Month: May 2012

So we want to ask customers if they’ll pay for Bounce before we build it, but first we need to figure out who they are.

Step 1 – What problem do we solve?

Since people don’t buy products, they buy solutions to problems, we started by identifying the problem we solve:

Being late is stressful. Bounce eliminates that stress by making it easy to be on time.

Step 2 – Who has the problem we’re solving?

Anyone who doesn’t like being late.

Step 3 – How will we tell people with this problem about our solution?

Hmm…now we’ve got a problem.

No one identifies with the customer segment we’ve called out here.  No one joins the, “People who don’t like being late” group on LinkedIn.  No one reads ThePunctualityBlog.com.  As we learned with OnCompare, if there’s no way for us to interact with these people, they’re not a customer segment.

Step 2 (again) – Who has the problem we’re solving?

Who has lots of meetings outside their office as part of their job?
Real Estate agents, sales people, event planners, founders, general contractors, etc.

What kind of companies “sell” being on time? 
Florists, caterers, utility installers/repairers, plumbers, electricians, etc.

Who is routinely affected by bad traffic?
Long distance commuters, van pools, people who commute over a bridge, etc.

Who really wants to be on time for their personal life? 
Single people who are dating, busy parents, the “chronically late”.

Who is unfamiliar with the local traffic patterns? 
Business travelers, people who have just moved to an area.

Step 3 – How will we tell people with this problem about our solution?

Almost all of the customers above self-organize into groups.  Either actual LinkedIn, Meetup or trade groups, or they’ve formed ad hoc communities on blogs or forums.  Or perhaps, they have a common set of suppliers, or they advertise in the same set of magazines. For example:

• Real Estate Agents – LinkedIn, meetup, trade group, blogs and forums
• Florists – trade groups, all interact with FTD, all interact with wedding planners
• Bridge commuters – listen to the radio, subscribe to traffic twitter feeds, download traffic apps
• People who have just moved to an area – read hyperlocal blogs, new college students read college newspapers

Etc.

Step 4 – Identify the Influencers

Now that we know the groups our customers hang out in, we need to identify the influencers of those groups.  For blogs that means finding the authors, for meetup and linked in groups it’s finding the moderators, if we need press it’s finding the person who is going to write our story, etc.

Of course, we need more than their name, we need at least their email address. To find that info for every one of our influencers requires hours and hours of tedious net-scouring, and to be perfectly honest, I hate don’t enjoy it.

Luckily, my friend Marcos Polanco introduced me to oDesk – a fantastic resource for internet research.  The idea is simple, pay someone else $5/hr to do the tedious work.  I write up detailed instructions on how to find someone’s email address including things like:

• Do google searches for:
  • [email protected]
  • [email protected]
  • [email protected]
• Use www.Jigsaw.com (which is good advice for everyone, btw)

And then I tell them to “Find the contact info of the top 5 hyperlocal bloggers in each of these cities: Los Angeles, New York, Chicago, San Francisco and Seattle.”

5 hours, and $25 later, I’ve got 25 email address.  So much better than me doing it myself.

Step 5 – Provide Value

Now that we’ve got our influencers’ contact information, it’s time to reach out.  Of course sending a, “You should tell your group about my awesome product!” email isn’t going to work.  If we’re going to get anywhere with influencers, we need to provide them and their group value.

Hey [local blogger name],

I saw your article on how awful traffic is getting in Chicago [link to article].  A friend and I are launching a Kickstarter project [link] to build an app that makes getting around Chicago easier – despite worsening traffic.

Think [blog name] readers would be interested in something like that?”

When I’ve done this before I’ve pitched the actual product, not a Kickstarter project to fund the product, so I’m not sure what kind of reaction we’ll get. Either way, we’ll use FollowUpThen to bug them about it at least one more time. ;)

To Recap

Those are the 5 steps we’re using to identify, segment and contact our customers:

1. What problem are we solving?
2. Who has that problem?
3. How will we tell people with this problem about our solution?
4. Identify influencers
5. Provide value

I’ll keep you posted on how it works out. In the meantime, alterations or alternatives to this approach are welcome.

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The scenario:

1. I want to get some feedback from a potential customer
2. I find their contact information
3. Send a succinct, but personalized, email asking to chat or meet up
4. Crickets

What now? Well, if I even remember that I emailed them (unlikely) I could chalk it up as, “I’m not providing enough value for them to talk to me.” But what if this person, like me, is busy, forgetful, or both? Worth following up one more time, right?

