(Or, How to Avoid Drinking Your Own Kool-Aid)

1. thekramer.jpg thekramer.jpg Don’t Fear the Research (Or, How to Avoid Drinking Your Own Kool-Aid)

2. Research: Pain, panacea or practical tool? Why don’t we use research to validate assumptions? • Too expensive. • Takes too much time. • Tried it before and results weren’t actionable. • Tried it before and we didn’t like the results. www.londonink.com

3. Today’s Agenda • What are bad assumptions and where do they come from? • Crafting your assumptions (before or after the fact). • Rich, fast and cheap sources of raw data. • Sticking up for traditional research. www.londonink.com

4. Bob London’s Background $150M London,Ink LLC $6M Garden Variety Internet Start-Up $2M London,Ink LLC $75.00 www.londonink.com

5. First Rule: Its about business, not research • Data points are a means to an end: Growing the business. • Research should have an ROI (revenue increase and/or operational savings) • Actionable, relevant. • Two people should each spend at least 5 hours a week on intelligence, data gathering and analysis. London,Ink Jargon Watch www.londonink.com

6. What are bad assumptions and where do they come from? www.londonink.com

7. Flawed Assumptions: They’re everywhere. www.londonink.com

8. Welcome to the Bad Business Assumption Hall of Fame • We have no competition! • Our technology is disruptive…and that’s an advantage for us! • The collect calling market is ripe for competition. (c. 1992) • This $45 billion merger will yield cost-savings, revenue growth and other synergies. It’s is a win-win-win for us, our customers and investors! • Brick and mortar retailers are dead. • The world needs a better search engine. (c. 1999) • Consumers will pay $23.95 for monthly dial-up internet service forever. • We can sell 1M Internet screen phones by 2001. (c. 2000) • We can tinker with our soda formula, then market it as “new” and sell even more! • The key to our success is to go for market share vs. profitability. (c. 1999) • People will pay for a monthly broadband content service on top of their monthly broadband access fee. www.londonink.com

9. Where do bad assumptions come from? • The “Steinbrenner” (a/k/a cram-down) • The “Emperor’s new clothes” • The “Pull” (as in where did you pull that one out of?) • The “Gartner/Forrester/Yankee said it so it must be true” • The “I Googled it last year but can’t find it now” • The “Our investors have already blessed it” (or “Our investors suggested it”) • The “I found it in a research report…from 1997” • The “Back of the envelope, placeholder, guesstimate, for planning purposes only assumption that just sort of got accepted” www.londonink.com

10. Impact of bad assumptions: Longer Meetings • Missed Objectives • Credibility • Morale • Operational Performance • Churn Side-Benefit: Solid data points can shorten endless meetings www.londonink.com

11. Crafting Your Assumptions

12. Triangulation vs. strangulation Primary and Secondary Research Friends & Family Investors Reasonable assumptions Advisors More Investors Investors’ Friends & Family Cab Drivers First Hand Experience (Lessons Learned) Competitors, Substitutes & Alternatives Separate fact from opinion. Arm yourself with data points before opinion takes root. www.londonink.com

13. Market Sizing: Use both top down & bottom upmethods Add up the known players (market share) Use reputable segment estimates www.londonink.com

14. How to avoid self-think and group-think The yes person The questioner The skeptic The group-thinker The advisor The consultant Stop guessing Be a questioner and hire questionersYour diverse team should keep you honest Put candid outsiders on your board of advisorsAnd tell them you want their input and feedback. Be conservative: you have everything to gain Always remember: we filter everything based on our own background and experiences www.londonink.com

15. Best Practices • Don’t start the justification process with the answer. • Maintain Continuous Curiosity. • Don’t discount any feedback immediately. • Stay in your customers’ shoes. And promote others who follow suit. • Customer name tag on your desk or wall • Name conference rooms after customers www.londonink.com

16. Public • Internal • Just a Phone Call Away Rich Sources of Data

17. Information ViscosityPublic information is cheap, accessible and fast • What are your competitors’ customers saying about them? • What are your customers saying about you? Research the pain points, i.e. customer churn rate, not just Company XYZ. • Blogosphere • Clusty.com • Yahoo Video • Analysts and reporters • Patent Databases “Server-Diving” • yourcompetitor.com/careers • Customer list • Speeches, interviews • What shows are they sponsoring? • What Google Adwords are they using? www.londonink.com

18. In-House Data: Lessons Learned • Sales pipeline reports • Churn/disconnect reports • Win/Loss • Bandwidth hogs • One-offs • Clicks per FAQ Failure is data too. www.londonink.com

19. When’s the last time you… Data that’s just a phone call away Rolodex Research: Friendly, meetings with prospects • Asked a customer for a critique of your product or service? • Took a customer to lunch without trying to sell them something? • “I’m looking for some feedback” vs. • “I want to sell you something” • Everyone loves to be asked their opinion, especially in their area of expertise. “Day in the life” of your customer. www.londonink.com

20. Traditional Research for Emerging Businesses

21. Various types of research • Market Sizing/Growth • Target Definition/Segmentation • Product/Pricing • Customer Experience • Positioning/Messaging • Due Dilligence Best done following secondary research. www.londonink.com

22. Research ROI Case Study #1: Quantitative Market Study • Service revenue growth falling well short of plan over 10 quarters. • Invested $80,000 and 8 weeks in definitive market study • Goal to evaluate (not validate) market and offerings. • Findings: • No real customer pain point. • While intuitively valuable to the company, service had no commercial appeal. • Results: • EOL’d business costing $3M + $800K Capex annually. • 12-Month Research ROI: 47:1 www.londonink.com

23. Research Case Study #2: Qualitative Testing • MCI Friends & Family Outbound Telemarketing • 150 live test calls to real consumers • Management used test scripts • Results/benefits: • Gauged and documented various reactions to product • Refined pitch until it worked • Provided input to product team • Built internal confidence www.londonink.com

24. Research Case Study #3: Simple Business Case Analysis • e-Commerce Start-Up Serving B-to-C market. • Revenue Model: Affiliate with e-tail sites and capture a small % of purchase price. • Gut Assumption: Breakthrough in convenient customer experience plus volume will generate rapid revenue growth. • Research: Revisited business plan to challenge assumptions. • Flaw: To become just a $30M business, every U.S. household (90M+) would have to purchase $3,500 worth of goods from this company each year for 5 years. • Result: Find new job. www.londonink.com

25. Data Sources & Tools • Purchased lists • Existing customers • Your Marketing database • Quantitative phone or Web • Focus Groups: $10K per evening www.londonink.com

26. Actionable data • Clear • Interpretable • Margin for error • Risk of implementing • Top down push www.londonink.com

27. Got it. Now where do I start? • Plan/Goal • What are your biggest information gaps or operational challenges? • Ownership • Take it on or assign a clear owner. • Scope of Activity • Is this a one-time push, an ongoing program or both? • Must-Do’s • Sanity check on business plan • Customer interviews • Competitive/substitute/alternative value analysis • Secondary Web research • Resources • Do we need specialized resources or do we have expertise in-house? www.londonink.com

28. Don’t start the justification process with the answer. • Don’t discount any feedback immediately. • Stay in your customers’ shoes. And promote others who follow suit. • DIY and empower a team member • Both should spend at least 5 solid hours per week on intelligence and data gathering Don’t Fear the Research

29. Thank You.