Sometimes I get ahead of myself in my posts, diving deep into thoughts and business issues that are way downstream in the process of growing your business. In this post I’ll swing the other way to the very beginning, where even capable founders fall off track when creating business ideas or taking them to market.
I’m rebooting a common formula that has been in use since time began for you to apply to your new or current venture. It works both when assessing a business idea and when informing a creative brief for marketing materials. This path to validating a business idea or strengthening your proposition runs through just a few short sentences that everyone should complete and survey at the earliest stages of their new venture:
I am selling my product or service to: (TARGET)
(Yeah I know this is reeeeeeeally fundamental, but stay with me. People mess even this up.)
You’ve got to be clear in your mind about who you think is going to use your product. Your target must be defined broadly enough to feel comfortable that there is enough of a market out there, while it must be narrow enough to identify common threads among the demographic.
It’s usually not enough to specify gender and age unless you’re in a narrow band e.g. graduating college students. If you feel the need to approach a wider base you must layer in several other components to the profile that can facilitate a more intimate relationship with your customer via product design and marketing. Where sensible multiple demographic dimensions, emotional states, activities and hobbies, personality traits and behaviors. Work through your targeting exercise to the point where you can almost see a few of your customers standing in front of you in a fair amount of detail. Then you’re ready to move on.
My target has the following PROBLEM or OPPORTUNITY:
Great businesses tend to start not from a product idea but from a problem definition. Solving problems by serving your target consumer is the foundation of business growth and success. The best founders don’t need to be passionate about the consumer’s specific problem; they just have to be passionate about fixing it.
What goes hand in hand is the intensity of emotion that lies in the problem faced by your consumer. The more passionately your target feels their pain point and the more intensely they have a desire to fix it is what allows you to have a business and charge (more and more) for it. Another part of the equation is the solution you provide by product or service. The experience of the solution in combination with price must meet or exceed expectations for your customer for your business to thrive.
Just today someone asked me to review a trailer for a new app a friend was about to launch. The trailer began with the benefit statement “make chatting on iMessage easier”…and then it went on to explain the product. Now I’m not an iPhone user but I have never heard or read about the iMessage UI being all that problematic. If it isn’t, you have probably lost your target consumer right from the opening; it’s great that you’re making it easier, but if that’s not a problem people are actively looking to solve, you’re cooked right off the bat. This is where many founders get led astray when they lather up some code and try to launch it without understanding if anyone wants it. Stellar marketing can’t fix it.
Understanding not only your target’s needs but their emotions attached to these needs is a necessary and tricky component to validate your business idea. Those of us who have worked in market research know that consumers don’t always tell you the truth…or are in touch with their own truth. A simple example is the personal training business. Going in, a client will tell you they are unhappy with their looks or fitness levels and wish to improve certain health metrics. Then after a session or two they embrace the reality that losing a few pounds costs money and daily trips to the gym that cause them to hyperventilate until they see stars …. and they quickly decide it’s not worth the investment in money and energy. Which is why most drop out almost immediately, citing that it wasn’t ‘fun’. And sorry, trainers, being a better cheerleader won’t bring them back.
What most clients ultimately discover is that they don’t care enough about improving their fitness levels to buy and experience that kind of solution. They want freaky cheap and easy to match their authentic passion levels, which is why the fitness insight is that most people will spend no more than about $100 total and ten mins a day to get fitter. Solutions that require much more will appeal to a market that is much more niche than you would ever think. This is why those $99 ab crunchers sell so well in January on the Home Shopping Club.
My target currently THINKS or DOES the following to address the problem or opportunity:
Before you step in with a solution, understand how they currently solve their problem or seize the opportunity. Maybe they do nothing. Maybe they have a current solution. And as a part of that, you have to understand their satisfaction levels with their current process. It’s to your benefit that they be unhappy/dissatisfied/frustrated. That spells opportunity for you. If they are generally OK with what they currently have, you might be in for a tough go, because the bar is thus set high to get their attention.
My target should want my product or service because: (PRODUCT FEATURES AND BENEFITS)
Your product must deliver all or most of the key features and benefits that your customer wants. And if they are using a competitor that delivers on some of these benefits, your solution must be equal to or better than the alternate solutions along every dimension that matters to your target. Where many products fail is by not recognizing everything that matters to the user. You can do 7 out of 8 well but failing on the eighth could cause disengagement.
Claims are of great value here. Being genuinely better / faster / easier is often a path to trial and engagement. But when you build a prototype, make sure you test your theories of superiority with a bunch of people who are not vested in your success or emotional well-being. Being superior is not easy to achieve, especially in a crowded market. A relentless pursuit of best in class user experience and value (even at a high price) will serve you well.
