The internet age and the growth of apps have disrupted many assumptions about how to do business, but one revolution that’s easily overlooked is changes to the very way a business develops a product.
In the old-school, physical manufacturing mindset, the production and sales process was very delineated. After researching demand, the company developed and made the product, then the sales team went to work, with minimal crossover. With today’s startups, that isn’t necessarily the best strategy. In many circumstances, thinking about how you’ll sell a product or service may be key to the development process.
The Sales-Market Fit Philosophy
One of the leading advocates for this new way of thinking, B2B startup sales consultant Whitney Sales, puts it simply with her “Sales-Market Fit” concept. She suggests that, in the tech world in particular, it’s not most effective to think of product development, sales and marketing as being on a linear timeline. Instead, they’re more like a Venn diagram with each element interacting with the others.
Intersection of Product Development, Sales and Marketing
Today, many startups are bringing product development, sales and marketing together in a singular function. It’s a form of ‘growth hacking’ that effectively reduces the cost of acquiring a customer, especially compared to, say, running campaigns externally (e.g. social media, public relations, SEO, SEM, etc.).
‘Growth hacking’ isn’t just a cool new way of saying marketing, despite what sceptics would have you believe. The term was coined by Sean Ellis, Founder of GrowthHackers.com, who defines a growth hacker as “a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth”.
Traditional marketers promote products after they’ve been built. The growth hacker’s job, on the other hand, is to find ways to adapt a product to fit the needs of the market to boost its adoption. In essence, the growth hacker is a tech-savvy marketer who finds and leverages opportunities to help companies grow their customers/users – whether it’s through product tweaks, distribution automation, influencer marketing or something else.
A lot of big companies attribute some of their viral growth to having a public Application Programming Interface (API) – a powerful customer acquisition tool. Facebook, Twitter, Foursquare, Dropbox, eBay and Xero have all benefited from their public APIs.
In fact, entire companies have been built off the back of other companies’ public APIs, such as Hootsuite and Maestrano. The parent companies then grow through its successors’ users, making the parent company a powerhouse.
Companies like Apple and Google are the foundation partners of millions of companies around the world because of their App Store and Android APIs. If not for the apps that have been built off their APIs, people wouldn’t be spending money on expensive hardware.
Another example of product development, sales and marketing coming together would be the integration of enterprise-level apps or features that encourage internal staff, as well as external companies that are doing business with the enterprise, to use the product – it could be a payment gateway like Stripe or a workflow management tool like Trello.
Even less complex features like ‘refer a friend to get 10 percent off’ or social media share buttons are examples of the three segments intersecting.
One example of how sales can drive product development is the scale and type of marketing you plan to do, which is something that can be determined by your expertise, experience and budget. For example, if you plan to market through major campaigns such as a television or newspaper advertising, you’ll often only have scope to emphasise one or two key points. If that’s the case, you may want to shape the development of your product so that it does a few things extremely well.
That said, in the post-launch phase, it’s always better to deliver a few great features to a niche market than many mediocre or substandard features in the intent of capturing a wider mainstream market. As Airbnb CEO Brian Chesky famously said, “It’s better to have 100 people who love you than finding a million who kind of like you.” Those 100 people will actually pay for your product.
Some of the most successful technology companies today grew through dominating small customer segments, one at a time. PayPal focused on eBay users before dominating the ecommerce world, Facebook targeted students at Harvard University before expanding to other colleges and user segments, and Airbnb launched in San Francisco before entering other cities. They looked at who they could sell to or who they could capture as users, then built features to serve the needs of that market.
If you are looking at a broader campaign, such as one that focuses on social media, you’ll be able to target specific messages to specific audience sectors. In this situation, it makes sense to develop the product (or continue developing the product) so that it serves a wider range of needs. (Here’s a great infographic on the evolution of Facebook features).
Follow the Money
It’s not just where you make sales that counts, but how. Take apps as an example. If you only have the capacity (whether through money, time or other resources) for a short, sharp campaign, such as one tying in with a topical event, you’ll likely have a more limited audience for an app and therefore need to maximise revenue. That could mean developing it with both in-app ads and in-app purchases in mind.
Alternatively you could be developing a child-focused app, in which case sales and development have more of a back-and-forth relationship. The product being aimed at kids drives your marketing style. In turn, the fact that you’re marketing to kids means ads and in-app purchases may be out of the question for legal or ethical reasons. That means you’ll likely need to prioritise a wider audience base and conclude this is best achieved by word-of-mouth. In turn, that means developing the product to heighten emotions and make users so excited they talk about it, rather than making something that works perfectly but leaves users in silent satisfaction.
Find the Audience
Your expected sales method can even affect seemingly small details about product development. If you plan on targeting word-of-mouth referrals, media coverage and favourable reviews, you can put more of your efforts into making sure the product doesn’t just work well, but is conspicuous about doing so such that even a technology journalist or product reviewer who uses it for an hour or so will see what a great job it does.
If you instead expect most of your sales to come from a central resource, you’ll need a product that’s marketable in that format. For example, with app stores you’ll need a memorable but descriptive name; an explanation of the key features and benefits in a few sentences; and a visual design that makes it obvious how the apps work even when reduced to out-of-context screenshots.