Important Customers – Comparing Products Part 5

A good product is one that solves valuable market problems. To be successful in the market, a product needs to solve the problems that the right customers are willing to pay to solve. To know if those customers are willing to pay, you need to understand how they perceive your product relative to alternative solutions. If you’re new to the series, head back to the intro article on comparing products, and catch up with this article, where we look at pulling together the information about which customers are important.

Overall Product Comparison Process

This is a relatively long series. Each article will start with a recap of the overall process.

Getting useful information from comparing products requires you to:

1. Introduction & Overview (so that the step-numbers align with the article numbers)
2. Identify your customers.
3. Articulate the problems they care about solving.
4. Determine how important solving each problem is, relative to the other problems, for your customers.
5. Characterize how important it is for you to solve the problems of each group of customers. (This article)
6. Discover which (competitive) products your customers consider to be your competition.
7. Assess how effectively each competitive product solves each important problem.
8. Assess how effectively each competitive product solves each important problem, for each important group of customers.

With this information, you can create a point of view about how your product compares to the others.

Target Personas

Previously in the series we identified (and refined) a set of personas that make sense for comparing products that compete with the Amazon Kindle. [Note: for people new to the series, this is a hypothetical analysis – using manufactured data – with the goal of showing the mechanics of how to do the analysis, not an actual analysis of real market data.]

1. Tina – A hi-tech prosumer who is using the device to get smarter about the latest trends in her industry
2. Tim – A hi-tech prosumer who is using the device to enjoy niche fiction content, particularly comics, e-zines and self-published works
3. Kenny – A typical kindle user who is using the device for his work in the finance space, studying proposals and business plans, etc
4. Karla – A typical kindle user and voracious reader who is using the device to eliminate the large pile of books on her nightstand
5. Chris – A basic consumer who would is studying business in college
6. Christina – A basic consumer who is in a book club, and who is always reading the latest best seller

[…]
We also identified a set of problems that these personas would want to solve.

1. Read Anywhere – Be able to read content in multiple physical environments / on multiple devices, and not lose my place in the book.
2. Annotate – Be able to annotate / highlight what I’m reading for future review.
3. Talk About It – Be able to have conversations with other people who are reading what I’m reading.
4. Find More to Read – Make it easier for me to find other content that I would like to read.
5. Subscribe – Be able to subscribe to magazines / newspapers / blogs / serial publications.
6. More From My Network – Be able to read what people I trust are reading.

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Comparing Products Part 3 – Market Problems

You can’t create great solutions for all of these problems, for all of these customers, at the same time. This is one of the two main failings of the bureaucratic approach I’ve seen large companies take (the other one is using a long waterfall process, that even if it succeeds, results in a product that solves yesterday’s problems by the time it is released). The old process would have you gather inputs from multiple stakeholders, identify multiple target customers and the capabilities needed to support them, and roll it all up into a giant document with MoSCoW reflections of the importance of each capability. Since every capability is important to someone, every capability ends up being “important.”

If you’ve worked on a non-agile project, you’ve seen this: Everything is high priority.

Except it isn’t. The problem that the monolithic document, waterfall processes does not take into account is that while everything may be important, not everything is urgent.

Only items that are both important and urgent are high priority.

Every problem identified in our example is a “five” to at least one of our personas. If you’re trying to be all things to all people, they are all important. Figuring out which ones are urgent requires you to form a strategy on which problems you need to solve first.

Solve for One Persona First

This process is informed (biased?) by insights that resonated for me from the writings of Seth Godin, Al Ries & Jack Trout, Geoffrey Moore, Hayden Christensen, and innumerable conversations with other product professionals. In summary, it has bubbled up into the following perspective from me.

• A product that is great for some people, even if unusable for other people, is a great product.
• A product that is usable by many people, but great for none of them, is a bad product.
• If you wait until your product is “perfect,” or even “great for a lot of people,” at best you will deliver yesterday’s product and no one will care anymore.

