Product Development with
Your Customers in Mind
Dear Business Builder,
John had been in business many years selling financial newsletters. He was doing well, but times were rapidly changing. His universe of potential prospects appeared to be drying up … they were getting older, no longer as interested in the financial markets and many were just plain dying. His subscriber base was shrinking.
In an effort to save his shrinking customer base, John pulled his team together for a brainstorming. What products could they sell that would appeal to a younger demographic of prospects? Could they attract women? Maybe they could start bringing customers into the funnel at a different point in their financial life.
The team was very excited. They too were younger and dealing with 401ks, mortgages, insurance, saving for college, buying cars and houses … why not create a publication that would speak to them.
John loved the idea.
They hired researchers and writers to create the publication, they designed the layout – a snazzier, glossier, 4-color magazine younger folks could relate to – and they started planning the marketing.
And knowing what they knew and doing what they do, they hired the best copywriter and the best graphic designer in the business for the job … sparing no expense.
They launched the product to much fanfare and excitement convinced this was the ticket … the publication that would save their shrinking customer base.
They did their mail plans, printed their promos and dropped it in the mail. The orders started coming in. And a peculiar thing happened. John’s existing “aging” customers subscribed to the new publication in droves. But the outside lists designed to bring in younger new customers failed to break even.
They went back to the drawing board and changed the promotion from a hard offer (cash with order) to a soft offer (bill me later) so it was more like the money magazines younger folks were used to subscribing to. They made costly modifications to their customer management system to handle the change.
They went back out in the mail to test. The current customers still subscribed – ignoring the bill me offer and sending cash with their order – and the outside younger customers still weren’t interested.
After a few more tests in the mail, a whole lot of money spent and some serious analysis, they determined the cost of production was too high, the price the market would pay for a personal finance publication was too low to cover the production, the bill me offer was completely outside of their business model and – to add insult to injury – younger folks got their personal finance information free from the internet.
They killed the publication and chalked it up to experience.
This is a true story … or rather a combined true story of multiple products, not just one personal finance newsletter. I was on the brainstorming team (more than once) and so were a lot of other really smart marketers.
Desperate times call for
desperate measures … or do they?
When faced with a challenge such as the one I described above, it’s easy to jump to the conclusion that drastic changes are needed. We so desperately want to attract a new, different type of prospect that we forget everything we know about our customers and our business model … we end up with a product market mismatch. We falsely believe we can be all things to all people and in that attempt we fail miserably.
Rather than reinvent our businesses, we should look first to what we do really well and duplicate those efforts. We should become crystal clear about what we can be the best at and do it over and over again.
In Jim Collin’s #1 bestseller Good to Great, this is known as the Hedgehog Concept. To quickly grasp the concept, Jim explains with a personal analogy …
Suppose you were able to construct a work life that meets the following three tests. First, you are doing work for which you have a genetic or God-given talent. (“I feel that I was just born to be doing this.”) Second, you are well paid for what you do. (“I get paid to do this? Am I dreaming?”) Third, you are doing the work you are passionate about and absolutely love to do, enjoying the actual process for its own sake. (“I look forward to getting up and throwing myself into my daily work, and I really believe in what I’m doing”)
If you have all three, then you have fully developed Hedgehog Concept.
New product development only a hedgehog could love
New product development need not be difficult. Oftentimes, the simplest concepts and ideas are the ones that are the most wildly successful. Repurposing or reworking an existing product is usually one of the fastest and easiest ways to boost your revenue.
But, when considering new products to add to your roster, ask yourself three simple questions:
- Will this product meet the needs of my core customer demographic?
- Will my existing customers buy this product? (Perhaps it is being sold successfully by a direct competitor.)
- Does the marketing of this product fit into my existing proven business model?
If you answered yes to all three of these questions, chance are good you have a winner on your hands. If you answered no to even one, then it’s time to go back to the drawing board.
Hope that helped and have a great weekend!
Until next week,
Julie McManus
Editor, In the ‘Net Trenches
THE TOTAL PACKAGE
And Web Media Goddess
P.S. Are you in the ‘net trenches? Do you need help? Send
me an e-mail to AskJulie@MakepeaceTotalPackage.com and
I just might answer your question in an upcoming issue.
P.P.S. Have you checked out The Total Package affiliate program lately? We’ve added tons of new creative to help you earn cash on any new subscriber you refer and we’ve opened our archives up for the pilfering … Click Here to check it out NOW!
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2 Comments »
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Comment by Greg Thompson — December 7, 2007 @ 9:18 am
I am a 26 year old male who buys from infomercials and direct mail. I\’m also in the business and also my mom was always a heavy direct mail buyer so I grew up with a positive image of it. But my question is… do young people really buy from direct mail? Most of the people I ask say they never would and that its only something \”old people\” do… has anyone found this to be true? If so, I am very concerned about the future of direct mail.
Thank you,
Greg
Comment by Derek Naylor — December 7, 2007 @ 9:35 am
Hi Greg -
If people read their mail…they\’ll buy from it if the product is right and the copy targets their emotions/needs/wants. Age doesn\’t matter. I\’ve sold stuff that people in their 20\’s want very well through the mail.
I think that most of the stuff being sold through the mail is just catered to older people…retirement investing, health supplements, etc. Stuff young people don\’t wake up in the middle of the night worried about.
I don\’t have a crystal ball but predict that direct mail will work on any age/demographic as long as the mail system is still in place for important correspondence like bills, taxes, etc.
People who say they\’ve never bought from direct mail just haven\’t recieved a promotion that hit their hot buttons.
My two cents…
Derek