It is common to see companies and startups focusing on building marketing strategies, while not having found their product/market fit. I did this myself, back in 2010, with my very first company (Capseo); and then thankfully, did way better with DOZ few years later. This post aims at giving tools to understand how refining your product will help you set the right marketing tactics.
1. How do I know that my product is ready for marketing?
Marketing is most of the time about asking the right questions and coming up with unique and creative answers.
Am I solving a real problem / issue?
The more one thinks about innovation the further one may go in terms of solution. Unfortunately, these creativity outbursts tend to distance founders from the initial aim of his/her project.
When reviewing your business plan you must be clear and straightforward:
What concrete problem am I solving with my product? Try to come up with alternatives: how do people solve their issue today? How important is it to solve this issue? If your product doesn’t exist, what happens? What strategy should you undertake and is the product you are selling truly worth it?
If plenty of good enough alternatives already exist, it might show that the market is already very mature. This might not always be a bad thing (think of Uber vs Taxi, and Airbnb vs Hotels). However, marketing will be much more costly. If no alternative exist at all, it might also tell you that there is no market. This often happens when founders build something that nobody really needs.
Who are my direct & indirect customers?
First you must define your marketing audience. While this target will be the one buying your product, they will not be the only one in relation with it. Indeed, keep in mind that your target audience is in contact with others audiences (families, colleagues, friends…). They will be the ones indirectly profiting from your product… and might end up buying it too.
While at first you must remain focused on one target audience, do not close up your mind or business to new customer entries. As these new customers might end up being your true and most profitable target.
What is my Unique Selling Point?
When launching a startup, you cannot offer a large range of products as you (generally) do not have the resources for such undertaking. Your selling argument must come down to a single heavy one. For instance, being the cheapest, the most performing… or the only one offering such product.
It should be clear for you (and thus for everyone else) what are you key differentiating features or solutions. The “Why” customers will come to you and to your competitor.
Are my customers are ready to buy my product and at what price?
Though your idea may solve problems, some individuals within your target audience will not believe it is necessary to buy your offering; or probably not at a satisfying price. In this case, you must review your product value and give further resources into research in order to improve your offering.
Also, the targeted individuals might already have their own way of dealing with the problem you are offering a solution to. This is not a worry to have in the first place. First, you must find your own customer base, and later you will work on converting those from the competition.
2. What KPIs will tell if I reach product/market fit?
There are 5 steps to convert potential customers to loyal ones.
Acquisition: how did people find me?
This acquisition indicator will tell you from which network you mostly gain your visitors. This will also tell you which network you must focus your marketing efforts on. In order to know where your customers are coming from, ask them the question when they are buying your product. You can also use Google Analytics to determine computationally how they arrived on your website.
When we launched DOZ in March 2013, my co-founder Faouzi and I, thought that creating a blog focused on digital marketing would drive qualified audience to our site. Thanks to this inbound content strategy, The DOZ Blog took off, creating many visitors and leads, also enhancing our SEO. While we were tracking the acquisition statistics, we realized the blog was the best way to trigger people’s attention to find our company. You must find your own way of collecting visitors depending on your business model.
To give you an exemple, some important KPIs for Acquisition stage could be:
- Unique visitors per week/month
- Unique visitors per channels
- Cost of Acquisition
- Bounce Rate
- Time spent
- Page views
Activation: how many of them actually use my product?
You must know what people do with the product you sold them (even when your product is free). Are they using it at all, and if so, are they using it for the purpose you designed it for? If not, you should review your product’s design and/or functioning, in order to make it clear, easy and more attractive to your users.
At DOZ, to trigger activation, one of the working techniques we applied, was to design several drip email campaigns, mainly with Hubspot and Mandrill that would shoot customised emails at key moments of the user journey. We then studied our readers’ reactions to know who were the ones truly using our product.
We usually talk about the “WOW” moment, when a user discovers the value of your product. For B2B, it might take a little bit more time, but for B2C you definitely want it to be in the next few seconds/minutes after the first sign-up, because of the short attention span.
Monitor closely the following KPIs to understand your Activation:
- Time to first interaction
- Interactions in one session
- # people of interacting vs # of people leaving without interaction
- # of session before first interaction
Revenue: how much am I making with my product?
Just like any business, you will start by being in deficit. First, your revenue will cover your expenses, and then you will benefit from the extra cash. Your investment refund period must not start too late or last too long. If that is the case, you must figure the deficient part of your strategy and solve it rapidly. Remember startups have 3 years to prove themselves. Generally, if past this period the startup has not started accumulating revenue, the project is up to failure. Obviously, the path to profits is very (very) different for a B2B, an SaaS, and a B2C Application, but you should be able to articulate a business model: how will your product be generating revenue and in what timeframe?