Believing this, my approach then is to ask:

• For whom should we build first?
• What do those customers expect and what will they love?

Those expectations are set, in part, by your competition – your market is a moving target – which is why comparing products is important to figuring out what problems to solve first, and how well you need to solve them.

Another way to think about it – success in your market is a reflection of aggregate sales. But sales don’t come in aggregate. Sales are made one at a time. In any given sales conversation, your customer prospect is comparing your product with your competition. If your customer has two choices – the first being marginally interesting (even if it happens to be marginally interesting to “everyone”), the second being “perfect,” which one will the prospect choose? For any given sale, you want the reasons why that customer would purchase your product to be overwhelming. You want to be the product that is perfect, not the product that is tolerable.

Even if your goal is to sell to “everyone,” you can’t launch your product with it being the “perfect” product for everyone. You can launch with a focus on a single persona. Note that I didn’t say with a product that is “perfect” for a single persona. You probably don’t need to wait until it is perfect to start selling it. You certainly shouldn’t wait until it is perfect before introducing it (and getting feedback that helps you improve) to people that are represented by your target persona.

When you think about the minimum viable product (MVP), the minimum is not “be tolerable to everyone” – it is “be good enough for someone.” Focus first on one group of people. And figure out where your minimum bar is. That minimum bar is defined by a combination of

• Which problems are important to solve – if you don’t solve the “showstopper” or “table stakes” problems, you don’t have an MVP, and won’t even be part of your customer’s decision process
• How well do you need to solve each of these problems – the next article in this series gets into this, but it is primarily a matter of matching or exceeding customer expectations, which are informed (or anchored by) how well competing solutions solve those problems today.

Picking the Right First Persona

There are a bunch of factors that can feed into the appeal of targeting any particular persona first:

• Market Size – Fish Where the Fish Are. All things being equal (although they never are), the largest market is the most attractive market. How you define “size” may influence which market you pick however. Is it the market with the potential for the most units sold? The one market with the highest revenue potential or the one with the highest profit potential?
• Cross-Market Influence – After you’ve launched, you need a plan for growth. Do you grow by gaining market share with your target persona, by growing share of wallet (sell more stuff) with your existing customers, by growing into adjacent markets (other personas). Does picking one target persona first, and making them rabid fans, help you transition into other markets? The best way to sell me a gadget is to convince the digerati (The Verge, Engadget, etc) that it is the best product ever. The best way to sell my mom a gadget is to convince me.
• Higher-Level Strategy – Your product may only be part of a portfolio of products and services. Your company may be focused on owning a niche, like being the technology supplier to all health care professionals. The strategic value of being a “full service provider” or of preventing the entry of a competitor into a market segment by satisfying the personas in that segment may dwarf the value of any siloed value of your product.
• Risk Mitigation – This is the Lean approach. With which group of customers can you most quickly, most cheaply, and most effectively test your hypothesis that you have a great product that will satisfy needs and succeed in a large market? Early adopters are the most forgiving technology customers, and often provide the most insight about what problems the larger markets will care about later. There’s also implicit value in the “gee whiz” factor of novel solutions to existing (and new) problems. You can put out a beta version of a product to early adopters, where they are ok with some bugs, workarounds, and missing capabilities. This isn’t likely to be your end goal – you’re serving these people first in order to more effectively serve another market next.
• Ease of Entry – Nature Abhors a Vacuum. There may be a persona for whom none of the existing (competitive) products provides particularly compelling solutions. You may want to attack this segment first, because easy early sales can fund your company and keep the lights on while you tackle the larger, and likely more competitive, market. I think that one of the reasons the Innovator’s Dilemma happens is because there is a niche market with unsolved problems, into which companies introduced products that eventually (through improvements in the product, and changes in the needs of the larger market) becomes competitive and eventually displaces the original leaders in the larger market.

