As business owners, we want to have a very high probability of success when creating new products or services.
Product creation is expensive and risky. A flop hurts. If it’s big enough it can even kill the business.
Despite this, the product release process by most businesses is haphazard at best. Often it looks something like this:
- They design a product or service they THINK their market will buy
- They spend time, money and resources creating the product or service
- They add marketing to try to convince people to buy the product they’ve created
Many business owners fool themselves into thinking that if their product is excellent, the market will buy.
While “build it and they will come” makes a great movie plot, it’s a terrible business strategy. One which comes with a high degree of failure.
History is littered with technically excellent products that failed. A few examples include Betamax, The Newton and LaserDisc to name just a few.
THE PURPOSE OF A GOOD PRODUCT
Ask yourself, when does a prospect find out how good your product or service is? The answer of course is – when they buy.
If they don’t buy, they’ll never know how good your products or services are. As Thomas Watson from IBM famously said: “Nothing happens until a sale is made.”.
Therefore we need to clearly understand an important concept: a good product is a customer retention tool.
If we give customers a great product or service experience they’ll buy more from us, they’ll refer other people to us and build up the brand through positive word of mouth.
However, before customer retention, we need to think about customer acquisition, AKA marketing.
All the most successful entrepreneurs always start with marketing. Specifically, market testing and measuring.
FAIL CHEAP, FAIL OFTEN
The market doesn’t care about your preferences, tastes or opinions.
Adding marketing after the fact and trying to convince people to buy what you already have is difficult and expensive.
As entrepreneurs we want to turn the tables in our favor and have a high degree of success from the beginning.
Instead of adding marketing after the product has already been created, we want to reverse the product creation process and start with market testing.
As entrepreneurs, we want to find a hungry market and give them exactly what they want.
We want to shoot fish in a barrel.
We want to sell someone something they already desperately want rather than trying to convince them to buy something they are lukewarm on.
The Internet as a media makes it quick, easy and cheap to test and measure demand.
It helps us know with a high degree of certainty what kind of demand a product or service might have.
Google Adwords, the largest and most sophisticated pay-per-click (PPC) engine can help you test if your product or service idea is likely to fly or die within a few days and for only a few hundred dollars – BEFORE you spend time and money on product creation.
Here’s how the product testing process works. You set up a simple landing page which has a “Buy Now” button at the bottom. If someone clicks the “Buy Now” button, you take them to a second page with pricing, shipping and basic contact fields to fill out (e.g. email address and phone number). If the visitor fills these out and presses “continue with order,”, you take them to a third page which tells them the product is currently out of stock but you will contact them as soon as you have it available.
Your entire goal is to test how many clicks you got to your landing page and then how many of those clicks would have converted to sales had the product been available for sale.
From this basic information, you can decide whether there is true demand and whether it is worthwhile investing in the product creation process.
This way you can kill any ideas that are not converting and go ahead with a high probability of success on ideas that did convert well.
This way you can fail often and cheap rather than betting the farm and going down in a blaze of glory.
Some people aren’t comfortable with this type of real-world test. A softer alternative is to survey your customers to check for demand. This, however, has to be structured very carefully, as people will often give positive feedback to a product idea but when asked to shell out their hard-earned cash, their positivity often turns into excuses.
A real-world test is a great way of testing for true demand.
Regardless, the point is to test and measure for demand BEFORE the investment in product creation.
This is one of the best ways to achieve a very high probability of success when releasing a new product and is the best-kept secret of successful entrepreneurs.