Making Sure Your Existing Products Maintain Product-Market Fit
Let’s start with the admission that product managers never have enough time to do market research. They have a development team to drive, salespeople to help, marketing materials to review, and clients to listen to. When it is time to recommend the next big project, they gather the outstanding requirements, add some market projections and propose a project guided by the internal team’s expertise and a long history of company experience.
This works to add features to an existing solution for the existing client profile, but if you want to add a new solution or conquer new markets, this poses a severe lack of information. It is inward focused, biased towards the known and often out of date. In short, it is useless.
Throughout my career as a manager of product managers, I have struggled with this ‘lack of time’ problem. How do I make sure we create time to gather the required information and learn enough about our markets to make sound strategic decisions?
The first step in solving this time problem is to start with defining what quality market research is. The second step is to setup your team.
There are three basic rules:
- Quality Market Research is Representative of a Whole Market
- Quality Market Research is Unbiased of Company Opinion or History
- Quality Market Research needs Focused Time and Budget
Why Customers Can’t Help
Your new product idea should be a solution to a problem that many people have and that they are willing to pay to solve. That group of potential buyers is your market. Now here is the issue: product ideas are typically tested with existing customers. Current customers are accessible, good friends and are exactly like the other desired clients. Aren’t they the representation of our market? Well…., no. And to make matters worse, the longer the tenure of the client, the less they represent the whole market.
The whole market is represented by i) our customers, ii) our competitors’ customers and iii) the rest of the market who has not adopted our type of solution yet. If you therefore want a representative opinion, you need to talk to all three constituents. And to make matters more interesting, you need to mostly talk to non-clients.
Existing clients will affirm your product expansion and add-on sales, but if you want to grow faster, you need to know if the new product will entice the non-clients to buy. You need to understand non-client’s ‘likelihood’ of buying in order to have a reasonable sense of the market opportunity. If all you do is ask existing clients, your market sample is too optimistic with a major blind spot.
Our Opinions Lead Us Astray
“Your opinion, though interesting, is not important” (Pragmatic Marketing 101). Experience is hard earned, but it is misleading and based on long years of history. It is gathered in small sample sizes, over a long period of time, and again mostly from existing customers. It is a formed point of view on how a market works, neatly connecting the dots where there is lack of knowledge.
New information needs to fit into the framework and new facts in a small sample size that are not consistent are typically discarded as “not representative of the market” or “outlier” or “too small a sample size”. The scientific term for this is ‘cognitive bias’.
So how do you minimize cognitive bias? A simple method is to collect a ‘burst’ of market feedback all at once. This way you will not be able to discard contradicting feedback from your well-formed experience model. On the contrary, experience now becomes a wonderful prism through which you can interpret what you have learned. It will allow you to avoid the mistakes from the past and reach conclusions much faster. Combine the problem of cognitive bias with the fact that we mostly talk to existing clients and you can see that research is often lacking the right quality to make good decisions.
Good Strategy Needs Funding & Focus
Now that we have defined what representative research is, let’s start scoping how much time and effort is needed. This becomes a planning and resourcing issue. How do you adjust your team and internal process to include ‘bursts’ of research as part of the regular day job? And how do you adjust your funding to include external support to help you gather the data.
I challenge Strategy leaders to think through their organizational setup and their mix of funding to support the business in planning for growth. How you support strategic decision making is a critical discipline for the business. What product ideas are most attractive? What features should be built first? Is this company a good company to buy? Should the pricing structure be adjusted? Is this new market segment interested in the existing products?
Strategic choices must be made, no matter the quality of research you have done. It will be a lot simpler if your choices have a foundation in representative and unbiased market feedback.
If you would like to learn how Topline Strategy can assist you with your market research needs contact us at email@example.com.