•12 months ago
Sometimes a product hits the market at the exact right time. It solves an existing problem elegantly or addresses a particular customer need. The company that releases this product is lauded for their success — for expertly predicting market trends and matching customer expectations of value.
Other times, the product flops. Why? According to a 2018 Nielsen study, one of the most common reasons new products fail is their inability to address a broad consumer need. This is why product teams spend so much time validating their ideas.
When you’re able to nail a product concept, that’s the first step toward addressing a real-world customer need on the market. It requires a deep understanding of your customer, real insight into their behavior, and a firm grasp on the ebbs and flows of market trends. Get all that right and it makes identifying and resolving problems for customers easy.
So why do so many products fail in this regard, and how do you know when you have the right idea?
There are a number of leading indicators companies can use to confirm an existing market need. Understanding how to identify these needs and codify them in your product concept ensures that you’re never putting too much time into a product that’s bound to flop.
Validate Your Product Concept with Customer Data
Every new product idea has to be grounded in customer data — providing continual value with each release is a crucial part of the product development process. And it’s impossible to nail down that value if your product concept doesn’t address a real-world issue for customers. Being able to solve their problems is the fastest way to show value and strengthen your relationships.
You’re probably asking how do I know what problems to solve? And that’s a great question. Markets are typically very large, made up of a number of different types of customers with varying wants and needs. Which is why you need to segment your market and customer base into specific personas. Segmentation makes it easier to understand with types of products or features have the potential to make an impact.
And segmentation gives you a way to target audiences who can gain the most from your new product or features.
There are four ways of ways to split up these different segments:
- Demographic: Income, age, industry, job title, and other personal identifying information
- Psychographic: Values, interests, beliefs, and other qualitative factors that impact your market
- Behavioral: Purchase habits, past interactions, use cases, and other actions taken when interacting with your brand
- Geographic: Country, state, province, and other location-specific aspects of your target customers
When you break down your market and audience in this way, it’s easy to see how your product can make an impact on specific customers. And that knowledge helps you position your product concept to showcase value.
Let’s say your product concept is an update to the in-app messaging feature of your app. You’d want to know which users access that functionality currently, and what characteristics they share. How often they send messages using the feature, what types of media they share, does engagement increase when using reactions — all this is valuable context.
But all that research is only half the equation. You also need to talk to customers. Every conversation is a great source of qualitative feedback — the data you need to add context and color to your product concept. This information helps your team empathize with the customer’s issues on a more personal level and makes it easier to understand the value you intend to provide.
Once you’ve had these conversations, take the qualitative feedback and the quantitative data points and connect them to other important aspects of your product concept, such as your business goals.
Connect Your Product Concept to Business Outcomes
Identifying and solving problems is at the core of how you define value for customers, but every product you release also has another very important job. Your product has to make a positive impact on your business. As you validate ideas for your next product, make sure to connect them with specific business metrics or outcomes.
A great product concept makes it easy to see the business impact of every idea.
Connecting the value you provide for customers with specific business outcomes also makes it easier to track the overall impact of your idea on the market.
So define exactly what aspects of your business you want to affect with every new product or feature you release. One way to conceptualize this is by focusing on a North Star metric. Setting a single, high-level goal makes it very clear what success looks like for your team and justifies all the hard work and resources you put into a project.
Here are some examples of North Star metrics:
- Reduce customer churn by 5% in Q1.
- Boost lifetime value (LTV) for X customer segment.
- Increase monthly recurring revenue (MRR) by 3% in Q3.
Each of these goals gives your team something specific and measurable to strive for with every project. And that clarity can boost engagement with the project while also making it easier to see the value of each specific task you create.
But this works only when you have processes in place to track the impact of every release. When you’re able to scope out the intended effect of your product concept early in the process, you gain a better understanding of how it matches up with customer and market expectations upon release.
Just make sure you also dig into what competitors are doing as well. Look at how their products match up with your understanding of customer needs and market trends. This helps you differentiate your product or feature’s value and identifies gaps in the existing product offering in your market. Every product concept you create should fill an existing gap in what the market currently offers.
Document Your Product Concept for the Team
As your team moves through the process of building new products, they rely on an awareness of how their work ties back to your company’s business goals. Without that understanding, it’s easy to veer off track or get bogged down in everyday tasks. Communicating a clear vision for your product is the key to instilling a sense of urgency and excitement.
Which is why you need to document your product concept in a central location for the team, like your company’s internal wiki.
Increasing visibility into your ideas will not only help justify why you chose certain ideas over others, it will increase buy-in from stakeholders throughout the team. And it gives everyone a baseline to track their progress throughout the product development life cycle.
When every member of the team can see clear reasoning for the work they do, it boosts engagement and increases awareness of how individual tasks impact others throughout the product development process. Having this clarity across the team also helps identify potential bottlenecks before they have the opportunity to hurt your business.
So, document the vision for your new product or service in a product concept statement. This statement describes the product’s value for customers and highlights the desired impact on your business. Writing all this out not only creates visibility for the team but also forces you to think systematically about the underlying value your new product or feature provides. This helps you identify areas to improve the product itself or refine the work that needs to be done throughout the development process.
A single source of truth also helps every member of your team contribute their own opinions as well. When you democratize the idea stage of product development, your team will feel more invested in the work and will be able to provide useful insight based on their own experience. Your team will be able to see the underlying value of their contributions, understand the business impact, and scope out their individual workflows to get everything done.
Bring all this together and it’s easy to see how failing to define your product concept in the beginning of the product development process can have a lasting negative impact on both your business and your team.
Engaging Products Start as a Solid Concept
People fall in love with brands, but ultimately what they buy is a product. Building an engaging and valuable product experience is all about understanding how to provide continual value with every release. Your product concept is the first step toward defining how you provide this value to customers.
That’s why it’s so important to validate every new product or feature idea against customer needs as well as market trends. When you understand how to solve a customer problem in the best possible way, creating an engaging and valuable product concept is easy.