lecture 5 customer relationships 120411
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The Lean LaunchPad
Lecture 5: Customer Relationships
Steve Blank
Jon Feiber
John Burke
Ann Miura-Ko
Jerry Engel
Jim Hornthal
Oren Jacob
2images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
CUSTOMER RELATIONSHIPS
what relationships are you establishing with each segment? personal? automated? acquisitive?
Retentive??
We Call Customer Relationships Demand Creation
• Get, Keep and Grow• How will customers hear about your product?• How much will it cost to acquire a customer using these
strategies?• How does market type impact my demand creation strategy?
Customer Relationship Definition
Get
Keep
Grow
6
Get Customers
Who needs to hear about you?
Suppliers
Channels
Government
Partners
End User
Influencer / Recommender
Economic Buyer
Decision Maker
Demand Creation Getting Free Users
• Search Engine Optimization (SEO)• Blogging / Sharable content• Social Media / Gaming Mechanics• Communities• Proven viral coefficient >1
Demand Creation
Demand Creation Paying For Users
Public Relations
Demand Capture SEM “Free” products (e.g. widgets) Biz Dev Affiliate Marketing
Market Education Webinars Email marketing Trade Shows Analyst Reports Direct Sales TV / Radio
Demand
Creation
Aw
aren
ess
Co
nsi
der
atio
n
Inte
rest
Pu
rch
ase
“Get Customers” Funnel
Get Customers Funnel - Physical
Demand Creation Feeds the Sales Funnel
PayingCustomers
$
Demand
Creation Acquisition
12
Keep Customers
Aw
aren
ess C
on
sid
erat
io
n
Inte
res
t
Pu
rch
ase
Earned and Paid
Media Get Customers
Keep Customers
Customer check-in calls
Customer satisfaction survey
product updates
Loyalty Programs
Keep Customers Funnel - Physical
14
Grow Customers
Aw
aren
ess
Co
nsi
der
atio
n
Inte
rest
Pu
rch
ase
Earned and Paid Media
Get Customers
Keep Customers
Customer check-in calls
customer satisfaction survey
product updates Loyalty Programs
Grow Customers
Referrals
Un
-B
un
dlin
g
Up
-Se
ll
Cro
ss-sell
Grow Customers Funnel - Physical
16
Get Customers
“Get Customers” Funnel
Acq
uir
e
Act
ivat
eViral Loop
Get Customers Funnel – Web/Mobile
Earned and Paid Media
“Get Customers” FunnelPR
SEO
Advertising
Blogs/Website
Tradeshows
Acq
uir
e
Act
ivat
e
Viral Mktg
SEM/PPC
Affiliate Mktg
Viral Loop
Demand Creation Feeds the Sales Funnel
19
Keep Customers
Contests,eventsBlogs,
RSS, emails
Product updates Affiliate Programs
“Get Customers”A
cqu
ire
Act
ivat
e
Viral Loop
Earned and Paid
Media
Loyalty Programs
Keep Customers
Keep Customers Funnel - Web/Mobile
21
Grow Customers
Keep Customers
Contests,events
Blogs, RSS,
emails
product updates Affiliate Programs
Grow CustomersN
ext-Sell
Referrals
Up
-Se
ll
Cro
ss-sell
Loyalty Programs
Acq
uir
e
Viral Loop
Earned and Paid
Media
Act
ivat
e
Grow Customers Funnel - Web/Mobile
• How many come through the first step?
• How much does that cost?• What is the conversion between
each level?• How much in revenues can you
get out of each acquired customer?
Demand Creation by Market Type
• Create, drive demand into your sales channelExisting
Resegmented
New
• Educate the market about what’s changed
• Drive demand into channel
• Educate the market• Identify/drive early adopters into your
sales channels
Clone • Copy a business
Market Type
Existing Resegmented New
Customers Known Possibly Known Unknown
Customer Needs Performance Better fit Transformational improvement
Competitors Many Many if wrong, few if right
None
Risk Lack of branding, sales and distribution ecosystem
Market and product re-definition
Evangelism and education cycle
Examples Google Southwest Groupon
Market Type determines: Rate of customer adoption
Sales and Marketing strategies Cash requirements
How does market type influence demand creation?
Team Deliverable by Next Week - Web
Get a working web site and analytics up and running– Track where your visitors are coming from (marketing campaign, search
engine, etc.) and how their behavior differs – What were your hypotheses about your web site results?
