If you’re building a product, your aim should be happy customers who are willing to buy your product as quickly as possible. But, most businesses fail at the very first step while writing the business plan and diving into it abruptly. Being a start-up, you might not know that the highest risk lies in the business trying to launch a product that customers are not looking for or that the business model can’t support.
Building a product that is not looked forward to can be the biggest blunder that you can make. However, building the right business model around the product that is sought for is equally important. So, before you start executing the product, you will need to test your ideas to ensure that you have matched the market and your company.
Below are three essential things to check for before you initiate executing the product.
Step 1: Product Solution Fit
At this stage, you are well aware that your customers care about certain jobs, gains, and pains of the product. You have figured out the problem and the value proposition to address your customer’s jobs, pains, and gains. However, you still have not come across the evidence that your customer cares enough about your value proposition canvas that triggers them to buy the product. In order to figure out your first step, you’ll need to follow the below process.
Understand your user and create personas:
The user personas bring your customer to life and a step closer to creating a successful product. For creating personas, it is very crucial that you understand your customers first and portray them accurately. The best way to build personas is by talking to your ideal customer and linking the, to the product features.
Create a value proposition canvas:
The value proposition canvas will help you to address the issues and match the customer profile with the pains and gains of the product. The idea of a value proposition canvas is to uncover the key products and services that you can offer to your users that solve their pains and help them gain. It helps identify pain relievers and gain creators who can help you give you a healthy starting point to think of different ideas.
Position your product:
The idea of product positioning is to fit the product in the market. It is a process of determining why your product is unique than other alternatives. The goal of this step is to convey why the product is important and how it can help them. This ensures your promotional and marketing steps to convey that the product is the best fit to meet your customers’ needs. The below process will help you to position your product successfully.
Market category: You need to study your market and look for alternatives for your product. Once figured out, you can set your product’s unique selling proposition by putting down what makes your product different from others. This will help to educate your customers and explain to them why is your product important to them. Segmenting your customers is a crucial task that you’ll need to do. The main aim of segmentation is to market your products and create the need for your customers based on the factor(s). You can segment your customers based on various factors such as demographic, geographic, behavioral segmentation, customer journey based segmentation, age group, and more.
Tagline: Once the market category and segmentation is defined, the next step is to create a tagline that describes your product or company in the best possible way. For instance, the tagline of Amazon is
“For consumers who want to purchase a wide range of products online with quick delivery, Amazon provides a one-stop online shopping site. Amazon sets itself apart from other online retailers with its customer obsession, passion for innovation, and commitment to operational excellence.”
The tagline, as in the above example, should consist of:
- Your target audience
- Company or product
- Your unique selling proposition
- Need of the customer
- Some of your business ethics
Customer challenges: Once you have created an attractive tagline, it’s time to look at your customer challenges. By this, I mean listing down the customer pain points. The pain points are the ones that customers tend to avoid that may result in dissatisfaction, challenges, frustration towards the brand. The main aim of listing the pains is to match them with the pain relievers and gain creators to convey the customers about how can the product help them. This step helps the customers to believe in the brand to meet their needs.
Company and product differentiators: The next step in positioning your product which is the process of distinguishing your product or company from others. It includes detailing the characteristics for your customers that differentiate your company or product. It is crucial to perform differentiation as there are numerous products that come into the market every single day. Too many choices can lead the consumer in a confused state, which can make him walk away from your product or company. Some ways to differentiate your products is by taking into consideration the below points
- Value: What will your customers gain from your product? What issue does it resolve for your customers? How will the product affect their lives to make it easier and better? These are some points that can be considered while you differentiate your product.
- Design, packaging, and safety: The three aspects namely, design, packaging, and safety plays a crucial role for your customer. For instance, is your product user-friendly? How attractive and safe is the packaging?
- Pricing: What is the best price that will trigger the customer to buy it? What price offers the best value for the given set of product features? Can you lower down the prices by maintaining the existing quality? For instance, if you are offering a premium product at unsurpassed quality, a higher price can be justified.
- Quality: Can you differentiate the product by surpassing the competitor’s product? Can you add some quality features that the competitors are not offering? These are some questions that can help you in determining quality as your differentiation strategy.
- Customer service: A happy customer is a loyal customer. However, for a customer to be happy requires a lot of effort. Before and after-sale customer service plays an important role that results in loyal and satisfied customers. For instance, Zomato’s way of resolving customer queries and challenges via their 24*7 customer support service can help the customer to resolve their issue in real-time.
