
Coaches typically play the user or economic buyer roles and rarely work in IT
They tend to be early adopters and thus are generally open to sharing your messages to colleagues and executives
A good coach has credibility with the other buying influencers and strong personal relationships with their peers
It’s essential to get a coach :explode:
Find those influencers and find ways to motivate them to champion your solution
The Saboteur – concerned with not losing ground
actively attempting to block a sale
saboteur is an individual or team whose job feels threatened by new software or processes
might be the business intelligence group inside IT or the CIO’s department that is currently trying to build their own solution
Saboteurs often fear losing their influence, or worse, their job :warning:
You must convince them that you’re there to help. IT people are notorious for playing the role of saboteurs — try to avoid selling to IT if you can
nerd-to-nerd selling, and it doesn’t usually work. You can get stuck in endless cycles of non-decision
Whether or not you’re able to quickly identify these buying influencers, remember that someone always plays these roles
Maybe a single person plays all roles in a small business, but those influencers can always be found
Create a Map
Coach
Economic Buyer
Technical Buyer
User Buyer
Saboteurs
The Offer
The ideal is automatization, but as a starting point you go with advice, services and accompaniments. Market education is essential. It’s typical of B2B. – Laurent Maisonnave, Seevibes Co-founder
The right way to approach preparing an offer is to position it as a partnership. Prospects help you develop the product
Trying a new technology has a cost for a business. It’s a commitment in time and resources. For businesses, the implementation costs tend to be harder to justify than the product costs. And, the bigger the company, the less likely they are to want to help
To validate a product and get case studies, you need to provide at least as much value as the businesses provides. Their investment must be quantified and matched
Your first offer will include assumptions about the pilot/product, the value proposition, the pricing, the delivery delays, the discount (if any) and the calculation of ROI. All of this will be based on hypotheses; your goal is to validate those assumptions. :check:
It is entirely possible to sell without a complete product; you can find five companies and convince them that your solution will be ready in six months if they invest
The Pilot
You need to think small, not big. Basically, your goal should be to get an initial project that gives you a chance to prove your value and establish a relationship with someone in the company
The Collateral
Reengaging prospects
What you can do today
You should spend more than ten hours preparing for a meeting with a big prospect. Call a few of his contacts to understand how he thinks and what are his biggest headaches.
chapter is about finding the core value of your product, pricing it and creating an offer that your prospects can’t refuse
Chapter 15 — Conducting Solution Interviews
Meeting organization
Problem qualification
Telling a compelling story
Solution exploration and demo
Closing
Dealing with your first purchase
What you can do today
Chapter 16 — Product-Market Fit
The Elusive Product-Market Fit
What did you learn?
Self-assessment – Do you have it?
Pivots and other aerobics
Success ratios
When to stick and when to quit
What you can do today
Why this book matters?
Chapter 1 — Introduction
When David met Goliath
What selling to businesses feels like
Lean B2B
B2B is about building relationships
Who should be reading this book
Who shouldn’t be reading this book
Chapter 2 — Where I’m Coming From
The challenges of being a Lean Startup in B2B
A half-baked B2B product shown to a few “early adopter realtors” runs the risk
Losing that potential customer forever as it would be much more difficult to get in the door again
Irreversible reputational loss in Boston (example) if the customer landscape is a tight and chatty one.
The book I would have loved to read
Chapter 3 — The nature of the B2B World
The B2B opportunity space
just need the patience and dedication to find their opportunity to enter the market
What makes B2B different
critical areas of difference b/n b2c and b2b, why businesses buy software
Return on Investment (ROI) :star:
To increase revenue;
To decrease costs;
To increase customer satisfaction
Client Relationship;
B2B client base is smaller
burning leads is not advisable
Long term relationships
Starting a consulting firm is a good idea
Decision-Making Process.
Multiple stakeholders to sel
three types of buyers
Economic
Technical
End User
Different positioning for different stakeholders
win results
Ex: Helping COO secure larger budgets from the company
Why enterprise scares us
B2B path is hard, but it is clear
Required things
Acquiring the Industry Context
Problems worth solving are typically invisible from the outside.
get inside the enterprise, understand how the company thinks and find the real problems.
Building a Relevant Professional Network
Connections are the best way to get through the door.
Understanding the Whole Product
Businesses have higher expectations (customization, integration, security, etc.). Startups need to entirely focus on what the business wants.
Building a whole product might mean adding a special security token, being compliant with an industry standard or building third-party integrations.
Estimating the Return on Investment (ROI)
Reducing the Enterprise Risk
The Consultant and the Inventor
Be a consultant first
Are you a B2B entrepreneur?
