Revenue Stocking Stuffers — Reassess Product-Market Fit (4 of 8)

This is part four of the Stocking Stuffer Series

Understanding Target Audience Behavior
Improve Outreach Credibility
Support the Ideal Purchase Process
Reassess Product-Market Fit
Break Down Barriers to Inbound Interest
Adopt a Digital Adoption Platform
No Sales Allowed! Outreach
Invest in Long-Term Customer Success

Photo by Михаил Секацкий on Unsplash

Reassess Product-Market Fit

BlackBerry, once a dominant player in the smartphone market, failed to grasp the evolving dynamics of consumer preferences and the importance of the app ecosystem. BlackBerry’s product-market fit was initially strong, especially among business professionals who appreciated its secure email services and physical keyboard. However, as the market shifted towards touchscreen smartphones and the demand for a wide variety of mobile applications grew, BlackBerry struggled to adapt.

Apple, with the launch of the iPhone in 2007, revolutionized the smartphone industry. The iPhone offered a user-friendly touchscreen interface, a robust app store, and a design that appealed to a broader consumer base. Apple understood the significance of creating an ecosystem that extended beyond hardware, focusing on the seamless integration of software and services.

While BlackBerry was slow to respond to the changing landscape, Apple capitalized on the consumer shift toward a more interactive and application-centric mobile experience. The App Store became a crucial component of the iPhone’s success, offering a vast array of third-party applications that enhanced the functionality and versatility of the device.

This historical perspective emphasizes the necessity for periodic, if not more frequent, assessments of product-market fit. While encompassing the holistic aspects of product-market fit, which involve the purchase, usage, and recommendation of a product, the subsequent discussion delineates strategic considerations such as features, pricing, timing, and adoption. Regular evaluations within these dimensions are critical to ensuring alignment with market dynamics and sustaining a robust product-market fit over time.

Assess Market Trends and Innovative Directions

In the rapidly evolving landscape of business, Blackberry, Netflix, and even electric lightbulbs serve as a poignant reminder that the market dynamics can shift swiftly, rendering once-innovative offerings obsolete or commoditized. As highlighted in influential works such as “Zero to One” by Peter Thiel and “From Good to Great” by James Collins, companies must embrace agility and be willing to undertake painful yet necessary pivots, even venturing into entirely different markets or product domains. Rather than tell Santa what we want, perhaps we should ask Santa what shifts in the global market he sees (hint: Natural Language Processing, NLP, and Natural Language Understanding, NLU, today; Natural Language Explanations, NLE, for autonomous decision making tomorrow).

It’s imperative for businesses to proactively engage with customers and prospects, not only for feedback on existing products but also to uncover emerging trends and advancements that may extend beyond the current product roadmap. Remaining attuned to the evolving needs and preferences of the market allows companies to stay ahead of the competition and, in some cases, become trailblazers in spearheading disruption. The ability to discard previous successes and embrace transformative changes is a hallmark of resilient organizations. By fostering a culture of openness to innovation and a commitment to staying ahead of the curve, businesses can avoid becoming entrenched in outdated strategies and technologies. This forward-looking approach positions companies to thrive in an environment where adaptability is paramount, ensuring sustained relevance and success over the long term.

Derived Value and Product Pricing

It’s imperative for businesses to critically assess their product’s perceived value and pricing strategies. While selling teams often champion premium prices as a result of significant and tangible Return on Investment (ROI), it’s essential to consider buyers’ perspectives. Buyers may perceive similar or better offerings elsewhere at reduced prices. An honest evaluation of customers’ ROI, time to recognize that return, and the consistency of benefits across the customer portfolio is essential. These reflections provide insights that can be addressed proactively to ensure sustained competitiveness in the market. Additionally, competitive positioning must be regularly updated to reflect market dynamics transparently. Even if your objective return is substantial, competitors may offer comparable results at lower prices, necessitating adjustments in target markets, product differentiators, and pricing strategies to maintain a competitive edge and navigate potential challenges posed by better-funded competitors.

