Launching a successful small business or startup can be challenging. In many ways, the deck is stacked against entrepreneurs. Larger organizations have more manpower and more money, not to mention established product-market fit. But running a successful small business or startup is one of the most rewarding things a professional can do, so it’s little wonder so many are still pursuing the job.
Now that you have developed a popular online business idea and learned a thing or two about establishing business credit, you’ll want to shift your attention to creating a product that achieves product-market fit.
For those unfamiliar with the term, product-market fit refers to the moment at which a product meets the needs and wants of members of the target market. This process can take years to achieve, but once established, it can make things much easier for your business.
Create an open feedback loop between product teams and go-to-market teams
Contrary to popular belief, developing a successful product isn’t the responsibility of product managers and engineers alone. In fact, go-to-market teams — like marketing and sales — have a responsibility to share feedback from prospects and customers with product leads on a regular basis.
Business leaders must ensure that their organization has a feedback loop whereby go-to-market teams gather and share customer and prospect feedback in an organized fashion. It’s best if this feedback can be associated with various customer types and deal values; that way, product managers will have an easier time understanding how various pieces of feedback should be prioritized.
Another way for organizations to create a feedback loop is to create automated reporting systems that share data collected by go-to-market teams with product teams. For example, product teams should have access to the performance metrics of marketing and sales teams.
Prospect and customer data can be analyzed to determine if particular value propositions are resonating with the target audience, or real-time data can be reviewed to determine if a particular feature could dramatically boost revenue if properly developed.
Lastly, product teams should have a hand in developing the collateral used by go-to-market teams. This is the best way to ensure marketing and salespeople are properly communicating the value proposition and functionality of various features with the target audience.
Realize innovative ideas may not come from customers
According to data cited in HuffPost, roughly 12 percent of businesses are able to successfully sell existing customers new products. Given this staggering statistic, Apple’s incredible success in upselling and cross-selling is all the more impressive.
But Apple didn’t build a remarkable brand by always listening to their own customers. Instead, Steve Jobs and other leaders within the organization realized that in some cases, the customer doesn’t know what they want (and isn’t always right!).
Apple focused on building innovative products that created or defined markets. The products were so innovative that customers would never have thought to recommend them without first seeing the finished product.
While product-market fit often comes from carefully listening to customer demand, product leaders should not focus exclusively on customers’ solutions to their own needs and wants.
In developing the iPod, Apple created a product to solve a common consumer problem — storing and listening to music on-the-go — but Apple didn’t rely on customer insights to develop the solution.
Experiment with pricing early on
It can take time to find the optimal price for your product, even after you’ve found product-market fit. That’s because pricing isn’t always about matching price to consumer expectations. Duke University professor Dan Ariely found that price is just as much about psychology as it is about anything else.
In a famous TED Talk, Ariely reviewed the Economist’s pricing page. The company offered three subscription options: a digital-only option for $ 65, a print-only option for $ 125, and a digital plus print option for $ 125.
Ariely found that most shoppers chose option number three, with the reason being that the pricing model presented caused people to start looking for a bargain, not challenge the value of the individual offerings. By experimenting with pricing, you may stumble upon a similarly powerful psychological phenomenon.
Finding product-market fit is one of the single most important challenges a business must overcome in order to become successful. By implementing these strategies, business owners will be able to accelerate the pace at which product-market fit is achieved.
What tips do you have for developing a product that finds traction? Leave your suggestions in the comments.
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