What it takes to win in B2B
Think like an insider
Understand stakeholders and their KPIs
What will get them bonus at the end of the year
never stop listening, testing and adapting
watch out for these deadly B2B sins :red_cross:
•Implementing technology that requires too much change in the company;
•Implementing technology that changes too much the way people behave or work;
•Building technology that is too difficult to use;
•Building technology that doesn’t deliver on the promise;
•Building technology that should be a feature of an established product, not a solution of its own;
•Selling technology that doesn’t have clear benefits and value;
•Selling technology that can’t avoid comparison to established players the prospects already know very well.
What you can do today
Problems
Chapter 9 — Finding Problems
Why finding problems matters
You should be looking for a big pain or a big gain that can be tied to a budget, a problem that will deliver a big ROI.
You need to find the absolute biggest opportunity for your business, not just any opportunity.
Problems that matter
three essential parts to a problem that matters
1.The problem or the pain experienced — the pain;
2.The people to whom this problem matters — the jury;
3.The prize available for solving that pain — the reward.
making a great first impression and earning references
They recall a CMO telling a tale of how she was brought to tears by her board because she was challenged to provide information on marketing ROI for which she did not have the answers.
Marketo
The pain
The earlier you are in your validation process, the more open-ended you need to be.
Solutions to explicit problems typically drive startups towards consulting while implicit problems, through more guesswork, can lead to disruptions.
For example, an explicit problem would be not having a way to track the tasks performed by your team members. Since you’re aware of the existence of this problem and find it painful, it becomes an explicit problem.
However, spending five hours every week consolidating the tasks of twenty team members can be an implicit problem. You might not realize that the same work could be done in just twenty minutes. Workarounds — like using a shared Excel spreadsheet for this task — are usually expressions of needs.
opportunities for gain often require making prospects aware of the existence of the problem, they are valuable in their own right.
can’t ask directly what customers want
best you can do is speak with a lot of early adopters, be open-minded and mindful of their realities to identify the strongest pains and the most pressing needs.
stronger the pain and the higher up in the company the pain is felt, the greater the likelihood that the problem
You’re looking for the pain of a buyer, not just the pain of any user :star:
The jury
group of stakeholders that must get involved in a complex sale.
3 Types of buyers
1.The Economic Buyer – concerned with the ROI;
2.The User Buyer – concerned with the user experience and day-today impact;
3.The Technical Buyer – concerned with the security and feasibility.
Early adopters are more likely to be user buyers or prospective coaches than to be gatekeepers (economic or technical buyers).
The reward
The first — and most important — obstacle for a startup is ‘we can do without it.’
Problems that matter have owners who have budgets and a willingness to use those budgets to remove the pain.
Companies generally prefer to invest money in acquiring new customers rather than on cost centers like HR :star:
Money is limited
Problem interviews should help understand where money is spent and who has purchasing authority
Goal
to seek biggest rewards or largest budgets available and convince the buyers
Promise of ROI :check:
Finding problems
Which problems keeps them awake at nights?
Interviews give more info
Double diamond
Problem Interviews
Discovery
Divergent
Drill down
Convergent
Solution Interviews
Exploration
Divergent
Confirmation
Convergent
It's best to plan for more interviews with a prospect than less number of interviews
Never settle for low impact problem :fire:
Assume that you know nothing. Always build from scratch.
people who focused on finding problems (problem-finders) were more successful in their creative endeavors than those who focused on solving problems (problem-solvers)
Chapter 10 — Conducting Problem Interviews
Code of conduct
interview pointers will help you organize valuable interviews
Learn to stay quiet: The best interviews are 90% listening and 10% talking. Don’t feel like you need to talk.
Have a plan: Create an interview script and stick to it. It’s okay to adjust the phrasing or add questions, but being able to compare interviews is critical
Separate target groups: Focus on one sector or market vertical at a time to get a consistent data point. For example, if you are to test the dentist vertical, ask the same questions to every dentist you meet.
Meet one prospect at a time: Your goal is to make them talk about their personal pains, not their employer’s. Keep it one-on-one.
Meet face-to-face: The best interviews are done face-to-face. Interviews through Skype or by phone are acceptable, but you will miss a lot of the emotions and opportunities.
Choose your location: If you’re uncomfortable meeting with a high-ranked prospect (it happens), get him out of his office for lunch or coffee to even the odds. A neutral location will make you feel more comfortable, but it will also make some information impossible to collect. A following interview should be in their office.
Ask open questions: Who, what, when, where, why, and how, not yes/no questions. Dig deep and avoid closed questions.
Follow emotion: Whenever you hear emotion in the person’s voice, prolong that line of conversation.
Record and take notes: You miss 50% of what’s being said during the interview if you’re taking notes. Record, take notes and re-listen to the interviews to gain new insights.
