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Customer Validation Before Marketing Investment

January 6, 2016

In his book Crossing the Chasm, Geoffrey Moore argues that there's a chasm between the early adopters of a product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). Moore believes that visionaries and pragmatists have very different expectations and suggests that alternative techniques are required to successfully cross the "chasm," including

  • Choosing a target market
  • Understanding the whole product concept
  • Positioning the product
  • Building a marketing strategy
  • Choosing the most appropriate distribution channel
  • Pricing

This framework is based upon the diffusion of innovations concept developed by Everett Rogers (Figure 1).

Innovation Diffusion Curve

Figure 1. Diffusion of Innovations Concept. This picture was used in the One Too Many Mornings blog post The Golden Circle: A Formula for Inspiring Action. The infographic was recreated by Sally King at SK Graphic Design skgraphicdesign.co.uk/

Are you REALLY ready to invest?

Many life science companies may be facing a chasm even though they are well beyond start-up mode with many years in business, increasing revenues, and a growing customer base. It's quite common for these organizations to invest in expensive technologies, eg, marketing automation, to accelerate top-line sales growth, but two key questions to ask are

  • Has the organization truly identified a specific target customer?
  • Does the organization understand the buyer persona and customer organization well enough to justify significant investments in marketing?

Steve Blank's Customer Development Framework offers good perspective on this situation (Figure 2). History has shown that many early-stage organizations leap to Customer Creation (let's use marketing automation as an example), before they truly validate their customer. When a marketing team or agency doesn't have sufficiently granular insights into the buyer, throwing money at marketing and sales can be wasteful.

Customer Development Process

Figure 2. Customer Development Process by Steve Blank.

In the case of life science companies that may be selling therapeutics, diagnostics, medical devices, or other products, there are often several dimensions to the target customer, and the overall customer organization needs to be validated before an investment such as marketing automation makes sense. For those who've played the board game Clue, this level of customer validation resembles solving a murder mystery ... "it was Professor Plum ... in the library ... with the wrench!"

Multiple levels of validation

Let's review a wound and tissue management product as an example. We'll assume that Ouchy Inc. has a new silver ionic solution for wound care — "Heal-Fast," which has been on the market for 3 years, but sales have not lived up to investor expectations. Marketing automation has been recommended as a solution to accelerate sales. Let's further assume that Ouchy Inc long ago determined that the best product form factor given the target wound type, the problem that needs to be solved, the target patient, and the target caregiver. This means that Ouchy Inc. considered the options of whether Heal-Fast is best packaged and sold as a rinsing solution, alginate dressing, hydrogel, antibacterial paste, foam dressing, hydro-fiber, or film dressing.

To inform the form-factor decision, they had to consider whether the biggest need was wound cleansing, wound debridement, infection management, pain management, exudate management, moisture management, periwound area management, or wound-bed conformability. The form-factor decision then informed whether Heal-Fast was best suited to treat diabetic foot ulcers, burns, pressure ulcers, surgical wounds, or vascular ulcers.

In terms of the end-use customer, Ouchy Inc needed to consider the podiatrist, registered nurses, endocrinologist, primary care physician, ER physicians, wound care specialist and others within the customer ecosystem (Figure 3). Once the target end user was identified, there were other recommenders, influencers, and others that needed to be identified and understood before a marketing automation strategy could be put in place.

Phillips_Decision_Maker

Figure 3. Customer Ecosystem

The point is that several dimensions had to be validated in sufficient detail to properly inform the decisions that would guide creation of an effective marketing automation campaign.

Build a road map

The ultimate output from customer validation is the sales road map, which documents the buyer's process at each stage of the sales funnel from suspect to lead to prospect to customer to reference. Once you understand the buyer's process, the next steps are to identify the associated business task, desired response, and metrics.

Once Heal-Fast identified the registered nurse as their target customer, the sales road map was populated after studying the process that RNs pursue when moving from awareness (suspect) to interest (lead) to consideration (prospect) to customer. They did this by identifying the online search, conferences, continuing education, professional associations, and other activities that spanned these funnel stages for the registered nurse. Armed with a road map, Heal-Fast was ready to invest in sales and marketing. From brand and product positioning to messaging and tactics, customer validation provided the raw ingredients to inform the sales road map and better position the investment in sales and marketing for a better return on investment.

Don't hesitate to validate

Customer validation has application beyond the business start-up phase and it's never too late, even for a mature company, to "take one step back" in order to "take several steps forward." As Steve Blank would say, customer validation is about "getting out of the building," and asking unbiased questions to confirm product-market fit — a prerequisite for developing the sales road map. Developing customer validation competency within your organization will pay dividends over the long term, so don't limit it to a one-time activity.

Scott Phillips

Scott is a veteran of product innovation, business development, marketing strategy and entrepreneurship with experience across many industries, including leadership positions at Whirlpool Corporation, Fortune Brands and Burger King Corporation. In addition to The Inovo Group, Scott has worked alongside innovation thought leaders including Strategos, Doblin, and Strategic Horizons on client engagements focused on top- and bottom-line growth. Scott has also started 3 companies including, The SearchLite, where he is CEO and Founder.

SAMPS, Sales And Marketing Professionals in Scientific research, is the first and only organization dedicated to sales and marketing professionals within the life sciences.

The association’s goal is to serve its members who work in commercial roles for life science products and services companies and associated businesses, globally.
 
SAMPS was previously named ACP-LS. We feel that SAMPS more clearly describes the membership, and will form a better foundation from which to expand this membership globally. 
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