Disciplined Entrepreneurship Workbook
Page 14
GENERAL EXERCISES TO UNDERSTAND CONCEPT
Mobile phone example: Consider a cell phone. Who is the end user of that phone? Who was the economic buyer? Who was the champion? Can you think of scenarios where this could be different? Describe those.
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Medical device example: Assume you are selling a medical device. Who are the options to be your end user? Who are some options to be the economic buyer? The champion? Influencers of the end user? Influencers of the economic buyer? Veto power?
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WORKSHEET
Determine the Decision-Making Unit (DMU)
End User Persona (Step 5) Economic Buyer Persona Champion Persona
Name
Title
Demographic Summary
Psychographic Summary
Proxy Products
Watering Holes
Day in the Life
Priorities (Top 4 in Order) 1.
2.
3.
4. 1.
2.
3.
4. 1.
2.
3.
4.
Key Selling Points to this Person 1.
2.
3. 1.
2.
3. 1.
2.
3.
Primary Influencers Secondary Influencers Veto Power Primary Influencers Secondary Influencers Veto Power Primary Influencers Secondary Influencers Veto Power
People
Organizations
Info Sources
Others
How would you qualitatively summarize the DMU in three sentences or less? _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
Note that one of the limitations of this worksheet is that it is a summary. Many cells in this worksheet require a depth of knowledge that is at least a paragraph and not a few words. Another major limitation is that it is static. In reality, the roles in an acquisition process can change over time. As you map out the Process to Acquire a Paying Customer in Step 13, you may find it necessary to create additional Persona profiles to encompass the multiple stages inherent in some decision-making processes.
STEP 13
Map the Process to Acquire a Paying Customer
WHAT IS STEP 13, MAP THE PROCESS TO ACQUIRE A PAYING CUSTOMER?
Determine how the members of the Decision-Making Unit (DMU) make a decision to buy your product.
WHY DO WE DO THIS STEP, AND WHY DO WE DO IT NOW?
The Process to Acquire a Paying Customer will be a critical framework to determine the length and complexity of the sales cycle and identify critical bottlenecks in the process. Knowing the DMU has given you the prerequisite information for you to build this map. Going forward, you will rely heavily on this information to make informed decisions on designing the business model, pricing, sales channels, and ultimately your all-important Cost of Customer Acquisition (COCA).
By the Book: See pages 149–153 of Disciplined Entrepreneurship for basic knowledge on this step.
See pages 154–156 of Disciplined Entrepreneurship for examples of how different companies and teams have addressed this step.
Gaining a detailed understanding of the customer’s Process to Acquire a Paying Customer underlies the understanding of the drivers of the product’s unit economics.
PROCESS GUIDE
In Step 12, Determining the Customer’s Decision-Making Unit (DMU), you identified the “who” needed to make the purchase acquisition decision. Now you will define the “how.”
You will build directly off Step 6, Full Life Cycle Use Case; however, there are two major differences. First, you will look at the same process from your perspective (the seller of your new product) as opposed to the customer’s perspective, which was the case in Step 6. The two should be similar and consistent but not exactly the same. Second, this map will link directly to the players in the DMU and the customer’s budgetary process. You will then use that information to develop a first draft of your Sales Funnel, which takes the information from the Full Life Cycle Use Case and turns it into an action plan for your company.
To recap, the key stages from the Full Life Cycle Use Case:
Determine need and catalyst to action.
Find out about options.
Analyze options.
Physically acquire the product.
Pay for the product.
Install.
Use and get value.
Determine value.
Buy more.
Tell others about the product.
Some of these stages may be trivial in your situation (especially for business-to-consumer [B2C] sales), but it is still worth thinking about them because even if they are small, they may well trip you up. You may also find that other stages should be included, or the stages should be listed in a different order. For instance, a customer might pay for the product before acquiring it, or after installing it, or somewhere else in the sequence. Feel free to customize the worksheet as needed, but be hesitant to remove any stages without careful thought.
You will start by filling out the Process to Acquire a Paying Customer worksheet with the descriptions of each stage from your Full Life Cycle Use Case as well as information about the acquisition process that you gain from primary market research:
What does the customer do in this stage?
Who is involved from the DMU?
What are the budget limits and other considerations (governmental or company regulations, etc.)?
How much time will this stage take? (Give a time range.)
What is your action plan to accomplish this stage in the most efficient and effective way possible (subject to revision)?
What are the risks?
What is your risk mitigation strategy?
Miscellaneous.
Next, you will convert the Process to Acquire a Paying Customer worksheet into a First Draft Sales Funnel. The Process to Acquire a Paying Customer is mapped out from the customer’s perspective, but in order to define how your company will sell to the customer, you need to convert that information into a company-focused, step-by-step action plan. You will find in each step that fewer potential customers express interest, but those who are interested are far more likely to buy your product. That is why the process is expressed as a funnel that is wide at the top and narrow at the bottom.
There are many different sales funnel models, and they are all pretty similar but use different words to describe the same process. For instance, the word “lead” has many different definitions depending on whom you ask. Here are the seven elements I will use in describing the sales funnel:
Element #1: Identification—The first element is the “top of the funnel” where you generate leads, people who are po
tential customers but are not yet aware of your company. You can identify leads through membership lists for groups or associations, through watering holes, and through asking people you’ve spoken with during your primary market research. Once you have compared them to your End User Profile and they are a match, you call them qualified leads. To make things simpler going forward, however, you will simply refer to leads coming out of this element and the assumption is that they are qualified leads.
