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The #1 Pitfall For Tech Startups

March 25, 2019

I’ve worked with start-up technology companies for over 20 years, both as an early-stage employee and founder, and as an external advisor and mentor. While the products, technologies, business models, founders and success stories have varied greatly, the most common pitfall I’ve come across is obtaining customer input into the product far too late in the development process.

Yes, two other problematic trends often emerge (namely adopting an “If we build it, they will come” belief, and growing largely homogenous teams), but for this article, I’m going to focus on the first all-too-common pitfall of not assessing product/market fit with the potential customer.

What Problem or Opportunity are you Addressing?

Many tech companies start with either an expertise in a certain technology area and look for a problem to tackle with that expertise, or identify an unmet market opportunity with their version of a solution. While the second approach generally is more viable, I certainly have seen the first work.

Regardless of which approach the company takes, too many do not get early customer input into the solution they are designing. Remember, it is not about the technology; it is about the problem you can solve for someone or the opportunity you can open for them. It is incredibly difficult to assess potential market fit if you are not talking to your customer. I’ve come across far too many companies that were almost two years into their development process and had NOT connected with a potential end user. This is dangerous for a multitude of reasons – cost, lack of focus, and most importantly (and the most common reason a business fails), not building a product that actually fills a customer need.

Minimum Viable Products, Pilots, and PoCs

If you work in technology, chances are good that you’ve heard the term “minimum viable product (MVP)” – a term defined by Frank Robinson in 2001, and then made popular by Steve Blank and Eric Ries in 2011. A MVP is a product with sufficient functionality/features to meet early customer needs AND to provide valuable insight into future product direction.

Conceptually, developing a MVP sounds simple. But many companies go down one of two paths. 

  • Wanting to announce a “perfect product,” some companies attempt to include so many features they lose focus on their core value proposition; this costs not only developer time and resources (and possible wasted effort) but also delays getting early valuable feedback.
  • Some companies are so concerned with getting a MVP out, they haven’t truly focused on their core value, and just put out a product with “nice to have” or “easy to implement” features, and not their main functionality. This approach ensures feedback on what does not matter.

It’s a tough balance; you simultaneously need to focus on your core features, while not obsessing on delivering the elusive perfect product with a full feature suite on Day 1. (I’ve seen (and been a guilty party to) both approaches far too many times.)

Some companies don’t go the MVP route; some implement a pilot or proof of concept route (often with larger product development programs where the underlying technology may be unproven) or the prototype route (where prototypes normally do not make it to the market, but they still make it to the potential customer’s hands for feedback.) Whether your company choses to do an MVP, a proof of concept, or a prototype, or a combination approach, there are many positive outcomes to getting customer feedback:

  • Test the market demand for your product before developing a full-featured product.
  • Obtain direct insight into how users would actually use the product, including patterns of behaviour and preferences.
  • Reduce development and implementation costs.
  • Avoid failures and large capital expenditures.
  • Gain valuable insight into what features work and what do not.
  • Gather information and learn more about your user base.
  • Reduce time to deliver your product to market.
  • Develop knowledge that will support marketing strategy.

Getting Customer Input

There are many ways to obtain customer input. Get your product into the hands of your customers and do one or many of the following:

  • Usability testing
  • Surveys
  • Focus groups
  • Ideas portal
  • One-on-one and group interviews
  • Observation sessions
  • Analytics

I have only seen companies benefit from getting customer insight early in their process. Many times, early adopters become champions for a company that take their input seriously to deliver a much-needed solution. Critical feedback can dramatically confirm or shift the direction your product development team is taking.

And, I have actually seen two companies take the feedback – difficult that it was to hear – and realize they did not have a viable business opportunity to pursue with their current product direction. One pivoted dramatically to a different offering. One chose to ignore the feedback and continued down their path for several more years until they ran out of money, an unfortunate but common outcome.

Insight into the Buying Process

Ideally, if you are in a B2B business, you will also gain simultaneous insight into the buying process. How many people are involved in the decision to purchase? Perhaps it’s not just the users you are testing with? Is an RFP involved? Does this space have preferred vendors? What does procurement look like? How long is the typical buying cycle? What would someone pay for the product? Arguably, this information is just as relevant as the product feedback information. Your product may be a fabulous product, but if your target audience is a slow-to-purchase segment with a lengthy procurement process (such as government or healthcare,) can your small company weather that pace? Or is there an alternate path to purchase?

More Viewpoints. More Insights.

Always keep in mind that the best feedback is also about the problem space you are addressing, not just your product and features. Deep knowledge about your customer’s world is critical to your ability to meet their needs.

Customer conversations and activities are valuable; they tell you who your customer is (and is not.) Finding those who don’t want to try your product (but you thought would) and those who don’t provide positive feedback (or those who were ambivalent) is just as relevant as those who loved your offering. Talk to your customers as much as possible. Talk to them at each stage of development if you can. And talk to those who didn’t have a great experience with your product.  This is very important, particularly in the early days. The more viewpoints you gain, the more complete view you will have to shape your product direction, marketing strategy, and ultimately, customer success.

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Alison Berg is the Director of Marketing and an EIR at Innovation Boulevard. She loves to chat with interesting people and learn how their businesses thrive. When she’s not doing “marketing stuff,” she’s starting businesses, watching Netflix, and hanging out with her 2 daughters.

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