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How can you actually “fail fast” as a start-up/ company to help decide whether to pivot or improve your existing product? Here’s an example, based on the tips we shared in this dot.LA article.
Get on the Same Page about Priorities and Scope
Brainstorm: Say you’re at a crossroads at your company. You have several different options for what to do next to grow your company, but you're not sure what to do first.
Should you: pivot/add a new recurring-revenue stream to your business?
Should you offer a new (digital or hard) product or improve the existing product?
Should you do them all at once?
Simplify: Your goal is to reduce cash burn by minimizing development time to create new offers/ products and update the infrastructure to make it possible. One possible MVT ahead of any of these offerings is to have a pre-order or waiting list sign-up page.
Prioritize: After prioritizing your ideas, you decide to introduce a monthly membership fee for accessing all of your existing digital content.
This is a great topic to discuss (at least) quarterly, to make sure everyone is on the same page about priorities, scope and next steps.
Agree on What Success Looks Like
Design: Your MVT will be a Google Form describing the offer and collecting email addresses.
Metric: By having all of the content behind a paywall, you’ll be monitoring four metrics: product and content engagement — and profits from each — for the next week.
Calculate Baseline: You calculate what the content and product engagement was and how much profit the product brought-in, over the past week; your profit from content is $0.
Specify Target: To consider pivoting to the new business model, you decide that within a week of the test going live, you’ll need to see at least:
3% of your existing customers sign up for membership,
similar engagement rates for product and content, and
similar profit from the product.
Build a Test with Clearly Defined Goals
Build: You create the Google Form, offering the membership at $9/ month, and make it available on your company website.
Share Selectively: While the form is available to everyone, you’ll send out a marketing email to 1% of our customers, letting them know about the new offer.
Measure and Monitor: You check your four metrics and the percentage of customer sign-ups every day for a week (expecting at least 1% of 3% by the end of the week). If no one signed-up after the first day, did the email go out and was the form collecting responses?
Decide on Next Steps
Learn: At the end of the week, did you hit your targets — and can extend the test for one more week to an additional 5% of your existing customers? Or did profit decrease because more customers came from paid marketing channels and customer acquisition costs went up?
Summary
The top three challenges companies tend to struggle with are:
Forgetting that there are trade-offs between requesting that something is fully-featured, works perfectly out-of-the box, and takes almost no time to develop;
Spending time and money creating products or features that your customers don’t want or use;
Collaboration challenges across teams within a company to deliver a solution to your customers.
This framework can help you focus on developing the right solutions at the right time, by understanding and solving your customer pain points, communicating why they’re important now, aligning incentives across the teams, and scoping down the product offering to save you and your team time, money and anxiety.
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