Identifying Product Market Fit: 5 Hard-Earned Tips

Posted by | June 26, 2014 | Uncategorized | No Comments

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Software Developers Tackle Product Development and Sales

Like many businesses, Volano Solutions has worked hard to build our brand around helping clients solve problems with software. We’re historically a project-based software developer and our comfort zone is building custom software for organizations whose systems are failing their business process and thus, their customers and employees. We are proud of our work and the long term relationships we’ve built with customers. Like Harvey Keitel’s character in Pulp Fiction, Winston Wolf, we solve big problems. But like many businesses, we strive to diversify revenue streams and stay ahead of changes in the marketplace. Two years ago we decided to create Saas product or software as a service so that customers could subscribe to a web application and use our product to make their life easier. We have learned a lot in two years and have come to know a lot about product development and market fit, often through brutal experience.

 Solve a Known Problem

The first thing you need to do if you’re interested in developing any product is determine whether or not your product solves a specific problem. If you think it does, you should assume that you are wrong and seek out the opinions of objective “experts” in the field to validate this assumption. Asking your family if you think your concept has legs is probably not scientifically rigorous. Look for people who would be potential customers. Not only will you gain perspective on the viability of your concept, you’ll pick up a lot of intelligence on features that would be essential, competitors, market share, ideas on other possible vertical markets and insight into the dynamics and politics of the industry your concept is geared toward. Ask yourself if your perception of the problem your product is going to solve holds up to scrutiny from people who live and work in this problem. Ask if this problem is real and if so, perhaps the greater question; is the pain caused by this issue greater than the inconvenience of leaving status quo for something new? If you’re the least bit unsure of this, go back to the drawing board. Good advertising convinces you of a need that doesn’t exist. Good products address specific needs.

 Know Your Market: Vertical Vs. Horizontal

 The next tip parallels the first. If you are solving a known problem, you should know who your customer is. Volano’s most recent application Action Card  was originally built for the franchise vertical market. We invited many local franchisors to our headquarters to poke holes in our idea that a cloud-based compliance review tool could not only save time on franchise visits and inspections but could help drive revenue generating outcomes and needed corrective action. We knew exactly who would use the app and in what capacity. We also had years of experience working in the franchise space with valuable contacts and willing beta-testers. We researched our competition, knew our differentiation and crafted a pitch that would make Don Draper jealous. We also knew that we had a general concept that, on the heels of our success in franchising, would play well in various other vertical markets that are compliance driven. Knowing exactly who to build the app for helped us add relevant features and on a broader scope, architect a general marketing plan which included launching the app at the International Franchise Association Convention. If custom software development is all about creating clarity in roles and transparency in processes, knowing who to sell a product to helps drive more meaningful sales and marketing efforts. As they say, If you’re selling something to everyone you’re selling to no one. From past experience we learned that if you design a product that could work for a lot of people, it is hard to focus on one group to build a sales pipeline within and your product features won’t speak directly to a specific group. The first question prospects ask is, “who else uses this?” They want to know that it’s working for their peers.

Quantify the Cost Benefit of Your Product

Based on what you learn from your industry insiders and what you see early adopters and beta-testers doing, try and quantify the value your product offers users. We see Action Card as a revenue generator for our clients. Knowing how many hours saved per compliance inspection done on a tablet instead of on paper helps us frame the discussions in terms of cost-savings. The reporting that comes from the centralization and data aggregation from the app also helps drive more informed business decisions from the executive teams of our clients. So we can say with confidence, based on our clients’ experiences that there is a quantifiable cost savings on the simple utilization of our tool and we can speak to the increased job satisfaction we bring users (from their own account) by taking away tedious double data-entry and excel-based reporting. Knowing your value proposition also helps you determine a price point that is understandable to your customers and profitable for you.

Timing is Important

Another tough lesson learned in regard to the development of Action Card and our study on market fit occurred early on. Our overzealous sales team pushed to sign up beta-testers before the app was completely finished and tested internally. As a result, a few of our potential clients eager to get going on the app incurred some bugs early on and lost patience with a tool they needed. Though beta-testers are wonderful at helping you identify opportunities to enhance the product, fix bugs and make the user experience better, ultimately we learned that companies want a finished product. Their definition of beta-tester was different than ours. Had we waited a month from completion to launch the beta-test, we’d have retained a few more clients and saved time on re-selling a few that fell by the wayside. As we grow our client base, we continually learn about market fit by watching our customers use our app.

Don’t Give Away the Farm

I realize that the conventional wisdom in subscription software is to make it easy for people to get acquainted with your product before making a financial commitment. We discussed this quite a bit at Volano and determined, like many other Saas products, to offer a free 30 day trial to new customers. I believe that this is the right approach and we will continue to stick with it. However, our eagerness to get beta-testers lead us to offer 6 months of Action Card access for free. This offering undermined the integrity of the product and its value. It also created less urgency from our testers to spend time getting set up on the software. They didn’t have skin in the game. In retrospect that was a mistake. We pride Action Card on its value in facilitating relationships between reviewer and the person being reviewed. The interaction goes beyond the criteria being evaluated and into a more consultative coaching and mentoring discussion about unified goals. In that spirit we should have trusted that our eager beta-testers did not need “free” to build that relationship with Volano.