Don’t judge: Your goal is to get as much information as possible in a limited time. It’s better to have more data than less; don’t disqualify the prospect during the meeting.
Encourage complaints: Whenever the person starts complaining, listen. People are more specific with complaints than praise. Specific examples will really help you learn about the problems
Focus on actual behavior: People are not very good at predicting their own actions, knowing what they want, or knowing their true goals. Avoid what ifs. Ask about recent experiences.
Bring a partner (sometimes): A two-person team can have one person leading the interview while the other takes notes. It might make your team appear more credible and will definitely accelerate share back with the team. Any more than two interviewers typically intimidate participants.
Parrot the answers: Repeat the answers back to your prospect for further clarifications and to validate your understanding. Do this by saying, “So what you’re saying is…”
Reference “other people”: Cindy Alvarez recommends challenging your pre-existing hypotheses by referencing “other people.” For example, “I’ve heard from other people that
__
. Do you agree?” It’s easier for people to disagree with an anonymous third party than to disagree with you.
Smile: Be friendly and welcoming to make participants feel comfortable and get them to smile back.
avoid these common interviewer biases:
Confirmation bias: The tendency to search for or interpret information in a way that confirms your preconceptions. An example of a confirmation bias is seeking validation that the problem initially envisioned is significant or speaking exclusively to people who won’t contradict you. In other words, selling your original idea.
Interviewer bias: The tendency to frame questions in a way that strongly suggests an answer. An example of interviewer bias is asking front-loaded or leading questions. For example, do you think that Apple is the most innovative company in the world?
Response bias: The tendency for subjects to consciously or subconsciously give responses that they think the interviewer wants to hear. This bias is common in situations where the participant is intimidated or feels pressured to share a certain point of view with the interviewer.
A breakdown of everything you need to find out
a rule of thumb — and this depends on how talkative your prospects are
you can squeeze as few as three to five questions in a divergent interview
as many as 15-20 in a convergent interview.
Interview questions
Demographics
What are your roles and responsibilities?
Business drivers
What are your goals?
Problem priorities
What are the few problems that keep you up at night?
Why?
Problem drilldown
How are you currently solving the problem?
Technology?
Consulting?
Intensity of pain
How many people are getting affected with the problem?
Problem ownership
Decision making power
Buying process
If you identify a need for a product, how does the buying process look like?
Typical length of the buying process?
Business processes
Technology landscape
What are the 4-5 tools that you use the most during your work?
Whole product definition
Influencers
What are some people you follow?
Blog, websites you read?
Calculation of ROI
How much money was invested to solve the problem?
Early-stage problem interviews can also fail, which is a form of invalidation. Find a way to disqualify problems as quickly as possible. Starting with an extreme position is sometimes a good thing.
Meeting structure
Multiple interviews - good to interview every prospect once before digging deeper with the most receptive ones
Steps in a meeting
Qualification (three minutes)
understand the role and situation of your prospect.
Open-ended questions (20 minutes)
understand and prioritize the problems of your prospects
Closing (five minutes):
you try to close a prospect on another meeting.
Note review (ten minutes): (and without the prospect)
review your notes to make sure you’re not losing information and to be able to quickly adjust to the feedback
Greetings (two minutes)
prospect is made comfortable through context
Keep an eye on these things
Body language
Office content
Indicators of interest
Interview script
Greetings
Thank you for taking the time to meet with us.
We’re a young company helping retail marketing departments reduce their dependencies on newspapers for local customer targeting. We’re currently exploring a few product alternatives. We would like to understand your needs and reality before going too far into product development. I have roughly 20 questions for you today, none of which should be too difficult. Before we begin, I’d like to stress that we don’t have a finished product yet and our objective is to learn from you — not to sell or pitch to you.
Does that make sense?
Qualification
Try not to ask too many questions about budgets
Open ended questions
Closing
to get another meeting to validate your understanding of the problem
to grow your network of early adopters by asking for five contacts that share this problem. This is how you will get references moving forward.
I want you on my advisory board so I can learn how to build a product you will buy. We both fail if I can’t.
A new meeting to explore the problem further or to show the outcome of the meeting
Referrals to confirm the existence of the market and have more discussions with prospects
Note review
note of your impressions and ideas while they’re fresh and highlight the noteworthy themes that came out
Practice Makes Perfect
Do
•Sustain the interest of your prospect?
•Make your prospect talk and dig deep into their problems?
•Direct the discussion without controlling it?
•Abstain from selling a vision or trying to convince your prospect?
•Steer clear of confirmation, interviewer or response biases?
•Learn about the problems and situation of your prospect?
•Leave the prospect with a positive feeling?
•Earn references?
What you can do today
Setting the right context to the interview is paramount.
Dont sell now :red_cross:
the customer does most of the talking and you don’t have to know all the answers.
