Is Your Business Ready to Ramp (Physical Channel)?

That is the question that the Customer Validation stage aims to answer.

WARNING: Customer Validation is very disorienting for experienced sales managers. You’ll need to give them special care and handling through this stage.

In this stage you are not going to hire a staff and sales team. You are not going to execute your sales strategy. Instead you will be validating your hypotheses about who will buy, why they will buy and how much they will pay. You will create your Sales Roadmap.

This is part 9 of our Lean Innovation Series.

This phase of the customer validation process is quite different for physical products vs web/mobile products. This post will focus on physical products. If you are focusing on a web/mobile application, skip this post and we’ll cover the web/mobile channel in our next post.

Customer Discovery tested your hypotheses with a relatively tiny group of customers who were asked mostly for opinions, rather than orders. Customer Validation goes the next step to determine if your product or service can be validated by actual sales.

Phase 1 of Customer Validation contains the six “get ready to sell” activities listed below.

  1. Develop Your Product/Service Positioning Statement – This is a simple message about your product or service that answers the following questions:
    1. Who is it for?
    2. Why do they need it?
    3. What is the product (describe it)?
    4. What is the key benefit?
    5. How is it better than the competition?
  2. Develop Sales Materials/Collateral – Marketing materials and efforts drive potential customers into your sales funnel. Sales collateral help the salespeople seal the deal. The basics you will need are:
    1. Website
    2. Sales Presentation
    3. Demos, prototypes, videos
    4. Data sheets – Solutions driven for new markets or product driven for existing markets
    5. Price lists, contracts and billing systems
    6. White papers, press clippings, testimonials, business cards, etc.
  3. Hire Sales Closer – Startup teams rarely include a sales professional. Unless the startup team is willing to bet their success on their sales abilities, you’ll need to hire a sales closer. This is not a sales VP who wants to build a sales organization – you are not ready for that yet. This person will be aggressive, love early markets and want great compensation for success.
  4. Develop Channel Action Plan – During Customer Discovery, your team already evaluated distribution channel alternatives and is focused on one specific sales channel for now. Your action plan will include the following:
    1. Channel Food Chain – A visual representation of the organizations that your product must flow through to reach your customers.
    2. Channel Responsibility – In the Food Chain, who is responsible for what and who do they report to?
    3. Channel Discounts and Financials – Each tier of the food chain costs your company money. Draw out how much each tier will take.
    4. Channel Management – It would be great if you could count on your sales channel to be a turnkey success, but that is simply not reality. You’ll need to manage inventory levels, sell in and sell through each step of the food chain.
  5. Refine the Sales Roadmap – One of the biggest mistakes founders make is to hire a sales force before you know enough to teach them how to sell. The sales roadmap shows your team the step by step process of selling.
  6. Formalize the Advisory Board – Hopefully, you’ve already developed informal relationships with advisors during Customer Discovery. Now you are ready to formalize those relationships. You are looking for two things from your board: great introductions to key customers, talent or advisors; and bold business model design thinking that will dramatically impact your strategy. For a great advisory board roadmap example go to page 352 of “The Startup Owner’s Manual”.

In next week’s blog we’ll cover getting ready to sell for the digital channel and then move to getting out of the building and selling! Stick with us. This is not a simple concept, but one of the best “how to” manuals on startups and innovation that I have ever read.

As always, I’ve done my best to summarize the main principles in this blog but pick up a copy of “The Startup Owner’s Manual” by Steve Blank and Bob Dorf to dive deeper.

Thank you for being a part of our values driven community!

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