October 22, 2017

Archives for October 2012

Mistake #3: A Market of One Does Not a Market Make

Way too often, an executive or salesperson comes back from visiting a major customer and communicates that the customer just identified a big need that the customer needs to solve and it would make a great product opportunity for the company.  Based upon this evidence, the company begins down the pathway of developing this new product, then implementing it for the major customer, only later to discover that the major customer was the only one in the market that had this specific problem.

Let’s change the context to an entrepreneur.  The entrepreneur identifies a specific problem that they are experiencing and thinks of a product idea to solve it.  Based upon this brilliant idea, they determine that they need to turn this into a product and sell it to many others in the market.   Once they develop the new product, they wonder why so few other people want the product.   Again, the problem is that the entrepreneur identified a very small opportunity where they, and maybe a few others like them, might be the only customers.  Or it could be that others do have the problem, but it’s not an important problem that they want to pay to solve.

How do we get around this mistake of creating products for a “Market of One”?  What we teach in the “From Napkin to Revenue” workshop is that when you identify a potential opportunity as described above, at this point, it is only a hypothesis.   Now you must speak to potential customers and validate that many others have the same problem and are willing to pay to solve that problem.  If you go through this initial step of the process and confirm that, yes, many others do have this problem and are willing to pay to solve it, then you have taken a significant step forward in improving your chances of success in the market.   There are many other things you must do right to be successful, but identify a significant and important market problem is the starting point for all great products.

Successful Products Begin With a Big Problem

That Many People Are Willing to Pay to Solve!

Mistake #2 – It Solves a Problem, But it’s Not Important to the Buyer

Several years ago, I was helping a company that had just launched a new product to the market, but was having a difficult time closing sales. They had identified a market opportunity where the target “user” had a significant challenge and they were looking for solutions to solve it. There were many potential users of the solution and there were no real competitors at that time. On the surface, this sounds like an excellent market opportunity.

So why were they having a problem selling this solution? The reason was that the business executive (buyer) who could make the purchasing decision for the solution did not feel the impact of this problem. So they had no reason to approve the purchase.

I have seen multiple companies face this problem. What seemed like an obvious market opportunity in reality wasn’t because the person that had to pay didn’t feel the pain and it wasn’t a priority in their overall business objectives.

How do you avoid this problem?

  1. When you are researching the market, don’t just speak to the user that is having the obvious problem, but also speak with the buyer and anyone that can influence that potential buying decision.
  2. When speaking with these other influencers/buyers, make sure to gain a clear understanding of how the user’s pain impacts them. If they can’t identify or express any clear impact, that should be a red flag to you.
  3. If this situation occurs, you need to dig deeper to see if you can help uncover a clear and urgent impact on the buyer and influencers. If you still can’t uncover a compelling business impact on these parties, this is most likely not a good opportunity to pursue.

Summary: In a typical B2B situation, you need to speak with users, mid-level managers, executive management and other influencers to make sure you understand how each are impacted by the problem you are trying to solve. In a B2C situation, many cases, you only need to understand the needs of one person as they are the buyer and user, but there are situations where the buyer, user and influencers are different, so the same concept applies.