A study conducted by McKinsey & Company highlights the significance of perceived value in purchasing decisions. It notes that 81% of buyers consider the value they receive from a product or service to be a crucial factor in their decision-making process. And a survey by PwC found 60% of consumers consider pricing to be a key factor influencing their purchasing decisions. Finally, research by the Journal of Marketing suggests that businesses facing competition from well-funded rivals should focus on creating and communicating unique value propositions. This involves not only demonstrating the tangible ROI of their products but also effectively communicating differentiators that set them apart. By doing so, businesses can navigate challenges posed by competitors offering comparable results at lower prices.

End-of-Year Sales

As we approach the culmination of the current fiscal year and delve into the planning phase for FY24, it’s crucial to seize the unique opportunities presented during this timeframe. While a substantial portion of allocated funds has been expended, a notable segment of potential buyers actively seeks opportunities for smaller, strategic acquisitions. To harness this potential, it’s advisable for businesses to adopt a more agile and accommodating stance, particularly in the months of November and December.

One strategic avenue to explore during this period is the implementation of attractive end-of-year sale packages, strategically tailored to capture the attention of discerning buyers. The key lies in structuring these packages to facilitate swift approval without requiring the involvement of additional decision-makers. This creates a window of opportunity for those seeking discreet purchases, potentially leading to increased transaction volumes. Distinct from end-of-quarter discounts, this approach fosters a sense of urgency among buyers willing to make a purchase if the package, adjusted as necessary to justify the discount, is swiftly approved. While this may result in a lower Average Contract Value (ACV) in Q4, the subsequent surge in volumes provides a robust foundation for cultivating a favorable up- and cross-selling pipeline in the ensuing Q1.

According to industry reports, the end of the fiscal year is a prime time for businesses to align their offerings with the purchasing behavior of potential buyers. A study by Gartner indicates that many organizations, in the rush to spend remaining budget allocations, actively seek strategic acquisitions during the closing months of the fiscal year. By offering attractive end-of-year sale packages, businesses can tap into this demand and create a sense of urgency, potentially boosting transaction volumes and setting the stage for continued growth in the subsequent fiscal year.

Product-Led Growth (PLG)

Another strategic approach to consider, contingent upon the nature of your product, is the incorporation of a Product-Led Growth (PLG) strategy. This innovative model involves segmenting different aspects of your product and strategically placing premium features behind paywalls or monitoring features for consumption. The data gathered through this monitoring serves as valuable insights during billing negotiations and provides a feedback loop to Product and Marketing teams. Essentially, the PLG model empowers consumers to pay based on their actual usage, aligning pricing with the tangible value derived from the product. This approach dovetails nicely with the land-and-expand model discussed in a prior article, where a small user base can quickly recognize the benefits of a restricted product on a restricted budget, paving the way for future expansion.

The Product-Led Growth strategy has gained traction in various industries. According to a report by OpenView Partners, companies that have successfully implemented PLG have experienced accelerated growth and increased customer satisfaction. By allowing consumers to pay based on actual usage, this model enhances customer-centricity and ensures that pricing is directly tied to the perceived value of the product. Case studies across different sectors indicate that the PLG approach can lead to more sustainable growth and customer retention, making it a valuable consideration for businesses seeking innovative ways to align their offerings with customer needs and preferences.

Calls to Action

1. Regularly engage with customers and prospects to gather insights into emerging trends. Embrace agility and be open to making necessary pivots.
2. Critically assess the perceived value of your product and pricing strategies from the buyer’s perspective. Regularly update competitive positioning to transparently reflect market dynamics.
3. Implement attractive end-of-year sale packages tailored to capture the attention of discerning buyers and accomplished with swift approval.
4. Explore the incorporation of a Product-Led Growth (PLG) strategy, empowering consumers to pay based on actual usage and enhancing customer-centricity.