Turning Good Ideas into Great Products

Zero to 60 Turning a Good Idea into a Successful Product

Agenda
Ideas & Opportunities
Markets
Exercise
Business models
Features
More exercise

One Word: Plastics

Why the one word?
Opportunity
Brand Completeness
Blocking competition
Raising money
Curiosity

Return on Investment
All your CEO cares about …
Returns (measurable changes)
Increased sales
Reduced costs
Achieving the mission (for a non-profit)
Investments (cost of making change happen)
Keeping headcount low
Using resources more effectively
Only bringing in consultants if necessary

Types of Opportunities/Ideas Better Cheaper Niche New I can do it better I can do it cheaper I can do it for you You never knew you needed it

How big is the opportunity? Total Available Market (TAM)
Total Available Market (TAM)
• How many people would want/need
the product?
• How large is the market be
(in $’s) if they all bought?
• How many units would that be?
How Do I Find Out?
• Industry Analysts – Gartner, Forrester
• Wall Street Analysts – Goldman, Morgan

How big is my slice? Total Available Market (TAM)
Served Available Market (SAM)
• How many people need or can use product?
• How many people have the money to
buy the product
• How large would the market be
(in $’s) if they all bought?
• How many units would that be?
How Do I Find Out?
• Talk to potential customers
Served Available Market (SAM)

Your idea is worthless alone Idea Execution Timing Dumb Luck

MARKETS
What business will you be in?

Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany

How many of them are there?
Are they price sensitive?
How big is their problem?
How often do they have the problem?
How do they solve it today?
Who are your customers?

New Product Conundrum
New Product Introductions sometimes work, yet sometimes fail
Why?
Is it the people that are different?
Is it the product that are different?
Perhaps there are different “types” of ventures?

Three Types of Markets
Who Cares?
Type of Market changes EVERYTHING
Sales, marketing and business development differ radically by market type
Existing Market Resegmented Market New Market

Existing: founded 1938

Competitor founded 1972

Competing in an Existing Market
Faster/Better
High end
Somewhere else

Resegmented

Gap’s new entry

Competing by resegmenting
Niche = marketing/branding driven
Cheaper = low end

New Market?

New New Existing Resegmented

New Market
Cheaper/good enough can create a new class of product/customer
Innovative/never existed before

John Gourville, Eager Sellers and Stony Buyers (2006)

Deadpool

Type of Market Changes Everything
Market
Market Size
Cost of Entry
Launch Type
Competitive Barriers
Positioning
Sales
Sales Model
Margins
Sales Cycle
Chasm Width
Finance
Ongoing Capital
Time to Profitability
Customers
Needs
Adoption
Existing Market Resegmented Market New Market

Choose your idea From Guy Kawasaki, Art of the Start Ability to provide unique product or service Value to customer compete on price stupid bankrupt The holy grail

WHAT IS YOUR IDEA?
Exercise
Who are your customers? What is your market? How big is the opportunity?

BUSINESS MODELS
How do we make money?

WHAT DO YOU USERS HAVE TO DO?
Who are you users?

Marketplace Model Advertising Model Affiliate Model Community Model Subscription Model

I have always been a woman who arranges things, for the pleasure–and the profit–it derives. I have always been a woman who arranges things, like furniture and daffodils and lives. Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.

I’ll go where the buyers are I want to find things! I want the best price! Can I trust this seller? Users must find products, evaluate seller, and make a purchase

Advertising Model The web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.

Users must:
Notice advertising
Interact with ad
Preconditions: User must visit advertising location
Share their demographic information
Types:
CPM
CPC
CPA

Community Model The viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking. Open Source Red Hat , OpenX Open Content Wikipedia , Freebase

Users need to
Create an identity
Connect with other users
Build a reputation
Create and share content/work/etc
Users must care

Subscription Model Users are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined . Content Services Software as a Service Internet Services Providers

User must:
Able to evaluate the offering
Subscribe and unsubscribe to offering
Realize value offered

Combos Advertising Community

Combos Advertising Community Subscription

Combos Marketplace Community Affiliate

Prioritize and Sequence
Pattern:
User gets value
User returns, gets more value
User reciprocates
User adds content
User contributes money
Wikipedia:
Looks up content
Keeps finding more content
Sees error, corrects
User donates
1, 2, 3

HOW DO YOU MAKE MONEY?
Exercise
Marketplace Model Advertising Model Affiliate Model Community Model Subscription Model

FEATURES
And now let’s do less

The AOF Method
Defining your Activity
Identifying your Social Objects
Choosing your Features
Courtesy of Joshua Porter. Check out bokardo.com!

Business Model Questions
Who are your users?
What will they pay for?
What do you need them to do?
Feature Questions
What are your users doing?
What do people have to do to make you successful?
What are you making people better at?
What are your users passionate about?

