1. NSF I- Corps
The Lean LaunchPad
Lecture 3
Customer Segments
Who Are Your Customers?
What Job Do They Want You to Do?
6/22/12

2. Customer Segments
Who Are They?
Why Would They Buy?

3. © 2012 Steve Blank

4. Product/Market
Fit

5. The Value Proposition
Gain Creators
Products
&Services
MVP
Pain Killers

6. Pain = Customer Problem
Gain = Customer Solution

7. The Customer Segment
Gains
Persona
• Jobs
/Archetyp
• Problem
or Need e
Pains
Market Type

8. Gain
Creators
Gains
Product
s MVP Persona
• Jobs
/Archetyp
&Servic • Proble
m or e
es
Need
Pain Pains
Killers
Product/Market
Fit

9. Jobs to Be Done
Problems/Needs
What is the customer segment trying to get done?
Is it a problem or a need?

10. Customer Segments – Jobs/Needs
• What functional or social jobs are getting done?
– (e.g. perform or complete a specific task, solve a specific problem or trying
to look good, gain power or status, ...)
• What emotional jobs?
– (e.g. esthetics, feel good, security, ...)
• What basic needs are you helping your customer satisfy?
– (e.g. entertainment, communication, sex, ...)

11. Buyer/Co-Creator/Transferor
• Are they a buyers
– (e.g. comparing offers, deciding, buying, taking delivery of a product or
service, ...)
• Are they co-creators
– (e.g. co-designing with solution providers, contributing value to the
solution, ...)
• Are they transferors'
– (how customers dispose of a product, transfer it to others, or resell, ...)

12. Customer Segment Jobs - Rank
• Rank each job according to its significance to the
customer.
• Is it crucial or is it trivial?
• For each job indicate the frequency at which it occurs.
• Outline in which specific context a job is done, because
that may impose constraints or limitations
– (e.g. while driving, outside, ...)

13. Customer Pains
undesired costs and situations, risks, negative
emotions

14. Customer Segments – Pains
• What do your customers find too costly?
– (e.g. takes a lot of time, costs too much, requires substantial efforts, ...)
• How are current solutions underperforming?
– (e.g. lack of features, performance, malfunctioning, ...)
• What are the customers main difficulties and challenges?
– (difficulties getting things done, resistance, ...)
• What’s keeping your customer awake at night?
– (e.g. big issues, concerns, worries, ...)

15. Customer Segments – Pains
• What barriers are keeping customers from adopting?
– (e.g. upfront investment costs, learning curve, resistance to change, ...)
• What makes your customers feel bad?
– (e.g. frustrations, annoyances, things that give them a headache, ...)
• What risks do customers fear?
– (e.g. financial, social, technical risks, or what could go awfully wrong, ...

16. Customer Gains
benefits the customer expects, desires or is
surprised by. includes functional utility, social
gains, positive emotions, and cost savings

17. Customer Segments – Gains
• Which savings would make your customer happy?
– (e.g. in terms of time, money and effort, ...)
• What outcomes do they expect and what would go beyond
their expectations?
– (e.g. quality level, more of something, less of something, ...)
• How do current solutions delight your customer?
– (e.g. specific features, performance, quality, ...)
• What would make your customer’s job or life easier?
– (e.g. flatter learning curve, more services, lower cost of ownership, ...)

18. Customer Segments – Gains
• What positive social consequences do they desire?
– (e.g. makes them look good, increase in power, status, ...)
• What are customers looking for?
– (e.g. good design, guarantees, specific or more features, ...)
• What do customers dream about?
– (e.g. big achievements, big reliefs, ...)
• How does your customer measure success and failure?
– (e.g. performance, cost, ...)
• What would increase the likelihood of adopting a solution?
– (e.g. lower cost, less investments, lower risk, better quality, performance,
design, ...)

