It’s hard to know how the market will react to a product and marketing messaging. Hence why it’s crucial to test these things beforehand. Ask potential users for feedback and test their response to the marketing message.
Great products fail all the time. It’s difficult to say precisely how common product failure is. Some popular statistics overestimate that 80% to 95%—the vast majority—of new offerings wind up as failures. While newer research suggests that the number is closer to 40%, the likelihood of product failure still represents a very real risk to fledgling companies. The stakes are high for new startups to launch products that earn enough revenue to sustain the business—but it isn’t an easy feat to achieve.
New products can fail for a variety of reasons—poor product-market fit, unanswered customer needs, or staunch competition, to name a few.
Achieving product-market fit means you’ve developed a product that offers value to the right market for your business. When you’ve found it, you’ll see signs like:
Without product-market fit, you’re unlikely to find much success with your product, no matter how well it works.
I’m sure you remember how Microsoft decided to take on the iPod in 2006. The company launched Zune, which promised to do everything that Apple’s device could do too. Yet, in spite of great promises, Zune failed on the market.
Why did Zune fail? Microsoft was just chasing Apple and created a product that offered no reasons for customers to switch. Microsoft’s marketing campaign fell flat compared to Apple’s, and the Zune’s feature set wasn’t as valuable to users as the iPod’s was. What’s the lesson from this mistake? It’s hard to know how the market will react to a product and marketing messaging, hence why it’s crucial to test these things beforehand.
Targeting the wrong market can lead to problems with fit, as can chasing a market that’s too small to sustain your business. Companies that routinely earn and keep product-market fit do so by adapting their product regularly to fit the changing needs of their market (not the other way around).
Every successful product needs to solve a problem for its users, and, going back to the idea of product-market fit, there need to be enough users with that specific problem. Solving a non-existing or rare problem won’t earn the popularity you need to gain traction in the market.
In 1990, Maxwell House launched Ready to Drink Coffee. The premise behind the product was simple: To create a new, convenient way for customers to enjoy coffee instantly, without having to actually make themselves a cuppa at home. Sounds genius, right?
A customer could buy the product at their local supermarket, bring it home, microwave it, and … voila, their coffee was ready. So why did it flop?They experienced a common problem many business leaders (especially early-stage entrepreneurs) encounter: feeling overly attached to their idea and convinced that there’s no need to change course. In this case, they envisioned a high-tech way to tackle a problem that didn’t need such an intricate, resource-intensive solution.
It turned out that you couldn’t microwave the coffee in its original packaging. Instead, customers had to pour the product from the packaging into a mug before putting it into the microwave … an activity no different than pouring yourself a cup of fresh coffee from the coffeemaker. That’s exactly what customers kept doing, forcing the company to abandon the product.
The solution for this kind of problem is to talk to your customers and target market. You may start out by creating a product that solves a problem you experience—and that’s a great place to begin. However, if you don’t check in with a larger audience, you’ll never know how widespread that problem truly is. Going back to your customers and validating your product decisions during (and even after) the build is the key to creating long-lasting, highly efficient products. Keurig’s continued success is a great example of a company finding an innovative way to solve the same problem Maxwell House tried to address.
When you’re launching something new, you have to balance the value you’re trying to deliver against the timeframe needed for your team to develop it. While putting a half-baked product on the market can certainly lead to problems, so can waiting too long to launch. It’s better to spend a month creating and launching an imperfect product that will garner feedback than it is to devote a quarter to perfecting software that may not actually address the problem you want it to.
That was what happened with Google Lively, the search giant’s answer to Second Life. After prolonged product development, Lively finally launched in 2008, just as the recession started to take its toll. As a result, the company pulled the product after just five months to “focus more on our core search, ads and apps business.”
New products (and new businesses) often fail because they spend too much time and resources trying to create something “perfect” instead of going to market with a completed product that can begin earning revenue. By the time that over-engineered product does hit the market, customer needs could have changed, the market segments may have evolved, or the economy could have shifted.
It’s completely normal to feel a little embarrassed when you launch your minimum viable product (MVP)—in fact, if you don’t feel at least a little worried about how your first launch will go, you’ve probably waited too long to release your product.
Customer feedback is the key to developing a product that solves their problems. Without checking in regularly, you’ll never really know if your product is delivering value or not. Even if that initial feedback is negative (which, if you’re working with an MVP, some of it will be), it contains actionable insight into how you can make incremental changes and improve your product over time.
In 1970, AT&T became blinded by its own vision and ignored negative feedback in trials, which led to the failure of the Picturephone. The company’s executives believed that a million units would be in use within 10 years of launch. Instead, after spending years researching and trialing the product, they pulled it off the market in just three years due to a lack of consumer interest. We know now that customers want video calls (we use them every day), so why did Picturephone fail?
As it turns out, users found the equipment too bulky, its controls unfriendly, and the picture too small to view clearly. The price for the service was also too high for most consumers—and these were all things users brought up during the trial phase.
Negative feedback can be difficult to deal with, especially if your company is brand new and you’re trying to make your entrepreneurial dreams a reality. It’s completely natural to want to avoid acting on it—or to avoid collecting it altogether. However, if you don’t ask your customers for their truthful opinions, you’ll never be able to iterate on your product responsively and quickly.
Your best defense against frivolous spending and wasting precious development cycles is proactively gathering feedback and validating every new feature and iteration of your product to better understand which product features add the most value for your end-users.
Quick updates are another key component of a successful product. The emphasis here is on “quick”—customer needs change fast, and so does the competitive landscape. The only way to keep up is to move in fast iterative software development cycles.
Fast iteration is part of what propelled Slack to its current success (which is a story we’ve discussed before on our blog). What started as an internal communication tool for a video game company was tested and tweaked until it became the uber-popular work tool it is today.
Timing is very important for B2B SaaS companies. In fact, mistiming a launch is a common reason why startups ultimately shut their doors. Your best option is to get comfortable making fast changes (and even get comfortable occasionally breaking things). It’s better to fail fast and learn something actionable than it is to move slowly and never understand why your product failed to gain traction.
Fast iterations will sometimes mean deviating from your initial product roadmap. That’s OK, and it’s quite common for early-stage startups to make big pivots away from their original plan. The key is to prioritize those pivots, which will deliver the most value for your customers.
If you’re not sure which changes to prioritize, your customers will tell you. Try to use feedback as a guide pointing you toward which iterations offer the most strategic benefit for your product’s overall success.
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