E245 Demand Creation Ann Miura-Ko January 2011

Agenda  Demand Creation Definition  Direct customer relationship  Indirect customer relationship  Metrics and Experimentation

3 images by JAM customer segments key partners cost structure revenue streams channels customer relationships key activities key resources value proposition

Test Hypotheses: Problem Customer User Payer Test Hypotheses: Demand Creation Test Hypotheses: Channel Test Hypotheses: Product Market Type Competitive Test Hypotheses: Pricing Model / Pricing Test Hypotheses: Size of Opportunity/Market Validate Business Model Test Hypotheses: Channel (Customer) (Problem) Customer Development Team Agile Development

CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

Demand Creation  How will customers segments hear about your product?  How does market type impact my strategy?  How much will it cost to acquire a customer using these strategies?

Market Type ExistingResegmentedNew CustomersKnownPossibly KnownUnknown Customer NeedsPerformanceBetter fitTransformational improvement CompetitorsManyMany if wrong, few if right None RiskLack of branding, sales and distribution ecosystem Market and product re- definition Evangelism and education cycle ExamplesGoogleSouthwestGroupon Market Type determines:  Rate of customer adoption  Sales and Marketing strategies  Cash requirements How does market type influence demand creation?

Demand Creation by Market Type  Create, drive demand into your sales channel Existing Resegmented New  Educate the market about what’s changed  Drive demand into your sales channel  Educate the market  Identify and drive early adopters into your sales channels

Who needs to hear about you? Suppliers Channels Government Partners End User Influencer / Recommender Economic Buyer Decision Maker

Demand Creation Feeds the Sales Funnel Paying Customers $ Demand Creation Acquisition

Agenda  Demand Creation Definition  Direct customer relationship  Indirect customer relationship  Metrics and Experimentation

Getting Free Users  SEO (without consultants)  Blogging / Sharable content  Social Media / Gaming Mechanics  Communities  Proven viral coefficient > 1 NOTE: “Viral” isn’t a strategy, it’s a product feature you either have or you don’t Demand Creation

Paid Channels  PR  Demand Capture -SEM -“Free” products (e.g. widgets) -Biz Dev -Affiliate Marketing  Market Education -Webinars - marketing -Trade Shows -Analyst Reports -Direct Sales -TV / Radio Demand Creation

 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?

Agenda  Demand Creation Definition  Direct customer relationship  Indirect customer relationship  Metrics and Experimentation

Example: Healthcare

Healthcare – system requirements FDA Payer  Approval of product category  Compelling clinical benefits and cost reduction  Product approval  Manufacturing approval  Quality control process approval

Healthcare & Marketing  Free samples  Professional papers  Speeches by leading academics and influential doctors  Leading institution as reference customer  Conference presentation  Continuing medical education Product Champions FDA  Restrictions on user generated content -Adverse event postings -Off label use postings  Restrictions on direct selling to doctors

Critical questions  What are critical regulations and approval processes that need to happen prior to launch of product? -Industry -Federal / State  Are there regulations on marketing efforts as well?  Who influences the purchasing decision and how can they become an ally? -What is required to be endorsed?

Agenda  Demand Creation Definition  Direct customer relationship  Indirect customer relationship  Metrics and Experimentation

Customer Acquisition Cost Paying Customers $ Demand Creation Acquisition To get one customer here How much do you have to spend here

The Sales Funnel Enterprise Software Leads Paying Customers $ Qualified Lead First Sales Call Demonstration Feasibility Proposal Purchase Order

Other Sales Funnels  What does your funnel look like?  How long does each part of the funnel take?  What % converts between each section? VisitSign UpActivateUpgrade Informational Meeting Trial Contract Negotiation Signed Contract 1. 2.

Cost of Customer Acquisition Calculation David Skok

Cost of Customer Acquisition Calculation

Demand Creation Pivot