Any business that wants to increase income must introduce new goods or services. Five years ago, the introduction of new products was responsible for more than 25% of all revenues and earnings in all industries. According to new data from Leap by McKinsey, executives anticipate that by 2026, 50% of global profits would come from firms, products, and services that do not yet exist.
Recent studies have also revealed that businesses that concentrate on developing novel goods and services while upholding core skills across all functions outperform their competitors in terms of growth. Furthermore, the vast majority of businesses anticipate that future growth will result from the development of novel business models, services, or goods.
We have more than one example for you to seal our point.
Practical examples of launching a product or feature to promote growth
Superhuman. An email app/client was established in 2014. It is designed for people who desire to increase their productivity by reading and responding to emails more quickly. On their landing page, they state that they are creating “The Fastest Email Experience Ever Made“. You cannot sign up today and get immediate access to their stuff. But compared to 95%+ of other products, they have gotten more word-of-mouth, funding, and press. Why? They executed exactly the opposite compared to what most companies do to launch new products and features. Let us elaborate.
A new feature or product release is undoubtedly receiving a ton of attention right now from someone, or perhaps an entire team, within your firm. The plan may comprise various elements.
- launching to the whole user base while rendering it accessible to the general public.
- sending an email or notification to all users or the marketing database as a whole.
- establishing a presence on and ascending the ranks of Hacker News, Product Hunt, and so forth.
- arranging articles from Techcrunch and other media.
- creating a Medium blog post to release the product or functionality.
The best of intentions are used in this endeavor. The goal is to ignite the fire that propels the feature or product toward its breakaway velocity. However, the reverse actually occurs. The majority of launches produce a tremendous amount of resistance to growth, which destroys your chances for long-term sustainable growth.
TBH (To Be Honest), an interactive quiz app for teenagers and high school students, shot to the top of the app store in August 2017 and remained there for a short period of time. In October 2017, Facebook promptly acquired them for $100M. Buzzfeed revealed an internal letter sent by TBH founders regarding how to carry out product releases nine months after being bought. The main message was that in order for their product to gain a critical mass, it is essential to build a procedure that enables them to introduce drastically diverse product experiences within particular communities.
This message has so much knowledge that it gave us the inspiration for our post, whereby we will:
Why most new products and features damage growth
First reason: you terminated your most valuable and significant channel
If all acquisition spending and effort were stopped immediately, would the businesses you focus on and invest in continue to grow? There will probably be a short-term decline, but soon it should level off and begin to rise again. Even though the growth may be quite sluggish, it indicates that you have flat retention curves and strong word-of-mouth. These two items offer a strong base on top of which to build growth initiatives.
The way we figure things out, there are three widely held notions regarding word-of-mouth that are false:
- It spreads naturally.
- It is something you cannot control or affect.
- You only need to design a fantastic product to generate word-of-mouth marketing.
Let us examine what influences word-of-mouth.
Word-of-mouth is a loop, like all things compelled by growth.
- A new user or client begins utilizing the product.
- That item well surpasses expectations.
- Consequently, that person informs others.
- Repeated loop.
The second stage in this loop—where the product vastly exceeds expectations—is crucial. In other words, the difference between the alternative and your product experience is significantly better. The user will not probably feel obliged to share with others regarding the experience if the difference is only modest. Building an excellent product is one aspect of achieving a non-incremental delta. But that just addresses fifty percent of the issue. Who you introduce the product to makes up the other half. An excellent product will have a modest or negative delta if it is exposed to a market it was not intended for. The majority of product/feature launches operate just like this.
Even though that particular form of the feature/product had been ideally developed with a very narrow target audience in mind, the problem is that the majority of feature/product launches have no control over who they are disclosing the product. When this occurs, a large number of consumers or users that it was not designed for end up having either a slight or unfavorable delta experience.
We rationally assume that users and customers will be aware that the feature was not created with them in mind. However, in practice, they just acquire a bad opinion instead. At the finish line, you have more people who are indifferent or critical than favorable, which breaks the word-of-mouth feedback cycle.
Second reason: you take longer to validate your claims about your product or feature
Any product team’s objective is to swiftly verify their goods or feature hypothesis. Your hypothesis can be validated in two different ways: qualitatively and quantitatively.
You may be examining NPS or other data for qualitative input. Given that most new offerings are not targeted, the result is a flurry of clamorous feedback that is challenging to sort through.
You are seeking flat turnover rates for the feature or product on the quantitative side. However, the standard untargeted product launch can complicate the process. Your turnover curves are probably going to exhibit an unfavorable trend with a lot more respondents compared to what we have prepared for.
