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Steve Blank Jon Feiber Jon Burke http://i245.stanford.edu /. The Lean LaunchPad Lecture 5: Customer Relationships. Source: http:// giffconstable.com /. value proposition. key activities. customer relationships. key partners. customer segments. cost structure. revenue streams. key

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steve blank jon feiber jon burke http i245 stanford edu
Steve Blank

Jon Feiber

Jon Burke

http://i245.stanford.edu/

The Lean LaunchPadLecture 5: Customer Relationships
slide3

value proposition

key activities

customer relationships

key partners

customer segments

cost structure

revenue streams

key

resources

channels

2

images by JAM

slide4

CUSTOMER RELATIONSHIPS

what relationships are you establishing with each segment? personal? automated? acquisitive? Retentive??

we call customer relationships demand creation
WeCall Customer Relationships Demand Creation
  • Get, Keep and Grow
  • How will customers hear about your product?
  • How much will it cost to acquire a customer using these strategies?
  • How does market type impact my demand creation strategy?
who needs to hear about you
Who needs to hear about you?

End User

Suppliers

Influencer / Recommender

Channels

Economic Buyer

Government

Decision Maker

Partners

demand creation getting free users
Demand Creation Getting Free Users

Demand

Creation

  • Search Engine Optimization (SEO)
  • Blogging / Sharable content
  • Social Media / Gaming Mechanics
  • Communities
  • Proven viral coefficient >1
demand creation paying for users
Demand Creation Paying For Users

Demand

Creation

  • Public Relations
  • Demand Capture
    • SEM
    • “Free” products (e.g. widgets)
    • Biz Dev
    • Affiliate Marketing
  • Market Education
    • Webinars
    • Email marketing
    • Trade Shows
    • Analyst Reports
    • Direct Sales
    • TV / Radio
get customers funnel physical
Get Customers Funnel - Physical

“Get Customers” Funnel

Interest

Awareness

Consideration

Purchase

keep customers funnel physical
Keep Customers Funnel - Physical

Earned and

Paid Media

Loyalty Programs

Get Customers

product updates

Awareness

Keep Customers

Consideration

Purchase

Interest

Customer check-in calls

Customer satisfaction survey

grow customers funnel physical
Grow Customers Funnel - Physical

Earned and

Paid Media

Grow Customers

Get Customers

product updates

Loyalty Programs

Un-Bundling

Awareness

Keep Customers

Up-Sell

Cross-sell

Referrals

Consideration

Purchase

Interest

Customer check-in calls

customer satisfaction survey

get customers funnel web mobile
Get Customers Funnel – Web/Mobile

“Get Customers” Funnel

Acquire

Activate

Viral Loop

demand creation feeds the sales funnel1
Demand Creation Feeds the Sales Funnel

Earned and

Paid Media

PR

“Get Customers” Funnel

Viral Mktg

SEO

SEM/PPC

Acquire

Activate

Blogs/Website

Affiliate Mktg

Advertising

Tradeshows

Viral Loop

keep customers funnel web mobile
Keep Customers Funnel - Web/Mobile

Earned and

Paid Media

“Get Customers”

Product updates

Affiliate Programs

Keep Customers

Activate

Acquire

Contests,

events

Blogs, RSS, emails

Loyalty Programs

Viral Loop

grow customers funnel web mobile
Grow Customers Funnel - Web/Mobile

Earned and

Paid Media

Grow Customers

product updates

Affiliate Programs

Keep Customers

Acquire

Activate

Referrals

Up-Sell

Cross-sell

Next-Sell

Contests,

events

Blogs, RSS, emails

LoyaltyPrograms

Viral Loop

slide24

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?
demand creation by market type
Demand Creation by Market Type

Existing

  • Educate the market about what’s changed
  • Drive demand into channel

Resegmented

  • Educate the market
  • Identify/drive early adopters into your sales channels

New

  • Copy a business

Clone

  • Create, drive demand into your sales channel
market type
Market Type

How does market type influence demand creation?

Market Type determines:

  • Rate of customer adoption
  • Sales and Marketing strategies
  • Cash requirements
team deliverable by next week web
Get a working web site and analytics up and running

Track where your visitors are coming from (marketing campaign, search engine, etc.) and how their behavior differs

What were your hypotheses about your web site results?

Actually engage in “search engine marketing” (SEM)

Spend $20 as a team to test customer acquisition cost.

