Market research is valuable. It supplies you with statistics about segment spend and customer buying habits. It also helps you understand what your customers say their needs are and what they say about your organization, your products and your services.
Customer research is even more valuable as it gives you insight into what your customers are frustrated with, how they feel about your offerings, and what their desired outcomes are. But market research and customer research are like weather forecasts: they’re predictions not a contract; there’s no guarantee those predictions will hold true.
“No operation extends with any certainty beyond the first encounter with the main body of the enemy.” Prussian field marshal Helmut Von Molten [the elder] in the mid-nineteenth century.
The best way to guarantee Offering-Market Fit before rolling out your new business model, product, service or experience to a wider market is to first prove with a small population of test customers that your offering produces the outcomes you designed it to produce; outcomes that customers want. Good traction on a limited rollout is validation of your offering.
The Build-Measure-Learn feedback loop is a game-changing technique for testing and optimizing Offering-Market fit by measuring your customers’ reactions to your offering, learning from the results, then fine-tuning your offering, based on new knowledge gained.
You’ll likely iterate through several loops in order to create an offering that precisely delivers your customers’ desired outcomes.
In the ‘Build’ phase, you begin with one of two MVPs, depending on how well you understand your customers’ needs.
One version of MVP is Minimum Viable Product. A phrase Frank Robinson coined back in 2001 to describe the parallel processes of releasing a product with sufficient features to satisfy early adopters in order to get feedback on ways to make it more desirable or more useful, while simultaneously developing market demand. You design and develop final features based on feedback from initial users.
A Minimum Viable Product is an idea-driven prototype, best used when you’re unsure of who your target users are or even what problem you’re trying to solve.
When you’ve already identified your target users and market, and you have a solid understanding of your customers’ unsatisfied or under-satisfied needs, it’s no longer about features and technical capabilities. It’s about customers’ outcomes and what they consider valuable.
The MVP to use at this stage is a Minimum Valuable Product. An offering sufficiently developed to deliver customers quantifiable value, while simultaneously capable of delivering quantifiable value to your organization.
- To entice customers away from direct competitors, your MVP must offer value comparable to competitive offerings plus some sort of differentiation: either better outcomes, from the customers’ perspective, at the same cost; the same outcomes at a lower cost; or a more convenient way to obtain the desired outcomes.
- To entice customers away from indirect competitors with a revolutionary new offering, your MVP has to promise enough value to garner interest.
The best customers to recruit for your test already perceive they have a need for your offering, have the ability to buy it, and have already demonstrated a willingness to make a purchase.
Next, there must be some form of measurement in order for there to be any learning. In the ‘Measure’ phase you gauge your customers’ response and reactions to your offering. Does it produce their desired outcomes to the level they expect, and in a way they value? Can you build a sustainable business around your offering?
“Make small investments in prototypes and minimum viable products, because million-dollar ideas are harder to kill than thousand-dollar ones.” Eric Schmidt and John Rosenberg
In the ‘Learn’ phase you synthesize what you’ve learned in the current loop and decide whether to:
- move forward with your offering as it currently exists,
- abandon your offering to avoid further expense, or
- build an updated version based on the knowledge gained, and test again with new test customers.
Use a Build-Measure-Learn feedback loop, along with an MVP, to optimize the fit of your business model, product, service or experience to the market to reduce your risk of a failed launch.
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