19. Customer Persona/Archetype

20. Define Customer Archetype/Persona
• Who are they?
– Position / title / age / sex / role
• How do they buy?
– Discretionary budget (name of budget and amount)
• What matters to them?
– What motivates them?
• Who influences them?
– What do they read/who do they listen to?
• Draw a Day in the Life of the customer

21. Market Type

22. Type of Market Changes Everything
Existing Resegmented New Clone
Market Market Market Market

23. Type of Market
Changes Everything
Existing Resegmented New Clone
Market Market Market Market
• Market • Sales •Customers
– Market Size – Sales Model
•Customers
• Needs
– Cost of Entry • Needs
– Margins • Adoption
– Launch Type • Adoption
– Sales Cycle
– Competitive – Chasm Width •Finance
Barriers •Finance Capital
• Ongoing
– Positioning • Ongoing Capital
• Time to Profitability
• Time to Profitability

24. Definitions: Four Types of Markets
Existing Resegmented New Clone
Market Market Market Market
• Existing Market
– Faster/Better = High end
• Resegmented Market
– Niche = marketing/branding driven
– Cheaper = low end
• New Market
– Cheaper/good enough can create a new class of
product/customer
– Innovative/never existed before
• Clone Market
• Local adaptation

25. Market Type
Existing Resegmented New Clone
Customers Known Possibly Known Unknown Possibly
Known
Customer Performance Better fit Transform- Local version
Needs ational
improvement
Competitors Many Many if wrong, None None
few if right
Risk Lack of Market and Evangelism Misjudge
branding, sales product re- and education local needs
and definition cycle
distribution
ecosystem
Examples Google Southwest
Market Type determines: Groupon Baidu
 Rate of customer adoption
 Sales and Marketing strategies
 Cash requirements

26. Market Type - Existing
• Incumbents exist, customers can name the mkt
• Customers want/need better performance
• Usually technology driven
• Positioning driven by product and how much value
customers place on its features
• Risks:
– Incumbents will defend their turf
– Network effects of incumbent
– Continuing innovation

27. Market Type – ResementingExisting
• Low cost provider (Southwest)
• Unique niche via positioning (Whole Foods)
• What factors can:
– you eliminate that your industry has long competed on?
– Be reduced well below the industry’s standard?
– should be raised well above the industry’s standard?
– be created that the industry has never offered? (blue ocean)

28. Market Type – New
• Customers don’t exist today
• How will they find out about you?
• How will they become aware of their need?
• How do you know the market size is compelling?
• Which factors should be created that the industry has
never offered? (blue ocean)

29. Market Type – Clone
• Takes foreign business model and adapts it to local
conditions
– Language
– Culture
– Import restrictions
– Local control/ownership
• Need market large enough >100 million

30. Other Thoughts

31. Who’s the Customer?
• User?
• Influencer?
• Recommender?
• Decision Maker?
• Economic Buyer?
• Saboteur?
• Archetypes for each?

32. Pass/Fail Signals & Experiments
• How do you test interest?
• Where do you test interest?
• What kind of experiments can you run?
• How many do you test?

33. Multi-Sided Markets
Business to Business to Consumer
(B to B to C)

34. Who’s The Customer?
• Consumer End Users, Corporate Customers
Pay
• Multiple Consumers
• Etc.

35. Multiple Customer Segments
• Each has its own Value Proposition
• Each has its own Revenue Stream
• One segment cannot exist without the other
• Which one do you start with?

36. Customer Segment Examples

37. Meet Xing Xie
International Graduate Student at Stanford
• Engineering graduate student
– Receives financial package to cover tuition,
fees, insurance and living expenses
Xing Art
• Chinese 4-2-1 family
– No siblings, spoiled by parents
– High disposable income
• 1st time to America
– No credit score, SSN, or US address
– Strong ties to his community in China
• Academically responsible
– Completes all homework on time
• Financially responsible
– Pays all bills on time and in full
• Social network is similarly responsible

38. Results:
Our Customers
• Professional Kite Surfers
• Solely concerned with performance
• Average Kite Surfer
• Performance and cost sensitive
• “One less thing to carry” effect
• Prospective Kite Surfer
• Cost sensitive
• Learning barrier

39. Customer Archetype:
Joe “Dude” Marrama
• Loves to ski, surf, rock climb
• Salary ~100K/year
• Looking for something to do
when the surf’s blown out
• Intimidated by cost and learning
curve of kiting
“Companies need to offer more entry level
packages."
Matt Sexton
Founder Collegiate Kiteboarding Association

40. ™
Customer Workflow
Phase I: Phase II: Phase III: Phase IV:
Design Prototyping Manufacturing Final Product
6-8 weeks 3-4 weeks 8-12 weeks 3-4 weeks
5/23/2012 40

41. IT The
Gov’t
subsidi Water Ecosystem
es systems
Nutrient
manageme
nt
Planting/tilling/harvest Heavy
Farmers equipmen
t
Hungry
folks or Seed
cars banks,
Ag-Bio
Regulato
ry fees $$
Mitigate fines

