channels, customer relationships and revenue models presentation - gist bootcamp
TRANSCRIPT
Channel Discussion
Guess Guess
Guess
Guess
Guess Guess
Guess
Guess Guess
Customer Discovery: Step 1
Focus so far… Value Propositions
Now start asking Customers about Channels
Where do you buy products
today?
What is a Channel??
A Channel defines how your customers want to
be reached !!!
What are the Channel Types??
Sales
Distribution
Support
Types of Product or Service
Virtual or Physical
Types of Channels:
Virtual or Physical
Direct or Indirect
Product - Channel Fit
Physical Channels
14
Virtual Channels
15
Distribution Complexity
16
Evangelists
Service Technicians
Direct Sales
VARs
Retail
Web, Telesales
Systems Integrators
Mainframes
Minis LANs
PC Servers Desktop PCs
Printers Keyboards
Toner
WANs
Global Systems
Solution Complexity
Mar
ketin
g C
ompl
exity
Channel Economics
How are channels compensated?
18
How are channels compensated?
19
Commission
Percentage of sales price
Discounted pre-purchase
Channel Economics Direct Sales
20
SG&A + R&D
End
Con
sum
er
EU
Dis
coun
ts
Your Revenue List
Price
Source: Mark Leslie, Stanford GSB
Cost of Goods (Supply Chain) PROFIT
21
Cost of Goods (Supply Chain)
SG&A + R&D EU
D
isco
unts
Reseller
Source: Mark Leslie, Stanford GSB
Cost of Goods (Supply Chain)
End
Con
sum
er
Your Revenue List
Price
Channel Economics Resellers
PROFIT
SG&A + R&D
22
EU
Dis
coun
ts
Reseller
Dis
trib
utor
Source: Mark Leslie, Stanford GSB
Cost of Goods (Supply Chain)
Channel Economics Distributor & Reseller
Cost of Goods (Supply Chain)
End
Con
sum
er
Your Revenue List
Price
PROFIT
We covered Direct Sales, and using Reseller / Distributors…
When does the Channel look
like a Customer??
We covered Direct Sales, and using Reseller / Distributors…
When does the Channel look
like a Customer??
Products embedded in others (OEM)
Products resold by others (VARs, System Integrators)
Who’s the customer?
Channel Economics: OEM or IP Licensing
25 Your Product Becomes Your Customer’s Cost of Goods
Reseller SG&A + R&D
Cost of Goods
(Supply Chain)
EU
Dis
coun
ts
Reseller
Dis
trib
utor
Mas
ter
Dis
trib
utor
SG&A + R&D
Cost of Goods (Supply Chain)
List Price
Channel Economics OEM or IP Licensing
End
Con
sum
er
Your Revenue List
Price
PROFIT
PROFIT
How are channels motivated or incented?
26
How are channels motivated or incented?
27
Money! (what makes them the most)
Training
Marketing to the channel
An Example
Source: On Live, Los Angeles Times
Publishers control market
Any Questions?
Customer Relationships
Step 1: Get
Customer Relationships Physical & Web Mobile Are Different
© 2012 Steve Blank
Customer Relationships Physical Products – Get Customers
© 2012 Steve Blank
Get Examples:
Awareness… Interest…
Consideration… Purchase…
What can we learn about how customers make
decisions?
Customer Archetypes Drive Get / Keep / Grow
• What’s their role? – How this person is evaluated / promoted / compensated?
• Who are they? – Buyer’s name – Position / title / age / sex
• 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?
Customer Relationships Physical Products – Get Customers
© 2012 Steve Blank
CAC = Customer Acquisition Cost
Customer Acquisition Cost versus Sales Complexity
Freemium No Touch
Self-Service
Light Touch Inside Sales
High Touch Inside Sales
Field Sales Field Sales with SE’s
$0- $10
$50 – $200
$1,000 - $2,000
$3,000 - $8,000
$25,000 – $75,000
$75,000 – $200,000
Rough Estimates of Cost of Customer Acquisition (CAC)
Source: David Skok Matrix Partners
Step 2: Keep
Customer Relationships Physical Products – Keep Customers
© 2012 Steve Blank
Customer Relationships Physical Products – Keep Customers
Customer Relationships Physical Products – Keep Customers
© 2012 Steve Blank
Attrition/Churn
Step 3: Grow
Customer Relationships Physical Products – Grow Customers
© 2012 Steve Blank
Customer Relationships Physical Products – Get/Keep/Grow
© 2012 Steve Blank
LTV = Customer Lifetime Value
How will you Get, Keep, and Grow your customers?
Revenue Streams
How do you Make Money?
The Two Key Questions
• What’s my revenue model? • Within the revenue model – how do I price
the product?
Revenue Model =
the strategy the company uses to generate cash from each
customer segment
Revenue Streams
1. How many will we sell? 2. Where/who is the money coming from? 3. How do we price the product? 4. Does this add up to a
business worth doing?
Key Revenue Model Questions
• What are my customers paying for? • What capacity do my customers have
to pay? • How will you package your product ? • How will you price the offerings?
Pricing Model =
the tactics you use to set the price in each customer segment
Common approaches to pricing
Cost based
Value based
Common approaches to pricing
§ Cost + markup § Typically not a strategic way to
price § Driven by internal economics and
not customer insight
Cost based
Value based § Based on buyer’s perception of
value (e.g. time saved, new efficiency created, etc.)
§ Customers don’t necessarily feel that they want to pay this way
How to price the product?
• Cost plus • Competitive
pricing • Volume pricing • Value pricing • Portfolio pricing
• “Razor/razor blade” model
• Subscription • Time/Hourly Billing • Leasing
(Pricing Models for physical products)
Payment Flow
Leasing company
Tenant
Property Owners install meter
send monthly water bill
$9/month (2yrs)
$200 one time
water bill plus $2/month
$2/month
activities
payments
1. Draw the diagram 2. Put in numbers
Market Type and Revenue
New Market Revenue Forecast
Existing Market Revenue Forecast
Resegmented Market Revenue Forecast
Other considerations
• Distribution channel affects revenue streams
• Market type affects revenue streams • Demand curve affects revenue streams • Consider lifetime value
“Direct” revenue models
• Sales: Product, app, or service sales • Subscriptions: SAAS, games, monthly subscription • Freemium: use the product for free: upsell/conversion • Pay-per-use: revenue on a “per use” basis • Virtual goods: selling virtual goods • Advertising sales: unique and/or large audience
“Ancillary” revenue models
• Referral revenue: pay for referring traffic/customers to other web or mobile sites or products.
• Affiliate revenue: finder’s fees/commissions from other sites for directing customers to make purchases at the affiliated site
• E-mail list rentals: rent your customer email lists to advertiser partners
• Back-end offers: add-on sales items from other companies as part of their registration or purchase confirmation processes, or “sell” their existing traffic to a company that strives to monetize it and share the resulting revenu3
Asset Sale
• Sale of ownership right to a physical product
Usage Fee
• Usage of service. Fee is proportional to the usage of the service.
Subscription Fee
• Fee for continuous access to a service
Renting
• Fee for temporary access to a good or service
Licensing
• Fee for use of some IP (including software)
Intermediation Fee
• Often found in marketplaces of various types, a fee for bringing together two or more parties involved in a transaction
Advertising
• Fee paid by brands and companies to get in front of potential customers