3 Equations & 3 Unknowns: Customers, Features, Message

Written by Sean Murphy. Posted in 3 Early Customer Stage, Customer Development, Demos, skmurphy

We posted the interview I did with Floyd Tucker of DreamSimplicity about a month ago but in the last two days I have had two people comment to me directly and one tweet about my “three equations and three unknowns” answer:

@dorait Sean: Startups are trying to solve 3 equations with three unknowns – http://bit.ly/dq7Sqd

Here is the relevant excerpt from the transcript:

FLOYD TUCKER:  [...] Can you tell me a little bit about the early customer stage?

SEAN MURPHY: We just spend a lot of time on this.  It’s a very different sales style than you’ll see later on.  It’s a conversational sales style.  It’s much more about understanding the problem.

You’re trying to solve three equations, three unknowns:

  1. Are you talking to the right people?
  2. Do you have the right features?
  3. Do those features translate into benefits that are going to be useful to them?

Here are three strategies that founders often use to answer these three interrelated questions, the likely results that ensue, and how we help them make key adjustments to get early customers and early revenue.

Current Strategy: Demo the product to anyone who will sit still. And by demo I mean explain how the product works.

  • Likely Result: On a statistical basis you may ultimately encounter a visionary customer who can intuit the benefits and determine that it’s worth the risk to work with you. One symptom we often see for this is that we ask a team how they have found their customers and they say that the customers have found them.
  • Our Fix: This is also why we are huge fans of Peter Cohan’s “Great Demo” methodology (see Great Demo Workshop Sept-15 2010) because he addresses the need to talk to the right target about a problem they are interested in solving in a way that they understand by stressing a few key features.

Current Strategy: Talk to a number of  target customers, compile a large wish list of features, return to BatCave and start work on a one year roadmap.

  • Likely Result: The one year roadmap  takes much longer than anticipated. But the founders don’t leave the BatCave until they are within two weeks to two months  of running out of money.
  • Our Fix: Trim the feature set to a minimum set that firms will pay for. Possibly offer consulting mixed with product licensing to enable engagement with an immature product to address cash flow issues. Get out of the BatCave for further conversations to discover and validate potential customers an ongoing basis.

Current Strategy: Talk to a number of target customers  about a challenge they face (e.g. saving money, increasing productivity, reducing certain kinds of errors).

  • Likely Result: When the prospect agrees that they have the need be unable to explain specific features that can actually achieve it, or be unable to explain how the particular person you are talking to would be accomplished in particular for the person you are talking to. This is the GEICO “Would you like to save money on your car insurance?” pitch without the ability to offer a quote specific to their car, driving record, and other relevant particulars.
  • Our Fix: Focus very specifically on what your product capabilities mean for who you should talk to and how it will make a measurable difference in a problem or challenge they are willing to spend money to address. Adjust your target and connect the dots very quickly and specifically to the benefit. This is component of compelling demos is also covered in Peter’s workshop.

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Comments (2)

  • Brian Gladstein

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    The concept of “three equations, three unknowns” is dead on. We’ve actually developed a methodology for solving this called the Market Sprint. It uses elements from all these strategies in an orderly, highly iterative way to converge on the right combination of pain point, features, and message to drive a go-to-market strategy.

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