Steve Faber gives us the scoop on the power of customer-driven product development (i.e. creating products your customers want!).
Imagine this for a second: you’re about to market a new product, but want to make sure what your customer base really wants. A good strategy, that. Too many marketers do the reverse. They zero in on a product they think would be great for a particular market, and then, with blinders firmly affixed, do their darnedest to create a demand for it. As many highly successful marketers are well aware, that’s completely backwards, and leaves you in a failure prone position.
Revenue and Buzz
Knowing exactly what your potential customers are looking for, and then giving it to them, is infinitely preferable to the demand creation strategy. One of the best ways to know exactly what your customers want is to simply ask them. Sure, you can do online surveys to get this vital information, and many companies do that every day. Many smaller marketers do this with similar online surveys, asking questions in forums, and polling their e-mail lists.
What if you could go beyond a simple online survey and have people clamor to voice their opinion on which of several potential products they’d most likely buy from you when you launched? They could simply text or phone in their choices from among several options. You almost couldn’t lose, and if you got a cut of the texting revenue generated when people were telling you their opinion, so much the better.
You would actually generate revenue from your marketing research, maybe even $7 million (2008) worth. Obviously, this is better than paying for your marketing research, which can be expensive, or at best, revenue neutral. It is rare when a business can turn an expense into a revenue stream, especially one so lucrative. The fact remains however, that this is just so much icing on the cake, compared to the overall revenue figures.
As many online marketers have realized, generating a buzz around your product launch is vital to maximize profits and start sales off on the right foot. What if, in the process of determining what your final product would be, you could also generate significant and sustained buzz over a period of several months, all but ensuring your initial sales would receive a hefty kick in the pants?
Another strategy used by many (one could argue most, successful) on-line marketers is the sales funnel. You make some money on the front end with a less expensive product, then use the customer list from this to sell more expensive products in the future, for commensurately larger revenues of course. If you could not only generate a huge, anticipatory buzz around your final product, but earn revenue on other smaller companion products in the days and weeks before you launched your main product, you’d have tuned your marketing funnel to perfection.
Finally, there’s the time honored rinse and repeat strategy. One you develop and execute a successful marketing strategy, do the very same thing with different products, either in the same niche, or others. You have a built in group of buyers eagerly awaiting your next product, who will also be just as happy to repeat the market research process you engaged in previously.
This is American Idol
Idol has become one of the largest multimedia franchises in history, with an estimated worth, according to Forbes Magazine, of well into the billions of dollars. They have made a science out of product development. In the case the products are singers, but the same powerful principles could well be applied to virtually any product, physical or virtual.
Having a popular TV show to leverage for marketing research and demand building is a powerful advantage, but one could well do the same thing, albeit on a much smaller scale, using a blog, and in fact, one could argue that a blog is perfect for this sort of marketing. Take a page from one of the most successful marketing efforts ever.
Do careful product research so you know exactly what your customers want. If you can monetize it too, hey, that’s fantastic. Once you know exactly what they want, and what they’d likely pay for it, you can develop your initial products to fill your sales funnel and build a list of buyers for your more expensive product yet to come. During this time, start to generate buzz around your coming launch. Once you’ve successfully launched your product to the accolades of millions (or even a few hundred of your closest friends), start over again for with your next product.
American Idol has used virtually the same formula most of the most successful online marketers espouse. They’ve created a huge empire doing so. You could do far worse (and still do quite well). How can you implement a similar marketing strategy if you’re the typical small business person? Fortunately, technology makes this relatively easy. If you already have an online presence, you’re half way there.
If you have a successful business already, you’re sitting on a goldmine for determining what prospective customers want. Unfortunately this valuable resource is all too often left untapped by business owners. I’m referring to your existing customer base. If they have invested their time and money purchasing from you in the past, these folks are the most valuable type of person for any marketer; proven buyers of your company’s products or services.
They are the first place to start when determining a new product offering. The question is, how to determine their wants and needs in a new product? As alluded to above, simply asking them is a time honored and effective strategy for accomplishing this. If you have developed a customer list, now is the time to hope you have also implemented a policy of regular contact, preferably through an e-mail newsletter of some sort.
This is one of the most devastatingly effective methods of keeping existing customers “in the loop” and warm for your future marketing efforts. Thankfully, technology has again stepped in to deliver a simple way to make this a reality for even the most technologically challenged or IT deficient business owner. It’s called an autoresponder, email management, or contact management system.