• Actually engage in “search engine marketing” (SEM)• Spend $20 as a team to test customer acquisition cost.
• Ask your users to take action, such as signing up for a newsletter.• Use Google Analytics to measure the success of your campaigning.• Change messaging on site during the block to get costs lower, team that
gets the lowest delta costs wins.• If you assume virality
• show viral propagation of your product and the improvement of your viral coefficient over several experiments
• What is your assumed customer lifetime value? • Are there any proxy companies that would suggest that
this is a reasonable number?
Team Deliverable by Next Week
• For non-web teams:• Get prototype demo working.• Build demand creation budget and forecast.• What is your customer acquisition cost?• Did anything change about Value Proposition or Customers/Users?• What is your customer lifetime value? Channel incentives – does your
product or proposition extend or replace existing revenue for the channel?• What is the “cost” of your channel, and it’s efficiency vs. your selling price?
• Everyone: Update you blog/wiki/journal• What kind of initial feedback did you receive from your users?• What are the entry barriers?• Present and explain your marketing campaign. What worked best and why?
28
Examples
implantable drug infusion pumpswith remote physician control
for chronic pain patients at home
“the right dose at the right time and place”
Christian Gutierrez (EL), Ellis Meng (PI), Carol Christopher (IM), Tuan Hoang (FE)
PatientsTraining
Hospitals
Unit sales
Trade shows
Clinicians
Institutions
Support Services
Pain clinics
Clinical dataKOLs Formulary Acceptance
FDA
IP
Advocacy Groups
Foundations
OEMs
Wireless Developers
Manufacturing Costs
Product Dev Costs
FDA/Clinical Trials
Chronic Pain v4 FS Team
Payors/ICA
Marketing Costs
Faster relief
Efficient patient management and Dosing flexibility
Access to high-value therapies and pharmacoeconomics
pharmacoeconomics
Support
Proprietary knowledge
Human Resources
Electronic records
Electronic health record providers
Bundled kits
CMS (Medicare)
Getting out
Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy)Dr. Giovanni Cucchiaro, Anesthesiologist (CHLA)
Dr. Diana Hull, Physician (Group Health in Washington state, formerly at Kaiser California)
Thomas Hsu, Insurance Specialist (Network Medical Management; a California ICA)
Two chronic pain patients Pump user and creator of support forum User of oral narcotics and patches
Dr. Frances Richmond (Director Regulatory Science Program, USC)
Richard Hull (formerly at company selling Lapband)
Clinicians
Institutions/patients
Regulatory
Entrepreneurs/Industry
Patients
Product flow/Channel
Fluid SynchronyElectronic
Health Records
.Partners/
OEMS
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Pump + Controller
Support Services
Bundled Kits
Electronic Records
Channels (Direct)
• Direct to institutions• Some formularies involved in purchase
decisions• Some doctors make purchase decision
directly• Device company/Doctor relationship is key • Heavily influenced by :
• Clinical study results • Regulatory approval• Reimbursement
Hospitals
Pain Clinics
Patient Care Flow (Now)
Fluid Synchrony
Hospitals(Anesthesiologists
Neurosurgeons)
Pain Clinic(Anesthesiologists
Neurosurgeons)Scheduled follow-up
Patient Discharged
Surgery/Rx/reprogramming
Trial period/ Home setting
Weeks/monthsKey factors: Reimbursement , state regulations
Pump + Controller
Support Services
Bundled Kits
Partners/OEMS
Patient Care Flow (Proposed)
Fluid SynchronyElectronic
Health Records
.
