Building great products requires a mix of vision, customer feedback and continuous iteration. I’ve found this to be true regardless of what your product is — software, professional services, physical goods or anything else.
Since I started my first company in 2001, I’ve tried to learn as much as I can about what makes great products. While I’m still learning, there are 8 “rules” I keep coming back to when I start, advise or invest in a new company — and I wanted to share them with you here.
This acronym stands for (B)uild (F)or your (B)est (C)ustomers. Simply put, it means you give a higher weighting to product feedback from your best customers — the ones who spend the most money with you over time.
This leads you to build additional products (and improve existing ones) for your best customers, who are much more likely to pay more for those new and improved products, thus helping grow your revenue faster with fewer customers and less customer support.
The key thing here is that not all customer feedback should be treated equally. If one customer pays you $2,000 a month and another pays you $20 a month, the feedback from the $2,000 a month customer is actually more valuable if you use it in your marketing and product strategy to attract MORE customers like them and/or if it gets them to spend more money with you via upgrades or additional products.
Simply put — it doesn’t take 10x the effort to get a $2,000/month customer as it does to get a $20/month customer. It probably takes 2–3x the effort but gives you 10x the revenue.
Cost (Create & Sustain)
When you build anything new, it’s tempting to just think about the initial cost to build, source or manufacture the product. What trips most founders up, though, is the ongoing cost to sustain that product once it’s live.
You might get a quote from an agency to build a product for $20,000, but quickly after you launch you’ll realize you need additional cash to build it out based on customer feedback, so you can improve your conversion rate, average order value, reduce customer churn, etc.
I’ve never seen version 1.0 of any product win a market — or generate significant (7–8 figures of annual) revenue. It always takes years of iteration based on customer feedback to generate that kind of revenue, which of course needs to be funded from somewhere — either profits or investors.
When you’re building a new product, it’s tempting to wait until it’s perfect and “fully featured” before you put it in front of customers. Turns out, this is the absolute wrong way to build a product.
Instead, you should build the simplest version that solves a single problem and put that in front of customers for feedback ASAP — even if it’s not your best work. You can then build upon that iteration of the product with customer feedback which you get much earlier in the process.
This is called building a cupcake.
Most startups try to build the wedding cake (the big final product) on their first iteration instead of starting small with a cupcake, then turning it into a cake (based on customer feedback) and then finally into a wedding cake (again, based on customer feedback).
I first came across the cupcake strategy on Intercom’s blog and it made so much sense it became one of my rules that I now use whenever I’m building or advising on the creation of any new product, be it software, a restaurant, a fitness supplement or even my latest training program for startup founders…
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