Using E-Mail Lists and Tools is Key
You can get these as online applications or as software that runs on your server. The more established online applications have a powerful advantage over self hosted versions; deliverability. With the rise of spam, many email providers have powerful anti-spam functionality. The more popular email management services are well known and trusted enough that mail coming from them is viewed as a trusted source, hence allowed through by many of the spam filters. If you do send spam, which is any email not specifically allowed by the recipient, you’ll quickly find yourself in hot water by the services and possibly have your account terminated.
The brilliant part of e-mail marketing is that it makes it very easy to keep in regular contact with your past customers, so you develop one of the most valuable things in business; a relationship. Some of the most popular e-mail management services are AWeber, MailChimp, Constant Contact, iContact, and GetResponse. Most of these not only let you easily send regular newsletters full of valuable content to your customers, thereby nurturing the all important relationship, they also incorporate survey functionality.
It’s precisely this ability to survey your existing customers that you’ll be using to help determine what they want in a new product. All is fair game, you’ll gain valuable insight about all manner of areas concerning upcoming product releases; functionality, features, content, layout, and yes, even pricing. Knowing exactly what your prospective customers want and then giving them exactly that is one powerful lesson you can learn from the biggest, most successful marketers, like those behind American Idol.
Surveys Can Pave the Way
If you haven’t taken the step of developing a email relationship with your existing and prospective clients, it is a vital step you should take as soon as possible. However, there are ways to incorporate surveys into your website also. This works well if you have no way to survey customers on your list. You can simply place a survey directly on appropriate pages of your website or blog, and use this info much as you would with an email survey.
Be advised, since you probably don’t have the same type of relationship as you do with existing customers, you may not receive the same value from the information, but it can be very important nonetheless. There are several free applications for online surveys such as Survey Monkey, Wufoo and FormSite.
Meet, Greet and Engage!
In addition to surveys, there are other ways to discover valuable information about what would possibly create customers for a new product offering. Because the online environment fosters communication and immediacy, you can use these to quickly gain insight that would have take previous generations months or years to learn about what their customers want.
One powerful method to do this is by visiting forums frequented by prospective or existing customers. There are many large and well regarded forums scattered throughout the Internet, and they are a gold mine for valuable information. People talk about their most pressing problems there and what they’d like to solve.
If you’re in the solution market, and most businesses are, you could scarcely wish for a more detailed and responsive audience than the popular forums. Not only can you discover incredibly important information about customer’s wants and needs, you can develop relationships that greatly assist you with your marketing efforts.
Once again, your approach is paramount to success. Forums tend to be relatively close knit communities. Just jumping in and shouting that you have products for sale is likely to get you banned from the forum, or at the very least, send your credibility right into the toilet. The way to avoid this is to become a valued member of that community yourself.
Contribute valuable information to the forum on a regular basis. Help members with their problems when you can, and refer them to a solution provider when you can’t. Soon you’ll be looked at as one who can help. After a certain number of valuable posts, you usually be allowed to put a link to your website or blog in your forum signature.
Obviously, that’s a bonus that can pay valuable dividends form both a traffic and a search engine perspective. Search engines love links to your site when it comes to calculate rankings, and depending on how the links are set up, some forum signature links will help you rank better in the search engines in addition to the direct traffic they provide.
Thereafter, when you ask for help from members, such as when designing a new product, they’ll be only too happy to tell you exactly what they want and how you can best help them them. In addition, the relationships you’ve cultivated will be invaluable with your product launch. You’ll gain instant customers, leads for future sales, and perhaps even better, you can find affiliates. Affiliates will help you market your products to their blog and website visitors. Why in the heck would they do this for you? In exchange for a commission on customers they refer to you, and because they feel your solution is a great fit for their subscribers, visitors and customers.
Forums are a fantastic resource for other marketing initiatives as well. Creating a buzz around a new product launch is vital to it’s success. Getting the word out on a forum where you’re positioned as a leader or a trusted member will give you a nice head start on generating interest before your product or service even hits the market. There’s noting like having customers lined up waiting when the store opens, so to speak.
If you’re a business owner or marketer, learning lessons from American Idol could well take your business to the next level. After all, they’ve demonstrated how to develop a new product, then take an unknown product, in a sea of “me too” competitors, and launch it with millions of direct and attachment sales. If you can tap into your market so well, you’ll do more than just taste success.