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Pump + Controller
Support Services
Bundled Kits
Electronic Records
Scheduled follow-up
Patient Discharged
Surgery/Rx/reprogramming
Trial period/ Home setting
Partners/OEMS
Weeks/months
Actionable feedbackto doctors/institutions
E-prescription / closing loop
Key factors: Reimbursement , state regulationsDays
Regulatory considerationsPMA 510K
Trial size 100’s of patients 20-100
Costs Up to $100,000 per patient
$10-50 MM $1-10 MM
Time ~ 3-4 yrs + post approval follow-on
~ 2-3 yrs
• PMA approval with grouping of FDA approved drugs.• Clinical trials results used to obtain CMS (Medicare)
approval• 510K restricts technology to predicate devices
• Can be more difficult to market against incumbents• European CE mark is easier to attain (safety and
performance only)
Take-aways• Channel is direct in this existing market
• Channel for e-health is more complex and evolving• State-to-state regulations can impact incentives
• Can pose problems as electronic records systems vary across the country
Next Steps• Understand costs associated with reaching
doctors/institutions directly• Understand structure of e-health channel• Develop regulatory pathway (timelines and cost profile)
PatientsTraining
Hospitals
Unit sales
Trade shows
Clinicians
Institutions
Support Services
Pain clinics
Clinical dataKOLs Formulary Acceptance
FDA
IP
Advocacy Groups
Foundations
OEMs
Wireless Developers
Manufacturing Costs
Product Dev Costs
FDA/Clinical Trials
Chronic Pain v4 FS Team
Payors
Marketing Costs
Faster relief
Efficient patient management and Dosing flexibility
Access to high-value therapies and pharmacoeconomics
pharmacoeconomics
Support
Proprietary knowledge
Human Resources
Electronic records
Electronic health record providers
Bundled kits
Manufacturing platform for rapid, cost-effective, and scalable
production of therapeutics in tobacco
“insero” = to plant ”gen” = gene
Lucas Arzola (EL)Karen McDonald (PI)
Vasilis Voudouris (Mentor)
What We Know
We have a novel technology platform with numerous market opportunities
Our working hypothesis – that we can scale up and commercialize our platform for production of life-saving therapeutics
Jon Feiber – “Since you are a platform technology, it makes sense to engage in ‘market discovery’ and ‘customer discovery’ at the same time during the next weeks”
Challenging this hypothesis by speaking with as many experts and customers as we can
This week: explored decision making and distribution channels in the case of a pandemic
The Business Model Canvas
SpeedCost-EffectivenessRobustnessScalabilitySafetyEase of CustomizationU.S. Supply
R&DManufacturingRegulatory ApprovalLicensingMarketing
Tobacco SuppliersGene Synthesis CompaniesCMOs - Purification - Fill & Finish- Packaging- QA/QCCROs- Clinical TrialsFDA
IP – Patents, Trade SecretManufacturing Facility
Capital InvestmentsManufacturing CostsLicensing CostsMarketing
Contract Manufacturing Fully Integrated Manufacturing (Sales) Licensing (Royalties)
U.S. Government- CDC - HHS BARDA- DOD DARPAForeign GovernmentsNGOsVaccine Manufacturers- Established and
Emerging Biotech
Distribution through Government and Pharma Companies
Long-Term Contracts with Government and Vaccine Manufacturers
Target Product – seasonal & pandemic flu vaccines
Getting Out of the Lab!
Cast a broad net by talking to many different experts and customers:
(1) Executives from large companies
Name Title Institution
Michael Girard Sustainability Manager Aerojet
Michael Jacobson Director of Corporate Responsibility Intel
Joseph Kieren Director of Corporate Real Estate AT&T
(2) Entrepreneurs and angel investors from SacramentoName Title Institution
Andrew Hargadon Professor of Management UC Davis
Wil Agatstein Professor of Management UC Davis
Larry Palley Former General Manager Intel
John Selep Operations Manager HP
Thomas Alberts Consultant SBDC
Cary Adams Head of MedStart Program SARTA
Getting Out of the Lab!
(4) Experts in vaccine manufacturing
Name Title Institution
Ann Arvin PCAST Vaccinology Working Group (Key Opinion Leader on Vaccines)
Stanford
Misa Sugui Associate Scientist MedImmune
Floro Cataniag Laboratory Manager MedImmune
(3) Experts in the commercialization of biotech platform technologies
Name Title Institution
Greg McParland Consultant DSM Ventures
Fernando Garcia Senior Director Amyris
Channels and Distribution
Conversation with Dr. Ann Arvin – Key Opinion Leader on vaccinesIn the case of a pandemic: Vaccine manufacturers have to be producing vaccines for seasonal flu –
regulatory approval, QA, and validation need to be in place When a pandemic occurs, the government (BARDA) negotiates a manufacturing
contract with vaccine companies – number of doses, formulation, price, and time are agreed upon
CDC provides the elucidated strain to the manufacturer FDA considers the pandemic flu vaccine to be a variation of the seasonal flu
vaccine – new regulatory approval is not necessary Vaccine manufacturers work with the new strain to ramp up production as
quickly as they can – takes 4-6 months Sterility and quality testing is performed for the produced vaccines – some tests
are done in-house and some are done by outside laboratories Vaccine is released
Channels and Distribution
Getting the vaccines to the patients Vaccine manufacturers have contracts with wholesalers (i.e. McKesson Corp.)
to distribute the vaccines – distribution is not a cost for the manufacturers, they hand over the product
In the case of a pandemic, vaccines are also distributed through local contracts with the state health departments
They distribute the vaccines to hospitals and clinics, where they can be administered to the patients
Organizational Strategy
Conversation with Greg McParland – Former CEO of biotech platform company: the virtual biotechnology company model
“Starting out and for as long as you can, you should be a virtual company. You can have contracts to outsource the downstream part of the process (purification, fill and finish, packaging, etc.) ”
“Keep your core technology and focus on using your manufacturing platform for protein production”.