Element #2: Consideration—In this element, the lead first becomes aware that they have a problem that needs solving, and second that your product exists to solve that problem. They may develop this awareness through responding to your advertisements by contacting you, or you may initiate the first contact and they express some level of interest in your product. Once the leads have this awareness, they become suspects, and the odds of converting them to customers are much higher. Not every qualified lead will become a suspect—the fraction of leads who become suspects is called the yield rate. Each transition from one element to the next in the sales funnel will have its own yield rate.
Element #3: Engagement—In this element, there starts to be meaningful two-way dialogue with the suspect because the suspect shows nontrivial interest in your product. The suspect might express this interest through participating in a demo, submitting a request for proposal, or engaging in a substantive sales call or online interaction. Now, the suspect turns into a prospect.
Element #4: Purchase Intent—In this element, the prospect demonstrates a clear willingness to purchase and starts negotiating to place the order. In B2B, the prospect may discuss drafting a purchase order. In online shopping, the prospect may put your product in their basket but has not yet checked out. They are now a highly qualified prospect.
Element #5: Purchase—This element is the moment of truth, when the customer actually issues the purchase order and pays for your product. In online shopping, the highly qualified prospect would check out and provide their credit card information and the credit card provider confirms the transaction. The highly qualified prospect now becomes a customer.
Element #6: Loyalty—In this element, you focus on making sure the customer receives and installs the product, address any support inquiries that arise, and ensure that the customer is getting the expected value out of the product. Hopefully, the customer is now a satisfied customer.
Element #7: Advocacy—In this final element, the customer becomes a repeat customer and/or an evangelist for your product. Evangelists won’t just buy more products, they’ll also tell their friends and acquaintances to purchase your product, too.
Converting Full Life Cycle Use Case (Step 6) to First Draft Sales Funnel
Full Life Cycle Use Case Stages
#1—Determine Need and Catalyst to Action #2—Find Out about Options #3—Analyze Options #4—Acquire Your Product #5—Pay #6—Install #7—Use and Get Value #8—Determine Value #9—Buy More #10—Tell Others
Sales Funnel Elements #1—Identification: Lead Generation Output: Leads #2—Consideration: Create Awareness to Potential Customers Output: Suspects #3—Engagement: Develop Initial Dialogue Output: Prospects #5—Purchase: Close Deal and PayOutput: Customers #6—Loyalty: Customer Support Output: Satisfied Customers #7—Advocacy: Sell More and Positive Word of Mouth Outputs: Repeat Customers and/or Evangelists
# 4—Purchase Intent: Develop Interest to Intent Output: Qualified Prospects
GENERAL EXERCISES TO UNDERSTAND CONCEPT
Mobile phone example: Construct a map of the Process to Acquire a Paying Customer for the mobile phone example from Step 12. Process to Acquire a Paying Customer: Automobile Example
Stage # 1
2
3
4
5
6
7
8
9
10
General Description of Stage Determine Need and Catalyst to Action
Find Out about Options
Analyze Options
Acquire Your Product
Pay
Install
Use and Get Value
Determine Value
Buy More
Tell Others
What does the customer do in this stage? (from the Full Life Cycle Use Case)
Who is involved from the DMU?
Budget limits and other con-siderations
How much time will this stage take? (Give a range.)
Action plan to accomplish stage
Risks
Risk mitigation strategy
Misc.
Automobile example: Construct a map of the Process to Acquire a Paying Customer in the case of an automobile. Process to Acquire a Paying Customer: Automobile Example
Stage # 1
2
3
4
5
6
7
8
9
10
General Description of Stage Determine Need and Catalyst to Action
Find Out about Options
Analyze Options
Acquire Your Product
Pay
Install
Use and Get Value
Determine Value
Buy More
Tell Others
What does the customer do in this stage? (from the Full Life Cycle Use Case)
Who is involved from the DMU?
Budget limits and other con-siderations
How much time will this stage take? (Give a range.)
Action plan to accomplish stage
Risks
Risk mitigation strategy
Misc.
Automobile vs. mobile phone: Does the Process to Acquire a Paying Customer for an automobile take longer or shorter than the process for a mobile phone? What about for an ice cream cone? Why? ______________________________________________________________________________
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B2B example: Now think about what the Process to Acquire a Paying Customer would look like for a multimillion-dollar machine for a corporation to help in their manufacturing. What would be the big differences between this example and the phone, automobile, and ice cream examples? ______________________________________________________________________________
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WORKSHEETS
Process to Acquire a Paying Customer
Stage # 1
2
3
4
5
6
7
8
9
10
General Description of Stage Determine Need and Catalyst to Action
Find Out about Options
Analyze Options
Acquire Your Product
Pay
Install
Use and Get Value
Determine Value
Buy More
Tell Others
What does the customer do in this stage? (from the Full Life Cycle Use Case)
Who is involved from the DMU?
Budget limits and other con-siderations
How much time will this stage take? (Give a range.)
Action plan to accomplish stage
Risks
Risk mitigation strategy
Misc.
Convert to a First Draft Sales Cycle “Time to Complete” Analysis Summary
For all time estimates except for lead generation, use the numbers from your Process to Acquire a Paying Customer table above. Make a reasonable estimate for lead generation.
Sales Cycle Length Estimate
Sales Funnel Element Full Life Cycle Use Case Stage Estimated Time to Complete
#1—Identification: Lead Generat
ion
Output: Leads n/a
#2—Consideration: Create Awareness to Potential Customers
Output: Suspects #1—Determine Need and Catalyst to Action
and
#2—Find Out about Options
#3—Engagement : Develop Initial Dialogue
Output: Prospects
and
# 4—Purchase Intent: Develop Interest to Intent
Output: Qualified Prospects #3—Analyze Options
#5—Purchase: Close Deal and Pay
Output: Customers #4—Acquire Your Product
and
#5—Purchase: Close Deal and Pay