Enter FollowUpThen, as proselytized by my good friend Rishi Shah at Flying Cart.

1. It’s free
2. It’s easy
3. It sends you a reminder to follow up with your customer if she didn’t get back to you

Now I send customer emails and bcc [email protected].  If my customer doesn’t get back to me before then, FollowUpThen will remind me to get back to them.

PS – It’s like a free version of Boomerang, which is what I searched for to find it.

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There were few things in my startup experience as uncomfortable as asking a potential customer how much they’d pay for an idea I’d become emotionally vested in.  That discomfort inspired a number of excuses for not asking:

• They’ll think I only care about money/that I’m greedy.
• It doesn’t matter what they say, it won’t be accurate anyway (customers don’t know what they’ll pay).
• What if they say “nothing”?

So instead I would ask questions like:

• What do you think about…?
• Would you use…?
• I’d love to get your feedback on…?

While those questions provide interesting responses, there’s something special about, “How much would you pay for…?” – it uniquely triggers the “what would it take to open my wallet/write you a check” area of the brain that no other question does.  I’ve found no other question to be as enlightening as this one.

So, after recognizing the value of the question, here’s how a typical conversation goes about Bounce.

Me: It’s an app that makes it easy to be on time.  It knows exactly how long it’ll take to get to your next calendar appointment, taking into account the current traffic conditions, and notifies just before it’s time to leave.

Customer: Oh, cool!  I’d could use that.

Me: Sweet!  How much would you pay for it?

Customer: Oh, hmm.  I dunno, $0.99?

Me:  Would you pay $0.99/month for it?

Customer: Nah, I don’t like paying monthly for things.

Me: Makes sense.  If you could choose in the app to pay $.99/month or $6.99 forever, would you pay $6.99?

Customer: Hmm.  Yeah, if it worked.  But I’d want to try it first.

Me: What if you had a month free and if after that, if it worked as you expected, would you pay $6.99?

Customer: Yeah.

This conversation has happened a dozen times and taught me a number of things:

• Anchor pricing works
• That half the people I talk to hate the idea of paying monthly for something
• The other half of the people I talk to think about $0.99/month the same way they think about $0.99 forever – it’s just not enough to worry about

While I’m not totally convinced folks will pay $6.99 for the app, I am convinced they’ll pay something.  To figure out how much, we’ll be running our Kickstarter test.

Contrast the conversation above with one about another app I built:

Me: It helps long distance couples stay connected…by letting the guy remotely control his girl’s “personal massager” from anywhere in the world.

Customer: Ha!  That’s awesome, I’m actually in a long distance relationships now.

Me: Oh, yeah? How much would you pay for it?

Customer: Me? Ah, nothing.  We don’t do that kind of thing.

Almost everyone recognized the “value” of the app, but almost no one I talked to would actually pay for it.

Conclusion: growing a pair, distancing myself emotionally from my idea, and asking, “How much would you pay for…?” has dramatically improved the quality of information I have about products before I start building them.

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What’s the difference between asking a customer, “Would you pay for a product that…” and “Would you like a copy of your receipt?”

Everything.

I’m a fan of customer development.  Asking a customer, “Would you pay for this?” before we waste time building, can be a huge win.  But is “would you pay” the best we can do?

What if we asked, “Will you pay for this?  Now. Before we start coding.”

What if we only solved problems that customers demanded we solved as they were shoving money in our faces?

• Security. No more guessing/praying whether companies would be successful.  They would be, and would have the cash to prove it.
• Money. Fundraising?!  Spending months of your life giving away a piece of your company? Pass.
• Happiness. The hard part would be done, all that’s left is the good stuff – building things to solve problems.

Lucky us, there’s a way to make this happen.

Today, Kickstarter is used mostly by artists or folks with physical goods that need to be mass-produced.  But what if we used Kickstater for the Customer Development of our startups? What if we ran a Kickstarter campaign and asked our customers,

Do you want  _______ so badly, you’ll pay for it to be built?

If the answer is yes, fantastic! We’re solving a problem people care enough about that they’ll pay to solve. The project gets funded, and we start development.

If the answer is no, fantastic!  We don’t waste our time solving a problem customers won’t pay to solve.

This is the first experiment of Customer Development Labs:

Can Kickstarter determine if an iPhone app is worth building?

More about how we’ll run the experiment soon, but for now – what’s been your favorite Kickstarter campaign so far? A couple of ours:

• This guy sells “the why” like nobody I’ve ever seen
• Kickstarter can get you into YC
• Duh (Pebble).  Our muse.

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