The issue is that if you fill it with random content, it will come out as random content. You’ll have to dig around to find evidence to support your hypotheses. As a result, your conclusions will be slower, less accurate and less useful.
Third reason: you lose the power to attract your audience’s interest in the future
We took some time to consider the qualitative part of growth, which involves comprehending user psychology. The “Psych“ Framework by Darius Contractor, Chief Growth Officer at Otter.ai, is one of the numerous frameworks we examined in depth. That framework’s central idea is to view your consumers’ motivation and attention as a fuel tank that can be filled from empty to overflowing. There are both things that add fuel to the reservoir and things that drain the tank when it is full.
This fuel tank in our hypothetical is more brittle than ever. The fuel tank can be drained far more quickly than it can be filled. We are all far more inclined to start ignoring when we have too much email, push notifications, etc. to deal with. The majority of product or feature releases operate exactly like that. In an effort to hasten adoption, they alert the entire user base, but what you are in fact doing is napalming your audience’s attention. This will make it very challenging to retain your audience’s interest in the future.
Fourth reason: you don’t position yourself for ongoing success
The long-term, sustainable expansion of your product or feature is what you ultimately aim to achieve. That results from developing a compounding loop-based sustainable growth paradigm.
Sadly, many frequently focus more on the debut than on the mechanism that will maintain growth after the launch. Each good and service needs to be launched, but the majority of the effort should go into creating a mechanism that will continue to function. The launch serves as a tool, not as the goal in and of itself.
So what is the right way?
What should one do instead? Let us go back to the TBH founders’ message saying in order for your product to gain a critical mass, it is essential to build a procedure that enables you to introduce drastically diverse product experiences within particular communities
Several elements make up this message: The possibility of reaching critical mass is equal to the repeatable procedure + drastically distinct product experience + particular community. It appears to be a five-step loop.
Step 1: Narrowing down
The first step is to take the complete opposite approach to most product launches and narrow your target audience down to the people for whom you originally designed.
Give a specific description of your theory on who that is. “What are the areas I can get attention?“ is typically the first question in a product launch. The better approach is to ask yourself, “Which particular audience am I attempting to get to with this v1?“ Following that, you might consider where those folks “live“.
Step 2: Determine access
You may then come across a ton of possibilities on how to reach that audience after you have our basic definition.
This may vary depending on the initial premise, whether it is a product launch or a feature launch, and whether you are introducing something new or using an existing user or customer base. It can be done via paid media campaing, emails, recommendations, Product Hunt, Hacker News, Medium, a website, etc. For instance, understanding the value of a website is essential to rapidly expanding your company, meaning your new product too, especially using a platform that provides free website builders, which have been at the forefront of the website builder sector for a while and have been developing. Anyway, as opposed to steps one and three, this stage, i.e. step #2, is less important.
Step 3: Filter
With any marketing strategy, you will never be capable of completely targeting your audience hunch. Due to this, you must consider how to take early attention and filter it according to our audience premise. There are numerous approaches to accomplish this, but the principal ones would be:
- Existing usage information: If you are dealing with an audience that is already there, you ought to have a lot of information about them. Not only who they are, but additionally what they have done and have failed to do in relation to your goods. All of this information is crucial for determining your hypothesis.
- Data supplied by the enjoyer: The key is to get the appropriate information or ask the appropriate questions to enable effective filtering.
- Passive data: There are numerous tools, such as Clearbit, that enable you to attach data to learn more about them.
Step 4: Look for your success indicator
As users of the product pass the filter and utilize it, you watch for success indicators that support your product or feature hypothesis. We consider them on three different levels, each requiring greater volume, information, and time to obtain:
- Very Disappointed Survey, NPS, and other qualitative data.
- Healthy retention curves at the product or feature level are indicators of feature market suitability or product market fit.
- Casey Winters, tech company advisor, posted a piece regarding feature product fit. According to him, feature/product fit demands the feature to increase core product profitability, engagement, and/or retention. If it does not, it is cannibalizing another component of the final product.
We frequently do not discover the success signs on our initial attempt. It is alright. It will be simpler to determine why our hypothesis is incorrect assuming we have completed our filtering, which will assist us choose where we should “travel“ next.
Step 5: Apply leverage
It is time to use your hypothesis as leverage into the subsequent set of audiences you are interested in reaching if you start to see some early success signs surrounding it.
Imagine it as an array of concentric rings that starts in the middle and grows outward from there. Once you have accumulated enough success signals, powerful word-of-mouth users, and other components, you can eventually turn off all filters and open the doors.
A final thought
Businesses can grow significantly thanks to their products. However, businesses will not be able to realize the full value of their products until they can master product launches.