As stated, your solution should adeptly balance the need, price, experience and the benefit. All four must align and support one another or your proposition could collapse. This is the equation being probed when you’re asked simply, “(how much) will customers pay for this”?
My target will be more interested in trying and sticking with me because: ( REASON TO BELIEVE we can consistently perform)
The full package of price, experience that deliver on benefits needs to not only meet the user need almost perfectly but in a way that distances your product from the next best alternative. Sometimes we package this entire notion into the concept of ‘reason to believe’.
A concise statement of the reason to believe isn’t always required but boy is it a powerful tool, especially in marketing and branding. Some brands have been built on a reason to believe, even when created by smoke and mirrors. In traditional product marketing I could point to a number of more simplified examples. A good one is Pantene Pro-V Shampoo. Procter and Gamble has told you that Pantene will make your hair shinier and cleaner than the rest but that’s an empty statement without some support. They didn’t have any because, well…it’s just shampoo….so they invented support in the form of what they call ‘Pro-V’. And consumers pay a premium for it. Pro-V is the secret sauce, reason to believe the product performs, yet it’s just some made up random ingredient that scientifically adds little to the cleaning and shining process.
We’re much less gullible these days and if you are a tech startup, chances are you will need to be all that you say you are. The competition is quite fierce and the consumer threshold to be impressed is insanely high. Don’t aim for smoke and mirrors for any aspect of your product design or communication. Authenticity is a much more powerful thrust in the 21st century. And in this day and age, your reason to believe is probably going to be embedded in AI or machine learning….or some powerful tool of that sort.
Now, how do we put all this together? Let me throw out a statement from a startup I’ll randomly select. How about Wealthsimple, an online platform to make investing more simple (right?) for the user. They are being quite successful in how they are matching a solution to a problem…and they are learning to speak about it better and better. The future is bright.
When you are pitching to investors or marketing your product you will in some shape or form be auditing most of the checklist I have provided here. Let me work through an example for Wealthsimple although I have no relationship to them and am working from what I see from the outside. Nevertheless, the checklist would be compiled into a proposition that might sound like this:
Wealthsimple targets adults aged 25-54 who have between $5,000 and $1million to invest. They currently invest their money one of two ways: they use investment managers and are unhappy with the high fees or they manage their own money for free, but without the confidence in their ability to understand the overwhelming amount of choices to invest. They are looking for a solution that is economical and credible to deliver investment performance.
Our solution is a simple online portal of a contained number of investment options. Our fees are the lowest of any service available and our returns are likely to be in line with the market or slightly better.
The reason to believe in our performance is our ‘smart technology’; we have algorithms supported by a team of successful investment experts with (experience). They constantly monitor investment options to distill the best and safest ones to deliver to our platform. Our system will automatically review your portfolio and rebalance periodically to upgrade to better investments that meet your investment objectives.
Again I don’t speak for them so I might be off on a few things but that’s essentially it. And the game begins.
My favorite way to get at all of this is to talk to anyone who has a product idea. I hear about the product and they often follow with a statement such as “…..and (I think) people will love this.” My immediate question is “WHY?”, which is the most powerful question in business. And then I listen to them talk. If they answer is all about features and benefits, chances are, I’m uninspired. But if they answer by scooping up all the questions in this post — by talking with passion and insight about the end user and the competitive landscape to start — I’m much more likely to feel they are on to something.
Although this post has a very ‘101’ feel to it, I have become a bit amazed by how many founders I have met seem to gloss over most of the content here. All too often, they get anchored by an idea, and off they go into the uncertain waters of trying to build a business around it. Create this little audit for yourself and then stress test your theories using advisors, research and objective and honest business gut. Think it through before you go too far down a path, or you could find yourself needing to backtrack, assuming you haven’t already failed.
July 2017 — This best-selling author published an excerpt from his latest book on TechCrunch. He points out how difficult it is for him to find a founder who understands his or her target. I have found the same; little insight about who we are selling to.
August 2017 — Consider my check list as super high level. This one is the model for an expanded list with more detailed questions from a post on medium from an investor. Lots of content out there on what VCs look for but this is perhaps my fave so far. It’s about why VCs say no but gives you a great template of questions of what to think about right from the very beginning. And, yes, no surprise that knowing the market and your consumer cold is mandatory.
June 2019 — Here is another angle to help you identify if you’re headed in the right direction from both a business opportunity & personal level. I wouldn’t classify this as a checklist formula for success but it’s an excellent cross-check of sorts. I read this in the context of the business I’m starting and it truly resonated for its relevance. Yahoo!