2. Identifying your Social Objects

What are Social Objects?
Social objects can be ideas, people, or physical objects.
By interacting through/with social objects, people meet others they might not otherwise know.
Social objects can be the reason why people have an interaction or form a relationship.
Joshua Porter (bokardo.com)

3. Choosing your Features

LET THE CUSTOMERS CHOOSE
The roadmap

Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany

Voice of the customer Interview
What we are doing
A lot about you
What we’ve heard/Problem statement
Solution Overview
Demo (clickable mocks!)
Limitations
Potential roadmap
Justifications
Procurement
Who’s our competitor
Who’s not here to decide?
How would you describe this to a colleague?
Homerun/strikeout?
SyncDev http://www.productdevelopment.com/

Potential Roadmap
Collaboration space
Speaker features/video
Capability Soon Later Much Later What would you move?
Reporting and advanced Admin
Community features
E(mail) to attendees
Version 1.0
Un/Official events list
Network notifications
Basic Admin

Pricing
Part of the business model
How do we make money? How much?
Revenue/profit/shipment forecasts
Supports core value proposition
“ Our product/service saves you $$$$…
… and we want 15% of the savings.”
Often an obstacle to buying
Too complex
Much too high (sticker shock) or too low (desperate)
Free (no reason to trade up)

Designing pricing
What’s the natural unit of exchange?
How do they derive value?
What does the competition do?
Can you split off a profitable segment?
How much of customer value can you capture?
Test, trial-close, get your hands dirty

Software Pricing Models
Time-based access (e.g. unlimited/month)
Transaction (stock trade)
Metered (seats, CPUs, named users)
Hardware (appliances, dongles)
Service (virus updates, support)
Percentage of incremental revenue/savings
Data-driven insights

Pricing drives customer behavior
What do you want core customers to do?
No-brainer renewals (small monthly fees)
Big up-front license (lock up marketplace)
Lust for upgrades (cool features are extra)
Freemium model (1% upsold into paid services)
Install latest version (free updates, increasing service
fees)

WHERE ARE THE USERS?
Distribution

Why
If you build it… they don’t come

Charter Clients

SEO & SEM

SEO SEM

Private Betas
Works if you know cool people
Classic influence concept of Scarcity
Good for user feedback

Think about how you will pull people in…
How do people share?
With whom do they share?
Where and how many of those tools do you place?
Distribution Exercise

10 Questions
Exactly what problem will this solve? (value proposition)
For whom do we solve that problem? (target market)
How big is the opportunity? (market size)
What alternatives are out there? (competitive landscape)
Why are we best suited to pursue this? (our differentiator)
Why now? (market window)
How will we get this product to market? (go-to-market strategy)
How will we measure success/make money from this product? (metrics/revenue strategy)
What factors are critical to success? (solution requirements)
Given the above, what’s the recommendation? (go or no-go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html

Questions? @cwodtke [email_address]

appendix

Return on Investment
All your CEO cares about …
Returns (measurable changes)
Increased sales
Reduced costs
Achieving the mission (for a non-profit)
Investments (cost of making change happen)
Keeping headcount low
Using resources more effectively
Only bringing in consultants if necessary
“ ROI” is just a fancy estimate accountants use to make decisions

About Business Things you should know to have a conversation

Profit and Loss

Investment vs. expense Location Location Location

The Fish Market Stock Location Advertising Differentiation Diversifying Pricing

Got Metrics? Do you know what matters?

Web Experience Metrics
Development: Reduce Costs
Development Costs
Development Time
Maintenance Costs
Redesign Costs
Sales: Increase Revenue
Transactions/ purchases
Product sales
Traffic, audience size
Customer retention
Appeal
Market Share
Use: Improve Effectiveness
Success rate/user error
Efficiency/productivity
User Satisfaction
Job Satisfaction
Ease of use
Ease of learning
Trust
Support costs
Training/documentation
Return on Investment for Usable User-Interface Design , Aaron Marcus

User Experience Also Influences…
Web Metrics
Total page views
Page views per session
Click paths
Unique visitors
Return visitors
Conversion rate (sales, reservations, applications, etc.)
Business Metrics
Leads
Sales
Retention
Length of sales cycle
Productivity
Development costs
Customer Satisfaction

What market are you in?
Media
Advertising
Subscription
Single purchase
Commerce
Profit margin
Customer retention
Broker
Transactions
Users
Liquidity

Why the one word?
Opportunity
Brand Completeness
Blocking competition
Raising money
Curiosity

Business creates value for which they receive money Money allows them the resources to provide value

Everything You Need to Know About ROI (in one slide) ROI Return Investment

Turning Good Ideas into Great Products

by cwodtke on Jun 02, 2009

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Turning Good Ideas into Great Products — Presentation Transcript