Jason Cohen, founder of Smart Bear Software, wrote a great piece on finding the “perfect customer” – an example of the risk mitigation approach. The conversation on Jason’s article is great too – and I love one of his comments: “There’s no such things as ‘5x better’ if there’s no customer in mind. Because “better” is in the eye of the beholder.”

Your overall approach will determine the different weightings you apply to each of these factors. As a couple straw men for this example, Amazon might be taking a red ocean (beat the competition in an existing, defined market) or a blue ocean (“create” a new market by solving different problems) approach. Those approaches might yield the following initial relative weightings:

For the personas in this example, I’ve made up the following reflection of their relative attractiveness along each axis.

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These 1 to 5 values reflect the relative attractiveness of each persona for each strategic approach. For example, the size of the potential market of people like Christina is much larger than the size for any of the other personas. Note that the Ease of Entry field is shown in orange versus green to emphasize that these initial values reflect a guess at the ease of entry – a general perception of how effectively existing products address the needs of these personas for the problems we previously identified. When you do the more detailed analysis in future steps, you should circle back and revisit these values. In Marketing Warfare by Ries and Trout, they point out the importance of the linkage between strategy and tactics – each informs the other. A tactical understanding of your market (like an understanding of the competitive products)) will inform the best strategy – the strategy that comes from an ivory tower will fail in the field. That philosophy is consistent with the iterative process of refining a comparison of products, as part of informing your strategy.

The strategic approach you choose will impact the “pseudo-math” of which persona is most important. Consider the two examples – when you use the percentages from the first two tables to apply a weighting to the assessment of each strategy aspect, you get the following:

[larger Red Ocean image]

A Red Ocean Approach would indicate that Christina is the most important persona on which to focus. The combination of the large market size of basic consumers reading for entertainment, along with an overall strategy to focus on the broad market makes Christina your target.

[larger Blue Ocean image]

A Blue Ocean Approach would indicate that Tina is the most important persona on which to focus. The perception that no other products address her problems dominates the other factors. Once we confirm that no one is solving the market problems that we know are important to Tina, we will have market data that validates that a blue ocean strategy is viable.

There are a lot of numbers here, and definitely a risk that you let the numbers overwhelm decisions and drive everything mechanically, like a computer algorithm. That would be bad. Where this data-driven view is useful is in giving you a framework for questioning the strategic approach. The “math” highlights that a strategy of going toe-to-toe with competitors, and attacking the largest market first says Christina is the persona on which you should focus. A blue ocean approach would drive you to emphasize investment in solving the problems that are important to Tina. You also get a feel for how many “happy accidents” you might get along the way, by also “accidentally” creating a great product for Kenny & Chris while focusing on Tina, because the problems that Tim cares about also happen to be ones that Tina cares about.

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Remember, though, that the Ease of Entry initial guesses will change as soon as you pull together detailed information about how effectively competitive products address the problems that are important to each persona. Next we’ll look at the competition.

Summary

To create a competitive product, you need to know which customers on whom you should focus and for which problems they would value solutions. There are always more potential customers, with differing needs and perspectives, than you can build product to satisfy. You need to figure out which customers to focus on, and which ones you consider a “happy accident” if you acquire them. Even if your management team insists that your product is “for everyone,” you need to know for which customers you will solve best and deliver first.

Recapping the overall flow of this series of articles on product comparison

Getting useful information from comparing products requires you to:

1. Introduction and Overview (so that the step-numbers align with the article numbers)
2. Identify your customers.
3. Articulate the problems your customers care about solving.
4. Determine how important solving each problem is, relative to the other problems, for your customers.
5. Characterize how important it is for you to solve the problems of each group of customers. (This article)
6. Discover which (competitive) products your customers consider to be your competition.
7. Assess how effectively each competitive product solves each important problem.
8. Assess how effectively each competitive product solves each important problem, for each important group of customers.

With this information, you can create a point of view about how your product compares to other products.

Attributions

Thanks Jon Worth for the skater photo.

Thanks Larry Lamsa for the skateboarder photo