In the startup marketing series, Nathan will address some of the key brand and marketing challenges that startups face as they discover scalable and repeatable business models. The purpose of the series is to help startups with customer development by demonstrating how integral brand identity and marketing are to the business model. Follow the entire series on the MaRS Commons website.
In my last segment, I outlined how startups can build strong brand identities aligned with customer development. For this segment, I turn my focus to the customer and how startups can use customer development processes to define their customers.
Customer segments and the value propositions delivered to them are arguably the most important part of a startup’s business model. After all, without customers who are we delivering value to?
To understand their customers, startups needs to define:
Let’s start with “customer jobs.” Understanding the customer’s jobs (or the customer’s needs to be satisfied) is critical throughout a startup’s life. No one explains this better than Clayton Christensen, the author of The Innovator’s Dilemma and the foremost theorist on disruptive innovation. In this video, Clayton describes his theory of customer jobs.
He asserts that it is not an individual’s personal traits or demographics that “cause” him or her to buy a product or service, rather it is the jobs that he or she needs to get done.
Customer pains and gains
The customer also has pains and gains that need to be addressed. Customer pains are the negative emotions, the undesired costs and situations, and the risks that the customer experiences before, during and after getting the job done. Customer gains are the benefits the customer expects, desires or would be surprised by from a product.
Before starting to solve these pains and gains, startups need to conduct customer development to test their value proposition hypotheses with actual customers in the hope of turning facts into insights. To start, I recommend building a Value Proposition Canvas using Alexander Osterwalder’s methodology and testing it using Steve Blank’s “testing your minimum viable product” methodology.
During testing, you’ll be able to start building what is called a “customer archetype.” According to Steve Blank, customer archetypes are “detailed descriptions of customer traits, including hard and soft customer data to form a descriptive profile and an entire story about a typical type or group of the company’s customer(s).” Building this customer archetype allows a startup to better target products or services through the value proposition.
By the end of the process startups should be able to clearly articulate things like: “We believe that most of our customers are age 35 to 45, and are tech-savvy young urban professionals who use Macs and spend two hours a day on Facebook.” Or: “Twenty-five percent of our customers read The Globe and Mail. This will impact how we target them through marketing.”
Once you have a thorough customer archetype and value proposition, it’s time to start developing key messaging hypotheses to test. To do so, you’re going to need a clear and compelling message that tells customers why your product or service is different and worth buying. I recommend using Crossing the Chasm author Geoffrey Moore’s product positioning exercise shown below.
Product positioning template
After the exercise, you should be able to write a series of clear and compelling selling statements that will grab customers’ hearts and wallets. Remember to test and retest your customer archetype until it is validated.
In my next segment, I’ll discuss how you can use your marketing message(s) and various paid and earned (“free”) forms of media to get, keep and grow target customers through a proper go-to-market execution plan. I’ll also discuss what metrics to measure and how and why they are important. Enjoy the journey!
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