We increased our revenue by thoroughly studying the marketplace. The DOZ project was based on an outsourcing process for marketing. We designed an online platform where freelancers would register and be assigned tasks in accordance with our clients’ requests. Since we knew the freelance market would grow, we figured the number of clients would grow accordingly (supply doesn’t come without demand). Thus, our revenues would benefit from that sudden market expansion.
Metrics that could be considered for Revenue stage are:
- Average Revenue Per User (ARPU)
- Customer Life Time Value (CLTV)
- Annual/Monthly Recurring Revenue (ARR / MRR) for SaaS
- Gross Monthly/Annual Volume (GMV / GAV) for Marketplaces
Retention: did my customers re-use or re-pay for my product?
Launching a tech product works just like any industry. Once you acquire a customer, you want to win his or her loyalty. Retention must figure in your KPI statistics in order to determine the percentage of loyal customers within your customer base. Furthermore, you must study customer satisfaction and make sure you are always in touch with them. This way, you will understand what works best and what doesn’t. You will then be able to improve your offering according to your clients’ needs.
When facing a customer leave, we undertook a retention program through Intercom. This way, we could figure out which customers were inactive and we engaged with them to retain them. Sometimes it works, sometimes it doesn’t, but trying is always better than giving up.
The most important KPIs for the Retention part is “Churn”:
- User Churn: # of users beginning of month VS # of users end of month
- Revenue Churn: MRR beginning of month VS MRR end of month
Referral: did my customers invite other customers?
This last point is what will make your business run. People like talking about their purchases, and most importantly, they like advising their circle. You are winning it if your product is good enough for people to talk about it, recommend it, and advise it. You will not be able to know exactly how many people referred you, but there are ways to know.
First, check your social accounts and look up who recommended you online. Next, ask you new clients how they heard of you (refer to Acquisition). Last, analyse the data you are given in order to maximize your efforts in terms of marketing and product offering.
Here are some useful KPIs for the Referral stage:
- # of customers referred by other customers
- Marketplace: supply referred by demand, and vice-versa
3. OK, I think, I’m ready, how should I market my product?
Get a clear messaging: Solving X for Y with Z
People are tired of hearing incomprehensible marketing slogans. People have problems and all they want are solutions. When you first start marketing your tech product, make sure you clearly explain the problem, who it affects, and the solution you are offering. Do not get confusing, because people will not buy into your mess; and the ones who do might end up truly disappointed.
Instead, direct your marketing towards an audience who clearly needs your assistance, show them how you can improve their life, and once they are convinced… prove it.
Start with few, well selected, channels
Many business owners think they must hit up on a large number of social networks to reach out to more people. Indeed, they are right; however they are missing the true point of their initial marketing strategy. When you first start marketing a tech product, you are not aiming at reaching a lot of people. You aim to reach the right audience and to get feedback on your product. This way you will be able to improve and optimize it, winning your initial audience’s loyalty. Then, you can broaden your perspectives.
Usually paid channels will help you start quickly with some early traffic, and has also the capacity to be very well targeted. However, in the long run these might be expensive and increase your cost of acquisition, thus impacting your business model. You will therefore have to think of “organic” alternatives.
Test & Iterate frequently
As I have been advocating in this article, you must be testing and iterating your product frequently. Keep in mind that when you launch a tech product for the first time, it cannot be (it’s not!!) perfect. You will have some bugs, non-working features, clients who do not understand how to work it out, etc. Trust me, this happens very frequently… I mean all the time! You must always keep an eye of your product and not abandon it thinking it’s all working out. Implementing analytics tools and recording user sessions will help you understand what is working as you intend, and what is not. From there, don’t be afraid to iterate, even pivot. It’s fine to be wrong, if you are able to recognize and improve.
Measure & Kill what’s not working
Along with that improvement line, you will not only be adding features to your product; you will also delete some. Even though you thought some of them were a great idea; if statistics show they are not working properly, you must let your ego down, admit it was not as great as you thought, and re-work it. I know this can be difficult sometimes, especially when you’ve been working on it for days and weeks, but truth is you’ll never go forward if you do not question today the work you did in the past.
In the end, marketing a tech product is a cycle like any other. Once your product is launched, marketed and you start making a decent revenue from it, more of this revenue will go into investing in new ideas. You will start diversifying your offerings, your audiences, and your statistics will become more and more complex. Managing a business is admitting you are a beginner every time you restart that cycle. You do not win when you are making revenue. You win when you earned your clients’ trust, and marketing is definitely the first step toward building this relationship.
Additional resources to learn more: