The sales strategy hidden in Four Steps. Part 2: evaluate feedback on the Problem

In 2005, renowned entrepreneur and academician Steve Blank published "The Four Steps to the Epiphany". Inspiring tons of new ideas for start-ups, the book advocates a renewed focus on customer development as a cornerstone to build a solid business. In this new series, we’ll crystallize Blank’s theory into a few tactical steps, cut to size for young fledgling companies.

In the previous post, we saw how collecting information on a specific problem of your target audiences culminates in creating a "Problem Presentation". The main purpose of this step is to determine whether your understanding of the problem matches that of your audience. This week, we’ll learn how the feedback you receive can be efficiently processed to help you acquire expert* status.

Acknowledging the problem

Whatever reactions your first (Problem) Presentation elicits from your audience, they will tell you a lot about the problem. Be ready to record them: bring a checklist, notepad or voice recorder with you. After all, the real aim here is to test the hypotheses you formulated at the very beginning.

The key questions you should ask yourself during the presentation center on the ‘pain’ your potential customer feels, and which you hope to solve. Is the pain real? For whom is it real and for whom not? Is there a segment of "Problem Owners" you didn’t know about yet? This is also the right time to explore how "aware" your audience is of the Problem. It’s not unusual for people to have problems they don’t acknowledge as such. For example, if you’d create a social network with guaranteed privacy for a small usage fee, it’s very possible that many people wouldn’t consider making the transition, simply because they don’t see a problem with privacy settings in free social networks.

To assess the degree of awareness, Steve Blank proposes an interesting scale. At the bottom are the "people who have the Problem, but are unaware of it", and at the top are the "people who are aware of the problem and its consequences, who have already explored standard solutions, are frustrated by their inability to solve it and have a budget ready for a good solution".

earlyvangelist scale according to Steve Blank

The Earlyvangelist scale: the two top profiles are of maximum interest - compare this to the situation of the sales forces of established companies, who typically concentrate on the third profile exclusively...

Don’t aim for the customer ("now" is too soon)

In the same breath, Blank warns us of a very common mistake. Many entrepreneurs will aim directly for the latter group, the "potential customer". The vast majority of people, however, are pragmatic. This means that they will first aim for an existing solution, with a proven track record that gives them a clear indication of the ROI. Your product doesn’t qualify for this, simply because you’re still developing and inventing your solution.

Blank circumscribes your future potential customers to a subset of these pragmatists. He asks you to focus on people who already tried standard solutions to no avail. These Problem Owners are most likely to listen to you and to (later) consider your solution with an open mind.

Get in the flow

Finally, you should structure the feedback gathered during your first round of problem presentations in a flow chart. This chart will show how "Problem Owners" currently do their job, who they interact with, and how they spend time and money. Next, draw a workflow describing how they would work with your Product or Solution. Compare both diagrams and mark the differences: they are the core of your value proposition.

After the first feedback phase, you’ll have a much more profound understanding of the problem, allowing you to define it from the point of view of your future customers. This knowledge can serve as a basis to go back to your Product idea and assess if it addresses the Problem correctly, and whether its features are prioritized in the right way. If changes are needed, you might have to develop a new rollout calendar, and reconsider how your Product should be further developed, and finally released.

In the next post, we’ll assess what makes your Product so special, and take our first step; not only as Problem experts, but as Solution providers as well.

* Don't compromise on this: earning any other title, no matter how pompous - like "Dictator of Geekville" - even considering the fullest extent of human ingenuity in this domain, is pointless.