What are the criteria for new product development?
Reasonable price, beauty, durability, creativity and good material are all important. These criteria are essential but aren’t enough.
why do not all products that meet the above criteria well succeed in the market? That’s the question.
The answer to this question introduces us to the concept of the product-market fit. This concept is explained in detail below:
Product Fit - The market describes a situation in which a company's target customers buy and recommend the product to others as much as is necessary to maintain its growth and profitability. (Product Plan)
According to Mark Anderson's point of view: product-market fit means offering the product to a potential market that has gained the satisfaction of its customers.
Importance and benefits of the product-market fit:
Most of the products that fail in the market are because there is no suitable fit between the product or the solution they offer and the target market. For this reason, investors attach great importance to the evidence of this in examining investment plans. Producing an excellent product that no one wants has no value. This is the main reason for the failure of most new startups and products. They are well designed but do not match the wants and needs of the target customers. Now the fundamental question is how to find out its relevance to the market during product development processes.
Each product has two stages: first before offering, second after offering.
In this section, we introduce some of these criteria after the product offering.
1) NPS
2) Sean Ellis
3) Alex shultz
The NPS is a performance indicator that can be used to investigate customer feedback and determine their level of product satisfaction and loyalty.
In this test, the user is asked questions that the most important question or the first of which is How much do you want to introduce this product to others? Score 0 - 10.
By examining the NPS index over time and comparing trends, companies can determine the extent to which customers' satisfaction with their products change and their needs. The NPS is also can be used to predict future business growth. Whenever this index is higher than the average of other similar companies, it means user satisfaction and product promotion by them.
customers are divided into three categories based on their answers:
A) Advertisers: People who give the product a rating of 10 and 9. These people in addition to being very passionate about our product and loyal to the product, also recommend it to others.
B) Indifference: People who have given the product a score of 8 and 7. These people do not promote our product, but they are not suspicious of it and do not do negative publicity.
C) Dissatisfaction: These people are not satisfied with the product and have a lot of criticism of it. Their critiques can be very helpful in designing and upgrading future versions of the product.
For calculating NPS, the first goal is to answer the important question of how much you recommend this product to others. Then, according to the score given, the next question is asked as follows:
1) advertisers’ group: What is the most important reason to choose a product and introduce to others?
2) Indifferent group: What changes and suggestions are necessary to upgrade this product?
3) Dissatisfaction group: What are the problems and shortcomings of the product or the main reason for their non-satisfaction?
In the below chart NPS testing process is summarized:
Conclusion:
By conducting periodic surveys and reviewing the results in each period, it is possible to better understand the tastes of the audience and make products according to their wishes. Do not forget, it is impossible that can be satisfied everyone, and satisfying everyone will eventually lead to the loss of everyone. So you must first identify your target group and the personality of your customers.
Their standard is Ellis?
Sean Ellis (a startup consultant), for all startups for the development of their new products, it is the most critical stage to consider the fit with the market.
In this method, a survey is used to check the suitability of the product with the market. The main question of the survey is how will you feel if you lose the product or it is no longer offered?
The answers are in the following category
I'm very upset
I'm a little upset
I don’t care
I have left the product
If 40% of users answered A in the polls, you should be optimistic about the success of your product.
Products whose users' response to Option A was less than 40% have encountered numerous issues in continuing to operate and scale it, compared to products with percentages above 40, they have grown more smoothly.
But can this poll be sent to everyone? It is recommended to send a survey to users who have used your product at least twice in a while and are familiar with its advantages and disadvantages.
Products that we have tried hard to design may not always meet the needs and wants of the market. Therefore, it is necessary to make changes to it. Those who have the ability to better adapt to change are more durable in the market. So, you need to be aware of how customers' demands change and change the product accordingly.
Conclusions:
Product-market fit is one of the most important steps to consider when producing a new product. The Sean Ellis benchmark is one of the fastest ways to assess a product's relevance to the S market. Of course, this benchmark is only an estimation and does not have 100% accuracy.
The long-term retention approach has been introduced by Alex from Facebook. In this approach, the percentage of monthly active users is plotted in relation to the number of days elapsed since activation. The more parallel the x-axis curve, the better fit the product with the market. In fact, the approach of this criterion is that the more- new users become regular customers, the better the product adapts to the market.