Ask your users to take action, such as signing up for a newsletter.

Use Google Analytics to measure the success of your campaigning.

Change messaging on site during the block to get costs lower, team that gets the lowest delta costs wins.

If you assume virality

show viral propagation of your product and the improvement of your viral coefficient over several experiments

What is your assumed customer lifetime value?

Are there any proxy companies that would suggest that this is a reasonable number?

Team Deliverable by Next Week - Web
team deliverable by next week
For non-web teams:

Get prototype demo working.

Build demand creation budget and forecast.

What is your customer acquisition cost?

Did anything change about Value Proposition or Customers/Users?

What is your customer lifetime value? Channel incentives – does your product or proposition extend or replace existing revenue for the channel?

What is the “cost” of your channel, and it’s efficiency vs. your selling price?

Everyone: Update you blog/wiki/journal

What kind of initial feedback did you receive from your users?

What are the entry barriers?

Present and explain your marketing campaign. What worked best and why?

Team Deliverable by Next Week
slide30

Christian Gutierrez (EL), Ellis Meng (PI), Carol Christopher (IM), Tuan Hoang (FE)

implantable drug infusion pumps

with remote physician control

for chronic pain patients at home

“the right dose at the right time and place”

slide31

Chronic Pain v4

FS Team

Trade shows

Training

Faster relief

Patients

KOLs

Formulary Acceptance

Clinical data

Efficient patient management and Dosing flexibility

FDA

Foundations

Clinicians

Support

CMS (Medicare)

Advocacy Groups

Access to high-value therapies and pharmacoeconomics

OEMs

Institutions

IP

Hospitals

Wireless Developers

Proprietary knowledge

pharmacoeconomics

Pain clinics

Payors/ICA

Electronic health record providers

Human Resources

Unit sales

Product Dev Costs

Manufacturing Costs

Support Services

Marketing Costs

FDA/Clinical Trials

Bundled kits

Electronic records

getting out
Getting out

Clinicians

Institutions/patients

Regulatory

Entrepreneurs/

Industry

  • Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy)
  • Dr. Giovanni Cucchiaro, Anesthesiologist (CHLA)
  • Dr. Diana Hull, Physician (Group Health in Washington state, formerly at Kaiser California)
  • Thomas Hsu, Insurance Specialist (Network Medical Management; a California ICA)
  • Two chronic pain patients
    • Pump user and creator of support forum
    • User of oral narcotics and patches
  • Dr. Frances Richmond (Director Regulatory Science Program, USC)
  • Richard Hull (formerly at company selling Lapband)
slide33

Product flow/Channel

Patients

Electronic Health Records

Fluid Synchrony

Partners/

OEMS

Electronic Records

Support Services

Bundled Kits

Pump + Controller

Pain Clinic

(Anesthesiologists

Neurosurgeons)

Hospitals

(Anesthesiologists

Neurosurgeons)

.

slide34

Channels (Direct)

Hospitals

Pain Clinics

  • Direct to institutions
    • Some formularies involved in purchase decisions
    • Some doctors make purchase decision directly
  • Device company/Doctor relationship is key
  • Heavily influenced by :
    • Clinical study results
    • Regulatory approval
    • Reimbursement
slide35

Patient Care Flow (Now)

Trial period/ Home setting

Surgery/Rx/

reprogramming

Scheduled follow-up

Fluid Synchrony

Partners/

OEMS

Support Services

Bundled Kits

Pump + Controller

Pain Clinic

(Anesthesiologists

Neurosurgeons)

Patient Discharged

Hospitals

(Anesthesiologists

Neurosurgeons)

Weeks/months

Key factors: Reimbursement , state regulations

slide36

Patient Care Flow (Proposed)

Trial period/ Home setting

Surgery/Rx/

reprogramming

Electronic Health Records

Scheduled follow-up

Fluid Synchrony

Partners/

OEMS

Electronic Records

Support Services

Bundled Kits

Pump + Controller

Pain Clinic

(Anesthesiologists

Neurosurgeons)

Patient Discharged

Hospitals

(Anesthesiologists

Neurosurgeons)

Actionable feedback

to doctors/institutions

.

