Sheryl is VP of Marketing & Comms at Plus One Robotics. She’s won many industry awards and was named ‘Global Best Partner’ while at Apple.
Before hitting the market with a new product, whether a brand new idea or a different line of business, you need to do some research to understand how best to position your offering. It’s easy to get excited about a product and rush it out the door, but understanding whether your product is something people want or need is vital to its success. Any seasoned VC will tell you that the number one priority for a new business is confirming product market fit.
The very first thing you need to do is identify your target customer. Who needs your product? Sometimes founders are convinced that their idea is fully baked right out of the box. While unwavering belief in your product is part of a founder’s DNA, skipping the important step of identifying your audience can create blind spots and lead to moving forward with false assumptions. Knowing your ideal customer profile before dashing straight to market will prevent missteps like wasting advertising dollars targeting the wrong personas, experiencing a high rate of churn or slower growth rates.
In a 2019 CB Insights study of 311 startups that failed, 35% went under because they launched on products with no market need. The infamous case study of mobile-focused streaming service Quibi is a good example. After raising $1.8 billion, it shut down just six months later after users abandoned the platform when its features failed to captivate.
As reported in the Wall Street Journal, founder Jeffrey Katzenberg and chief executive Meg Whitman explained why market fit was a primary cause for the shutdown. “There were ‘one or two reasons’ for Quibi’s failure: The idea behind Quibi either ‘wasn’t strong enough to justify a stand-alone streaming service’ or the service’s launch in the middle of a pandemic was particularly ill-timed. Unfortunately, we will never know, but we suspect it’s been a combination of the two.”
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In early-stage startups, Marketing is the best team to conduct this product research, in conjunction with the Product team. Large organizations may have a product marketing function, but in many startups this is a shared responsibility driven by Marketing. The marketing team already understands the audience, and perhaps more importantly, how to communicate with them. Hand over the reins and let them do their magic.
Here are four ways marketing can help determine product market fit.
Focus And User Groups
At the most basic level, the purpose of a focus group is to get folks from a similar demographic group together to talk about or use the product and provide honest feedback. It’s an age-old, tried-and-tested way to gauge customer interest and gain valuable feedback. On a smaller budget, you can run a focus group in-house to keep costs at a minimum. If budget permits, commission an analyst house or market research company to execute a larger-scale survey.
A user focus group is a necessity if you’re launching an app or a web-based product. Sure, friends and family can test your app, but that isn’t enough. Chances are they are inherently biased. Make sure to get a neutral group of people to trial your app. Avoid the temptation to guide them through, instead, let them navigate on their own. Use a one-way mirror for observation. Conduct follow-up interviews anonymously. This is how you get impartial, in-depth feedback and insights that can help you fine-tune or course-correct at the pre-launch stage.
Running a hackathon prior to finalizing software or a technology product is a smart way to bring a knowledgeable community together to assess market fit and it’s also a cost-effective way to road test your product for bugs and security issues. Marketing teams at companies like Apple host hackathons to entice the best and brightest engineers to try out a new product, smash bugs and, in some cases, build a new feature quickly. Hackathons can be great for recruitment too.
A well-designed survey can quickly (and inexpensively) help you develop insights into your target audience’s preferences and behaviors. Veteran marketers know that an unbiased survey audience is crucially important to get a real lens on your product. For example, sending your survey only to your most enthusiastic or engaged customers will skew your results inaccurately. If budget permits, hire a marketing survey company to help facilitate the outreach and identify the best respondents. Remember, you don’t need hundreds or thousands of responses. Survicate, a customer survey platform, reveals you need 40-100 responses for the results to be meaningful.
Customer Experience Center (CEC)
Magic happens when you can preview new products or products in development to existing customers in order to gauge their reaction or interest level. Existing customers are already supporters of your business and typically have an active interest in what’s coming down the line. Seeing is believing, and that’s exactly what happens in customer experience centers (CECs). At our CEC, visitors see robots in action as well as our ‘lab’ area where they can see robots being built. From technology companies to engineering firms to sports teams, many businesses operate CECs as an engaging way to get customers on their home turf and fully immersed in the products.
Marketing is a useful tool when validating a product and determining market fit. Be sure to take the time to research and test your hypothesis before jumping into the market with your big idea.