I work with a local non-profit called SCORE that matches small businesses and start-ups with mentors that have expertise in the area they are seeking help with. I have been working for the last couple of months with a start-up that spent a decent chunk of change on building a website and a subscription product, only to discover that they were unable to sign up paying customers.
What went wrong, and what can you do to avoid such a situation?
Whether your business is a digital product or a physical product, ask yourself these questions before you engage an agency to build your website or app.
1. What is my business?
Jot down a description of your business – e.g.
“I will open a bagel shop that sells the most awesome bagels ever”
At this stage you don’t know if your plan will be successful, nor do you need to.
2. Does my product solve a customer problem?
Why would someone buy your awesome bagels, other than the fact that they are hungry? What need do the bagels fulfill, that say, a granola bar cannot?
To answer this question, you want to observe and talk to people who you think may be likely customers of your product. Its fascinating how much you learn by simply watching people and asking them why they are doing what they are doing.
Ideally you want to test a prototype of your product – put it in the hands of customers and observe if and how they use it. With our bagel shop analogy, bake a fresh batch of bagels, hand them out to customers and see how much they love them (or not). For a digital product, rig up an analog prototype and see if customers find the product helpful.
3. Who will use my product?
People who need to solve the problem you have identified are the ones who will use your product – they are your target customers.
If you spent some time answering the earlier question, you should be able to answer this question easily. For the bagel shop, for example, your target customer could be “millennials who crave variety in their food and like to pick up breakfast on their way to work in the morning”. You want to make sure there are enough target customers to make your business viable.
4. How much will the customer be willing to pay?
Once you know that you are solving a real problem for a set of customers, you will need to figure out how much to charge for your product.
You will need to experiment a bit to settle on a price that provides value to the customer and also keeps you in business, however you can be sure that you will find customers willing to pay for your product because you are solving for an actual problem.
As I worked with the start-up and we walked through these steps, they discovered that the product as designed was not solving a problem for the customers it was targeting. Digging deeper and casting the net broader resulted in identifying another group of customers with a need that was not being fulfilled by any existing product. The start-up redesigned their product and website to solve the problem of this new group of customers, and they signed their first paying customer last month!
Make sure your business idea has legs before you spend money on building a website or mobile app, or on marketing your product.
Metrics Matter will help you formulate a digital strategy, and will work with you to ensure the digital strategy aligns with your overall business and marketing strategy.