Chapter 11 — Analyzing the Results
Taking a step back
Don't start thinking about solutions immediately
You’re looking for the bigger picture and the underlying trends
This might mean only listening to some of your prospects.
As an early assessment, ask yourself:
•Did you take a step forward?
•Did you learn?
•Did you enjoy spending time with the people you met?
•Would you like to work with those people again?
•Were there noticeable differences in the profiles of your prospects?
•Do you feel like you can help those prospects?
•Were you able to speak with decision makers?
Removing extreme values
Not only do you need to make sure you get your data from people that fit similar profiles, you also need to avoid being pigeonholed with early adopters.
You need to keep your eyes on the big(ger) prize: the early and late majorities.
The fact is that when you’re talking to one customer it’s very easy to fall prey to their specific needs that may not be representative of the whole market. :red_cross:
Looking at the data you collected, were some of your early adopters completely different from the majority? Were there early adopters that worked in completely different ways or had access to budgets or resources that others did not?
Scoring problems
How do you identify the problems that matter most?
five ways to score (prioritize) problems:
By frequency
Is that pain shared by a lot of early adopters?
Knowing that a problem is frequent is good information, but it is of limited value. It says nothing about whether people would buy a solution to the problem.
If you were to solve this problem, how easy would it be to meet new prospects?
By intensity of pain
Is this a painful problem? Are prospects actively trying to solve it?
If the problem is real, people are dealing with it somehow. Maybe they’re doing something manually, because they don’t have a better way. The current solution, whatever it is, will be your biggest competitor at first, because it’s the path of least resistance for people.
We can tell that a problem is painful if:
The same person repeats it frequently with passion during the interview
The company is actively trying to solve the problem or has assigned a budget to solve the problem
The problem is frequently listed in the top five of your early adopters. If it’s not part of the top five, it may be too far ahead of the market.
Problems that are not mission-critical lead to nice-to-have solutions and are harder to buy into.
By budget availability
Is this the pain of a buyer? Have budgets already been assigned?
Stay close to the money :check:
The training stuff (that we were working on) was a cost center. People just said… we don’t have a budget for that, but we do have all these marketing problems. We had to be closer to the money.
For each problem fill out the following details
Budget Owner
Problem Parts Broken Down
Problem
Budget
By impact
What kind of ROI can you expect if you solve this problem? What impact will it have on the organization?
Reduce costs or improves end users satisfaction
Solutions that can generate a high ROI have the most impact
solutions that can make an economic buyer or someone influential look good or reach their annual objectives are the easiest to sell :fire:
For each problem identified fill the following
Expected ROI
People who would benefit
Problem
Moving forward, only problems for which your team can deliver ROI matter
By market education
Is there competition? Would you need to create a completely new paradigm?
markets are rarely dominated by first-movers
Your objective is to solve a big pain and deliver a big gain.
Drawing a line in the sand
choosing a problem to solve is one of the most vital decisions your startup will make :check:
Be mindful that intuition and passion should also play a role. Your team is a critical part of your business’s success.
What you can do today
only problems that matter are the ones you can solve.
You should go through problem interviews until opportunities start to appear and you stop learning, not until you’ve interviewed a certain number of prospects.
Sometimes, with a varied set of profiles it can take up to 40 interviews before seeing any patterns emerge. Other times, when the profiles are very similar, it takes only 12. In general, plan for 20 to 30 problem interviews. :star:
Don’t rush the interview process. You’re doing yourself a disfavor if you’re not being honest with yourself. Collect more data than needed and wait for the patterns to emerge.
Speed
Chapter 17 — Common Challenges
Being everything
Pet problems
The curse of “interesting”
Postponed usage
Long sales cycles
Insufficient credibility
Gatekeepers and Saboteurs
Soft value propositions
Committed budgets
Insufficient coaching influence
Death by process
Chapter Summary
Chapter 18 — Speeding up Product-Market Validation
Finding the watering hole
Moving in with customers
Setting up a customer development panel
Recruiting key staff and advisors
If you’re an expert or have one on your team
you’ll gain ground much faster than startups founded by people who are complete outsiders to the market they’re trying to capture
always be asking yourself: Who in the industry already has the knowledge you seek?
Who can you recruit as partner, advisor or employee that could help speed up P-M validation?
the right partners, advisors or employees — that will help you save an incredible amount of time
If your company is well rounded with staff and advisors from the industry, you will be perceived as an insider
Using other sales staff to gain a competitive edge
Starting with a free version
Multi-tracking the validation process
Chapter Summary
What you can do today
Chapter 19 — Conclusion
What the rapid validation framework won’t do
The real benefits of the Lean B2B methodology
Remaining humble to avoid pain.