42. CustomerSegments
• Commercial Institutions:
– Primary Market
– $1.4B (Globally)
– License and Revenue
sharing agreements
• Academic Labs:
– Secondary Market
– Increase Visibility of Tech
– $140 M (North America)
– Product Sales

43. The Problem
Missing out
Lonely Left aside
Disconnected
Frustrated
Multitasking
I’m busy
Living different lives
Send each other things Laugh less
through email/text
Planning the next visit
Many short call Everything is an effort
throughout day Post-poning couple time
Don’t communicate trivial things

44. Design Arka
Sources and Heat Exchanger
Technical Lights Manufacturer
Experts
Division?
Partnership?
Market
Market
…

45. Determining our customers
Oncologist Pathologist
Patient management Sample management
• Oncologists decide • Pathologists perform in-
what tests to order, house tests and
when, and how often facilitate contracts with
service providers
• Primary customer • Less important
45
45

46. Use and Payment Model (Hospital)
Hospital
Oncologists
Patient
$ Hospital
CROs Pathology HMO
2 $
Lab
Decider
1 $ Influence
r
$ Buyer /
CanScan Payer
Class 3 - Update 2.6.2012

47. Reimbursement Model
3
Private
CMS
3 payer/MAC
4 2
Hospital / Clinic 2
Lab Advisory
Oncologists ASCO /
Committee 2
NCCN
1
5 CanScan
1 Generate physician
1
2 interest lobbies
Physician
3 payer/hospital reimburses
Regional payer
Influence
4 National CMS coverage Payment
5 decided reimburses
Hospital Sets rate
CanScan Class 4 - Update 2.13.2012

48. Health insurance reimbursement is a necessary
precondition for hospitals to use our service
Private insurance or Medicare reimbursement requires:
Evidence of
• Double-blinded, placebo controlled clinical trial with
several hundred participants will be needed
Clinical Utility
− Must demonstrate the detection is accurate and repeatable
− Must demonstrate improved decision-making ability for
physician linked to better patient outcomes
Assignment of
• Codes are assigned by the AMA (CPT code) and CMS
(HCPCS code) semi-annually with editorial panel approval
a Billing Code
(12-18 mo)
− CanScan’s likely coding: HCPCS Level II or CPT category
III*
− VeridexCellSearch received code in Nov. 2011 for CTCs
− CanScan will likley need new code (non-immunologic)
* Coding used for non-FDA approved service billed by suppliers other than
physicians
Class 4 - Update 2.13.2012

49. What We Found: Patient Care Flow
Electronic Partners/
Health Fluid Synchrony
OEMS
Records
Electroni
Support Pump + Bundled
c
ServicesControlle Kits
Actionable feedback Records r
to doctors/institutions
E-prescription / closing loop
Surgery/Rx/
Patient
Discharged reprogrammin
g Hospitals
(Anesthesiologists
Neurosurgeons)
Trial period/
Scheduled
Home
follow-up
setting
- Process shortened to days
- Improves outcomes

50. What We Found: Value Chain
Patients
CPT reimbursement
Pump $13,305 Pay for coverage
Service provided
Surgical Kit $2887
Refill Kit $200
Hospitals /
Fluid Synchrony Insurance
Clinics
Product Hospital
purchase Reimbursement
50

51. Position in Value Chain
OmegaChem

52. Value Proposition, Customer Segments:
Results
Surfactants: new market ($24bn)
Monomer Monomer
manufacturer “Have you manufacturer
considered
surfactants
Polymer space?”
formulator Polymer Surfactant
- DSM formulator Formulator
Polymer Polymer Surfactant
user user user
Consumer facing Consumer facing
company company
Consumer Consumer

53. Product and Payment Flows
$250
$200 Year
unit
Cosmetics Department
Contract
Manufacturer
MySkin Tech Firm or Spas / Stores
Salons orSales
Reps Increased
$500 - $1K Sales
unit
Consumer
MySkinTone Product Money Cosmetics Cosmetic Money
• B2B2C customer relationship
• MySkin Technology customer are also strategic partners
• Instrument is simple and inexpensive enough for broad deployment
53

54. Sourcing for Expanded Product Offering
Electronic
Health Fluid Synchrony OEMS
Records
Electroni
Support Pump + Bundled
c
ServicesControlle Kits
Records r
Hospitals
(Anesthesiologists
Patients Neurosurgeons)
Pain Clinic
(Anesthesiologists
Neurosurgeons)
54