New Product Here: Who wants it? (Part 1)
Delivering Bad News
A couple of years ago, I had to give a great friend some really bad news. It took me weeks to do it and hours to shape it — to make sure I wasn’t too harsh, too negative, dumping too much rain on the parade.
But he asked for my opinion, and I had to tell the truth — he had a terrible business plan.
To set the stage, my friend, “Bob”, had been working on this business for two years. He was recruited by the inventor to help bring this new product to market. He had an equity stake in the new company — sweat for stock.
By the time he reached out for my help, their LLC had ordered the first 25,000 units and were one month away from launch. He had already pulled the soft-launch to Facebook friends.
I received all the documents just about that one month before launch.
What I saw then, makes a great case study. Especially with hindsight and knowledge of what has become of the product and the company. In writing this up I decided to break this case into pieces, because each piece is a great lesson unto itself. There is a take-way from every small chip in the strategy.
The basics
Across the full business plan, there were a myriad of issues, but I want to focus on some of the basics. Since they didn’t have these right, all the other stuff really didn’t matter. And the basics discussed here are material to anyone operating a business and looking for, simply, more customers and more money coming from your business strategy.
To be fair, these guys were first time entrepreneurs and, more importantly, first time ‘product’ guys. There might be a few readers that have tripped up on the same parts of a business strategy that Bob and his team did. There are great lessons here.
Who’s the Customer?
As I dug in, I went for the market and customer descriptions within their plan. I didn’t know the market well and wanted to get a clear picture of who would use this new product.
Here is what I found:
- The market is “fitness”
- The customers include: weight lifters, military staff, marathoners, sprinters, yoga students, physical therapy instructors, coaches . . . This was all listed on the home page too
- The product has “so many uses”
Do you see what I saw?
The target customer is much too broad. There are many many sub-segments in this market. A favorite quote I have spouted in other similar situations is:
“Something for everyone is nothing for anyone”.
Trying to serve all segments will not deliver a valuable, tangible, desirable, emotional result for anyone.
This was the early insight that told me right away I was not going to have a good report.
In my notes to Bob, I commented on the breadth and lack of customer focus, and went on to ask: “which segment is the most attractive?” and added “who’s the actual purchaser?” I couldn’t figure out who was going to buy this. Was the product for an individual athlete who was self-training or a coach to use or give to their top athletes? Complete lack of focus.
Not an uncommon destination
They arrived here like many of us. In being so excited about the product. The team discussions when we shout: “Everyone can benefit from this!” It’s the family saying: “That is just great! You guys will sell a ton!” It’s the picture of the financially independent future just over the horizon if we can only sell a million units to anyone that will buy one.
But, without a clear customer (or, in industry parlance, no clear “customer-market fit”), no value can be delivered, no money made, no independence.
This was a super tough starting point for my review.
So What Do We Take Away?
Make sure the base is sound. Take a few minutes to really analyze and describe (write it down) your customer — focus on excruciating detail. Note things like age, actual annual income, family situation, business type (if B2B), gender. . . continue to hone in on the very specific person or business that you believe is your target customer. When you can actually picture and describe a real person or a specific business you’ll have your avatar. That is a good sign.