E-prescription / closing loop

Weeks/months

Key factors: Reimbursement , state regulations

Days

slide37

Regulatory considerations

  • PMA approval with grouping of FDA approved drugs.
  • Clinical trials results used to obtain CMS (Medicare) approval
  • 510K restricts technology to predicate devices
    • Can be more difficult to market against incumbents
  • European CE mark is easier to attain (safety and performance only)
slide38

Take-aways

  • Channel is direct in this existing market
    • Channel for e-health is more complex and evolving
  • State-to-state regulations can impact incentives
    • Can pose problems as electronic records systems vary across the country

Next Steps

  • Understand costs associated with reaching doctors/institutions directly
  • Understand structure of e-health channel
  • Develop regulatory pathway (timelines and cost profile)
slide39

Chronic Pain v4

FS Team

Trade shows

Training

Faster relief

Patients

KOLs

Formulary Acceptance

Clinical data

Efficient patient management and Dosing flexibility

Foundations

FDA

Clinicians

Support

Advocacy Groups

Access to high-value therapies and pharmacoeconomics

OEMs

Institutions

IP

Hospitals

Wireless Developers

Proprietary knowledge

pharmacoeconomics

Pain clinics

Payors

Electronic health record providers

Human Resources

Unit sales

Product Dev Costs

Manufacturing Costs

Support Services

Marketing Costs

FDA/Clinical Trials

Bundled kits

Electronic records

slide40

“insero” = to plant ”gen” = gene

Lucas Arzola (EL)

Karen McDonald (PI)

Vasilis Voudouris (Mentor)

Manufacturing platform for

rapid, cost-effective, and scalable

production of therapeutics in tobacco

what we know
What We Know

We have a novel technology platform with numerous market opportunities

Our working hypothesis – that we can scale up and commercialize our platform for production of life-saving therapeutics

Jon Feiber – “Since you are a platform technology, it makes sense to engage in ‘market discovery’ and ‘customer discovery’ at the same time during the next weeks”

Challenging this hypothesis by speaking with as many experts and customers as we can

This week: explored decision making and distribution channels in the case of a pandemic

slide42

The Business Model Canvas

Target Product – seasonal & pandemic flu vaccines

  • Tobacco Suppliers
  • Gene Synthesis Companies
  • CMOs
  • - Purification
  • Fill & Finish
  • - Packaging
  • QA/QC
  • CROs
  • Clinical Trials
  • FDA

R&D

Manufacturing

Regulatory Approval

Licensing

Marketing

Speed

Cost-Effectiveness

Robustness

Scalability

Safety

Ease of Customization

U.S. Supply

Long-Term Contracts with Government and Vaccine Manufacturers

  • U.S. Government
  • CDC
  • HHS BARDA
  • DOD DARPA
  • Foreign Governments
  • NGOs
  • Vaccine Manufacturers
  • Established and Emerging Biotech

IP – Patents, Trade Secret

Manufacturing Facility

Distribution through Government and Pharma Companies

Capital Investments

Manufacturing Costs

Licensing Costs

Marketing

Contract Manufacturing

Fully Integrated Manufacturing (Sales)

Licensing (Royalties)

getting out of the lab
Getting Out of the Lab!
  • (2) Entrepreneurs and angel investors from Sacramento

Cast a broad net by talking to many different experts and customers:

(1) Executives from large companies

getting out of the lab1
Getting Out of the Lab!
  • (3) Experts in the commercialization of biotech platform technologies

(4) Experts in vaccine manufacturing

channels and distribution
Channels and Distribution
  • Conversation with Dr. Ann Arvin – Key Opinion Leader on vaccines

In the case of a pandemic:

  • Vaccine manufacturers have to be producing vaccines for seasonal flu – regulatory approval, QA, and validation need to be in place
  • When a pandemic occurs, the government (BARDA) negotiates a manufacturing contract with vaccine companies – number of doses, formulation, price, and time are agreed upon
  • CDC provides the elucidated strain to the manufacturer
  • FDA considers the pandemic flu vaccine to be a variation of the seasonal flu vaccine – new regulatory approval is not necessary
  • Vaccine manufacturers work with the new strain to ramp up production as quickly as they can – takes 4-6 months
  • Sterility and quality testing is performed for the produced vaccines – some tests are done in-house and some are done by outside laboratories
  • Vaccine is released
channels and distribution1
Channels and Distribution

Getting the vaccines to the patients

  • Vaccine manufacturers have contracts with wholesalers (i.e. McKesson Corp.) to distribute the vaccines – distribution is not a cost for the manufacturers, they hand over the product
  • In the case of a pandemic, vaccines are also distributed through local contracts with the state health departments
  • Theydistribute the vaccines to hospitals and clinics, where they can be administered to the patients
organizational strategy
Organizational Strategy

Conversation with Greg McParland – Former CEO of biotech platform company: the virtual biotechnology company model

“Starting out and for as long as you can, you should be a virtual company. You can have contracts to outsource the downstream part of the process (purification, fill and finish, packaging, etc.) ”

“Keep your core technology and focus on using your manufacturing platform for protein production”.

