2014 has been a year of great momentum for software products in India and its going north in 2015. As the momentum picks up, thought of sharing some thoughts on a thumb rule that we can apply for products that we plan to build
Picking the medical analogy, the one way of classifying where your product fits in would be when you answer if your product is a vitamin, pain killer or vaccine – and how you innovate around them.
The must haves are the pain killers, you can’t survive without drugs that cures fever or other painful diseases. In software products area, an equivalent is the automation software that will help you bill your customers, keep your accounts, communicate through emails, build professional or personal network etc. These are very basic, been there for a while and there is always market for these products. But the challenge with these products is that you are not the first one building it and you have tons of competitive products. A funny example I came across when a team mentioned they are building a product for traffic problem that exists in Bangalore, but the how part was not convincing enough to believe it can solve the problem. While the problem is clearly understood, and is a pain, the pain killer solution is key.
Often referred as commodity market, the only success factor here is “how” you solve the problems in a different way, leveraging latest technologies such as mobile, cloud or internet of things. Value of such products, in order to be successful, needs significant go-to-market investment. Nevertheless, if you have found the right product – market fit, there is still scope for this as everyone needs these products, as there is no question “why you need these products”, as long as you can differentiate and sell.
The nice to haves are vitamins, we all know that. You will agree that to sell vitamins, you really need to first establish “why you need that product”. We do see the benefits, but we can live without it. Analytics and big data products are good examples of vitamins analogy. It would certainly help for your data driven decision making, but you need to convince someone a lot as he or she is already getting the insights in different forms, maybe through a good team that he or she has. But like how we get addicted to some vitamins, you can tend to get addicted to software products that can help businesses or life better. Also over a period of time, vitamins become pain killers as we can’t live without them. A good example for me is Google or Mobile phones or ipads. We have lived without google or mobile phones few years back, but they are no more an option. Ipads is still a vitamin, but still sells very well.
Vitamins need a different kind of expertise in your sales and go to market organization. You need experts to sell these solutions. They really need to uncover the invisible need that the buyer would have and offcourse your product needs to fulfill their aspirations by educating them. Vitamins can be sold at a very premium price if we can convince the customers.
While painkillers take care of the visible need, vitamins have to discover the invisible needs
As you build products that fall in the vitamin category, it would be great to see the end vision of these products, and if they can eventually create a new category that can get into a pain killer or vaccine.
They are preventive; they address solutions to problems that exist today or likely to arise in the future. They are must haves, but they get into territory of unsolved problems, so if you have a solution that solves an unsolved problem or even prevents the problem to occur, they would fall into this category. Vaccines type products are real innovations – as they are needed and they can help businesses or improve life.
Business networks are a great example of vaccines, as they remove the hurdles of problems such as intercompany reconciliation or payments by cheques. Knowing your customer is great problem that exists and you want to sell the right product/services, at the right time and at right price based on what customers are seeking. If you understand the customer better, it’s a no brainer that your revenue is going to increase. Next generation customer engagement solutions are a good bet, which personally can fall into the vaccine bucket. I was super impressed by the Health care cloud mobile products developed by Lifeplot, and many of their products certainly fall into the vaccine category as they can prevent diseases at an affordable cost.
While vaccines are game changers, they also need certain degree of convincing to sell, as the problem is not obvious to many. One example for me in software products is digital commerce such as web and mobile. There is a huge opportunity to tap into selling in these channels and having products to support them. But it still needs to convince the buyers, as certain level of education is required for this.
|Need||Must have – Visible||Nice to have – invisible||Must have – Visible|
|Problem statement||Well defined||Need to be explained||In certain cases defined but needs education|
|Main value prop to sell||How its solved||Why its needed||How its solved and sometimes why its needed|
|Sales approach||Non Experts but with clear differentiators for product – market fit and lot of investment||Experts required to explain value with lot of investment||More education required, and once convinced less investment|
|Revenue and Pricing||Standard||Premium||Standard|
|Examples||ERP, Emails||Analytics, Messenger||Business Network, Digital Commerce|
So where does your product fit in – is it a pain killer, vitamin or vaccine ?