Brand Essence: once you have figured out your differentiation strategy, the next step is to create the brand essence. The crucial attributes that you want to be known for can help you to create the brand essence for your product or company. Successful brands tend to incorporate their brand essence in the slogan or tagline. For instance, Nike’s brand statement is “Just Do It.” There is a lot that this slogan conveys to its customers. You can create a lasting brand essence by making your brand relatable to the customer’s needs.
Step 2: Product Market Fix
Product market fix occurs when the evidence of value proposition is creating value for your customers by creating their desired gains and lightning pains. According to the founder of Netspace, “product/market fit means being in a good market with a product that can satisfy that market.” In his definition, a good market means a potential market having high growth and ease of potential users.
Both the above views have one thing in common point that says about the customers. The capability of customers to pay for the product they seem to love, value, need, and but is a good starting point. The below process will help to figure out the second step
Convert ideas into hypothesis:
At this point, you must have ideas for your product. Also, you should study customer needs, expectations, and important features that can attract a wide number of customers. In order to convert your idea into a hypothesis, you may ask various questions such as
- What is our target group?
- Why does Mr. X do what he does?
- How to attract potential customers?
- How to encourage potential customers to buy the product?
One good way to meet a good hypothesis is to prioritize the above questions and turn them into a hypothesis. Now, you can think of what would be the answer to those questions. Once you have the answers, you can turn them into a hypothesis.
We often assume that we know our customers and what they want. But most of the start-ups fail at this stage. Hence, developing a hypothesis plays a crucial role in understanding your customers and meeting their expectations.
Build an MVP:
Building a Minimal Viable Product is exactly what it says on the label. The product is in the best possible size with required features and functionalities. MVP helps in testing, designing, and delivering a final product. There are businesses that fail while trying to launch a product and this is why it is important to understand the MVP process.
Build a click-through prototype: The first step in building an MVP is to build a click-through prototype with the features. The first version might not meet customers’ needs, but it will help you to understand the gap between what is needed to make the customer buy it.
Single feature MVP: Building a product with a single feature will help you understand the engagement that you get for the product. Before investing in a full-fledged product, a single feature MVP helps in further development. Since your users need to understand, the focus should be on functionality.
Sales led MVP: Here, you will need to build a product brochure site for your customers to learn about the product. You should always build the product from a sales perspective and then invest in its development. This way, it becomes easy to market the product and make it successful.
Step 3: Business Model Fit
Business model fit happens when you have evidence that your value proposition is rooted with a scalable and profitable business model. You have done everything to create a value proposition that creates value for your customers. You have found the appropriate business model to create value for your company or product. The below process will help you to achieve the right business model fit for your product or company.
Build a business model canvas: The first step towards a successful business model canvas is defining building a value proposition canvas. The value proposition canvas helps in building a business model that would be valued by your customers. It includes defining how you will solve the key problems. Each product that is developed in the market solves a problem. The product gets successful when there is a high utility or a strong solution.
Figure out pricing: The main goal of a business is deciding a price that customers are willing to pay. Reaching that price needs efforts, such as understanding your customers and what matters to them. Various businesses commit a mistake of setting to a very low or high price and choosing the wrong price structure altogether. Often, testing different prices in the market may work for a business as it is also about business perception. The business needs to ensure the value offered and the price of the product. You can have a look at a detailed article on product pricing here.
Setting a market and adoption goal: The next step is setting a goal on how many users you expect or want to have for a particular product. This will include studying your target market and its needs to come up with an accurate number. The crucial point here is not to target a high or a very low number of customers. Hence, to get an accurate number you will need to do SMART work. Further, keeping track of these customers is equally important. You will need to develop daily engagement metrics, a number of active users daily and monthly. The number thus obtained will help you to strategize marketing to reach the existing and potential users.
Evaluate revenues and paying customers: Analysing your customer profile will be the last step of your business model fit. At this stage, you will need to determine the paying customers, customer acquisition cost, retaining cost, and so on. The main aim of this step is to ensure your costs and revenues which will help in further decisions you make. If you’re incurring a loss, you might need to revisit the strategy and amend it to increase the profits.
Creating all three fits is really crucial for your product and company. At first, your fits will only reflect on paper. But, the time you reach business to fit all the things will start making sense when it will create value for your customers. Once you achieve the business model fit, you will start creating value for your product.
Though the entire process of creating the three fits looks messy and difficult, it is important for the success of your business.
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