Common practice in biotechnology – almost every company has contracts with CROs, CMOs, marketing and distribution arrangements, etc.

More flexibility – move quickly from failed avenues of research to more promising projects

Startups partner with big pharma companies to complete clinical trials and take product to market

“If you build it, they will come” – but only build the essential core that lets you control your technology platform

more feedback
More Feedback

Conversation with Dr. Ann Arvin – Key Opinion Leader on vaccines

  • Pain point: Reliability issues with traditional egg platform - willingness to move away to a different manufacturing platform
  • Pain point: Current platforms are not fast enough, cannot have an impact in case of a pandemic - sense of urgency in finding a manufacturing platform that can produce vaccines faster and at a large scale
  • Given this landscape, we still believe our technology can solve a significant problem in the vaccine market
  • Conversation with Dr. Misa Sugui & Dr. Floro Cataniag – MedImmune
  • Pain point: attenuated virus platform is harder to work with, safety measures are more stringent – would prefer recombinant subunit vaccines
  • Wish: a faster process for vaccine production (our technology can help with this)
  • Wish: a faster process for clinical trials and for approval of new drugs (this we can’t do anything about)
  • MedImmune is a possible partner - always looking for new vaccine production technologies and new products to incorporate in their pipeline
more feedback1
More Feedback
  • Conversation with Fernando Garcia – Amyris
  • Biotech platform technology company
  • First target product: drug for malaria, partnered with Sanofi to commercialize
  • Change in strategy: they have transitioned into making biofuels
  • Why have they made this transition? We will follow up with one of the founders of the company to find out
next steps
Next Steps

We believe we have a good feel for our value proposition

We need to better understand how we can sell to customers and how to establish these relationships, how partners’ decisions are made – meeting with Sanofi Head of External R&D

Keep searching for a business model that will allow us to commercialize our technology – looking for meetings with companies that distribute/sell flu vaccine antigens for research and diagnostic use, trying to determine market size

We need to talk to many more experts and customers…

interviews
Interviews

Action

Motion

Planned Customer Interaction Meetings:

Jeff Farbacher, CEO Accutran

Ed Faust, Global Marketing, Siemens

Charles Noll, Marcellus Shale Coalition

Customer Interaction Meetings:

Director of R&D of C/A partner

NETL Methane Hydrate RG

Ed Faust, Global Marketing, Siemens

Former GE Employee

Berkeley sensors group

Tim Fogarty, Director of IW Energy

  • Planned Hypothesis Testing:
  • Dr. GiladKusne, NIST
  • Ann Truschel, Corporate Insurance Broker
  • Tim Fogarty, Director of IW Energy

Hypothesis Testing:

Ed Faust, Global Marketing, Siemens

slide53

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d

d

Chemical,

Physical,

Thermal

….

Chemical

Marketing Agency

  • Every significant market segment has specific marketing agencies directed towards selling them goods

n

Direct Marketing

u

Possible

Not Possible

[Too expensive]

slide54

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Chemical,

Physical,

Thermal

….

Chemical

Marketing Agency

  • Every significant market segment has specific marketing agencies directed towards selling them goods

n

Direct Marketing

u

Possible

Not Possible

[Too expensive]

slide55

Direct sales to plants typically is a very hard way to generate scalable business in the sensors market.

Typically much better to bundle product into offerings from larger sensors businesses

Agrees with current approach to this first market!

t

t

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Chemical,

Physical,

Thermal

….

Chemical

Marketing Agency

  • Every significant market segment has specific marketing agencies directed towards selling them goods

n

Direct Marketing

u

Possible

Not Possible

[Too expensive]

org chart current c a partner
Org. Chart – Current C/A Partner

CEO, CTO, CFO, etc. etc. etc.

Global Director of R&D

CEO,

Director of R&D

Director of Marketing

Director of Product Service

Engineers, etc. etc. etc.

Director of R&D