Common practice in biotechnology – almost every company has contracts with CROs, CMOs, marketing and distribution arrangements, etc.
More flexibility – move quickly from failed avenues of research to more promising projects
Startups partner with big pharma companies to complete clinical trials and take product to market
“If you build it, they will come” – but only build the essential core that lets you control your technology platform
More Feedback
Conversation with Dr. Ann Arvin – Key Opinion Leader on vaccines Pain point: Reliability issues with traditional egg platform - willingness to move
away to a different manufacturing platform Pain point: Current platforms are not fast enough, cannot have an impact in case
of a pandemic - sense of urgency in finding a manufacturing platform that can produce vaccines faster and at a large scale
Given this landscape, we still believe our technology can solve a significant problem in the vaccine market
Conversation with Dr. Misa Sugui & Dr. Floro Cataniag – MedImmune Pain point: attenuated virus platform is harder to work with, safety measures are
more stringent – would prefer recombinant subunit vaccines Wish: a faster process for vaccine production (our technology can help with this) Wish: a faster process for clinical trials and for approval of new drugs (this we
can’t do anything about) MedImmune is a possible partner - always looking for new vaccine production
technologies and new products to incorporate in their pipeline
More Feedback
Conversation with Fernando Garcia – Amyris Biotech platform technology company First target product: drug for malaria, partnered with Sanofi to commercialize Change in strategy: they have transitioned into making biofuels Why have they made this transition? We will follow up with one of the founders
of the company to find out
Next Steps
We believe we have a good feel for our value proposition
We need to better understand how we can sell to customers and how to establish these relationships, how partners’ decisions are made – meeting with Sanofi Head of External R&D
Keep searching for a business model that will allow us to commercialize our technology – looking for meetings with companies that distribute/sell flu vaccine antigens for research and diagnostic use, trying to determine market size
We need to talk to many more experts and customers…
Business Canvas
Interviews
Action MotionCustomer Interaction Meetings:1. Director of R&D of C/A partner2. NETL Methane Hydrate RG3. Ed Faust, Global Marketing, Siemens4. Former GE Employee5. Berkeley sensors group6. Tim Fogarty, Director of IW Energy
Planned Customer Interaction Meetings:1. Jeff Farbacher, CEO Accutran2. Ed Faust, Global Marketing,
Siemens3. Charles Noll, Marcellus Shale
Coalition
Hypothesis Testing:1. Ed Faust, Global Marketing, Siemens
Planned Hypothesis Testing:1. Dr. Gilad Kusne, NIST2. Ann Truschel, Corporate Insurance
Broker3. Tim Fogarty, Director of IW Energy
Clustered
Clus
te
red
nu
Direct Marketing
Possible
Not Possible[Too expensive]
Marketing Agency- Every significant market segment has
specific marketing agencies directed towards selling them goods
Chemical
Chemical,Physical,Thermal….
Clustered
Clus
te
red
nu
Direct Marketing
Possible
Not Possible[Too expensive]
Marketing Agency- Every significant market segment has
specific marketing agencies directed towards selling them goods
Chemical
Chemical,Physical,Thermal….
Clustered
Clus
te
red
nu
Direct Marketing
Possible
Not Possible[Too expensive]
Marketing Agency- Every significant market segment has
specific marketing agencies directed towards selling them goods
Chemical
Chemical,Physical,Thermal….
Direct sales to plants typically is a very hard way to generate scalable business in the sensors market.
Typically much better to bundle product into offerings from larger sensors businesses
Agrees with current approach to this first market!
Org. Chart – Current C/A Partner
CEO, CTO, CFO, etc. etc. etc.
Global Director of R&D
CEO, Director of R&DDirector of MarketingDirector of Product
Service
Engineers, etc. etc. etc.
Director of R&D
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