How many start-ups (or possibly even established companies) can really claim that they clearly understand the problem or need they are addressing for their target market? How many actually know who their target customer is and what makes them tick? How many companies really understand the “value” that they will add to the world by existing at all?
Often companies start with the “inside-out” approach where they have some clearly bright people who have created a whiz-bang new technology that they really believe everyone is going to need. They take this whiz-bang concept and invest heavily in engineering, marketing and sales to bring this idea to the market. It is only at this stage that they discover that nobody really cares! They fall into a hole where 6 out of 7 new ideas end up – and it is a very black place! This is often a costly mistake and one that could have been avoided.
There are many reasons why a new product concept just does not hit the mark in terms of revenue generation. In my view one of the stand-out reasons is a lack of understanding of the value proposition for the product or service.
When someone comes to me with a new idea I start by asking what problem or need it addresses – more often than not the person (certainly in the technology industry) starts by telling me how great the product will be, how many cool features it will have, what a fantastic, real-time, highly-performant engine it is built on… what they cannot articulate without some help is the “why will anybody care about this?”
Clearly, defining the problem is an art – it takes a whole new way of thinking and a little coaching to put yourself in the “mind” of the customer but everyone can do it with a little training – and everyone in your company should be able to think like the end customer – everyone should be able to articulate your “value proposition”.
Of course, once you think you know what your “value proposition” is then you need to validate your hypothesis with your target customers – apply the “outside-in” approach. You do this before you invest anything in engineering, sales or marketing. Talking to the customer in the right way is critical – these are not “sales calls” – they are “validation calls”. You simply need to validate that your customer is “excited” by what you have to offer and they believe you have identified an “urgent” problem to solve. Put simply, you need to validate that your hypotheses about your target customer are correct?
I have been pleasantly surprised over the years at how target customers will open up to you when you approach them in the right way and talk to them in a language that helps them to understand the value that you bring.