Your product or service must not only align with your value proposition and customer’s needs, but you must package it into a product offering that your target audience can understand and buy.
You probably have a clear idea of the product or service you offer.
That doesn’t mean your target customer knows what they can buy.
How is this possible?
Say, you are an artist, and you want to sell your paintings.
You can create individual paintings and sell them in a gallery that appeals to high-end buyers.
You can create “digital paintings” that you upload onto your website and offer them for direct download, so art connoisseurs can print them and hang them on their wall.
You can offer visitors to your website the option of imprinting your paintings onto a coffee mug, mousepad or T-shirt and delivered to their door so consumers can enjoy your art every day.
Every one of these businesses is built on the same idea – to sell your paintings – but each product offering represents something different that a type of customer can buy.
Do you know exactly what you’re selling?
Your product offering packages what you’re selling
As you build your business, you will almost certainly have an assumption about the product or service you want to provide.
If you’ve followed my unique, 5-step process for developing a high-impact value proposition statement, you can clearly explain your product or service’s target customer, its key benefit and competitive advantage.
To make your product or service function as a business, however, you must develop a product offering that packages your value proposition into a form that customers can understand and purchase.
In other words, your product offering must be something consumers can say ‘yes’ to.
A clear product offering supports product-market fit
Why is having a clear product offering so important?
It will help you achieve a critical objective of any business: product-market fit.
I’ve read many definitions about this ‘state of business’, but the simplest and clearest one comes from Marc Andreessen, the co-founder of Netscape and one of the most successful venture capital investors in Silicon Valley.
“Product-market fit is being in a good market with a product that can satisfy that market.”
I’ve developed a five-step process that will not only help you achieve product-market fit but enable you to scale and broaden your business afterwards quickly and efficiently.
Creating a clear product offering is a critical principle of The Launch Code, my business growth framework that combines corporate planning methods with entrepreneurial execution to guide you on how to build a successful business and achieve clarity and comfort.
Step 1: Create a minimum viable product
A minimum viable product, also known as an “MVP,” is the product offering you start with based on your assumptions about what your target customer will want to buy.
Ideally, it has enough features to attract early-adopters and will help you validate your product idea early on its development.
Entrepreneur and author Eric Ries introduced the concept of the MVP in his book on Lean Startup methodology.
An MVP is useful because it enables you to release your product or service to the market quickly and to test an idea with real users before committing lots of time and money.
After all, what you had in mind might not have a market.
The story of AirBnB’s founding is one of my favorite examples of how to use an MVP to develop your product offering.
Founder Brian Chesky used his own apartment to validate his idea to create a service offering short-term, peer-to-peer rental housing online.
He created a minimalist website, published photos and other details about his property, and found several paying guests almost immediately for a conference in San Francisco.
The ‘Air’ in ‘AirBnB’ refers to the air mattress that he ‘rented out’ in his apartment.
An MVP works for professional services businesses too
An MVP is just as relevant for agencies and other professional services businesses that sell a ‘virtual product’, usually in the form of time, knowledge, network or experience.
Their version of an MVP will be the various packages through which they can make their services easier to understand and buy.
If you say, “I’m an expert in marketing, buy my service” it’s much more difficult for your customers to understand ‘how’ to buy what you’re selling.
Instead, say “I’m an expert in marketing, and I offer three products for customers like you”:
- Advisory Service: a 10-hour personal consulting package on how to create a value proposition.
- Workshops: a two-hour workshop on how to launch a new product in 5 easy steps
- E-Learning: a 6-hour video series on the keys to building a successful marketing plan
Step 2: Gather feedback and insights
After you launch your MPV, you will receive feedback from a variety of sources.
1. Your customers
The response you get from your first potential buyers will either be very direct (“I’m not interested because this has no value to me”), or more indirect (“I don’t understand what you’re offering” or “Let me think about it.”).
Listen to your customers and learn to read between the lines. This will give you the clearest indication of how clear your product offering really is.
2. Your friends and advisors
People close to you who have your best interests in mind will give you an honest assessment if you ask them to. Be careful not to take their criticism personally.
3. Your competitors
As you dive deeper into the process, you will get inspiration from other players in your market even if they are direct competitors. Notice how they are evolving their own product offering and follow suit.
Finally, after processing all of these different sources, it’s likely that one day you will look at the MVP that you were so proud of and thought was so perfect and realize that it does need significant improvements.
Make sure you record all this feedback. This will help you notice certain patterns emerge as you start hearing the same thing repeatedly from different sources.
Some common insights that you might discover are:
- Your target audience has no interest in your product offering, or
- Some elements of your product offering have value to your target customer, while others don’t, or
- Another type of customer values your product offering more, but not necessarily how you assumed.
Learn to live with this sometimes-painful process.
Honest feedback is like medicine. It may not taste good, but it is good for you.
Step 3: Realign and test your revised product offering
Commit to integrating changes into your product offering based on the feedback you receive.
First and foremost, you’ll need to reevaluate your product offering and realign it so there is a clear connection between the value you’re offering and the target customer who is willing to pay for this value.
You’ll then need to test this revised approach with potential customers, integrate their feedback, realign, test and integrate their feedback, and so on, as if you were on a continuous loop.
One fine day, you will discover that you have achieved product-market fit.
How will you know?
Customers understand clearly what you’re selling, they recognize the value you deliver and they are willing to pay your asking price to gain access to this value.
It’s like magic, but even more fun!
Step 4: Scale your product offering
Once you’ve achieved product-market fit, you can begin scaling your product offering.
This means you’ll be able to sell more of your product to more customers and grow your revenues with only a minimal increase in the time, effort and money you invest to achieve bigger results.
Listen to or read my blog on the business models that are easiest to scale.
Service businesses are traditionally more difficult to scale.
You can still repackage your service offering and extend various levels of service at different price points so that you appeal to similar customers with different needs.
Step 5: Broaden your product offering
You might reach a state where you consider your product offering ‘finished’… for the time being, at least.
This is the time when you can consider broadening your product offering to generate additional revenues from existing markets, or new revenues from adjacent markets.
I use the word ‘broaden’ and not ‘diversify’ on purpose. It’s critical that you stay true to your value proposition and expand into adjacent areas that complement and don’t hurt your core business.
Doing something completely unrelated to your core business will destroy the value of your original business.
Here are three smart ways to broaden your product offering:
- Same Customer/New Product – you currently sell car insurance online, but you decided to offer home insurance, as well.
- Same Product/New Customer – you sell a household cleaning product and decide to repackage it and sell it as a cleaning agent for automobiles.
- Same Product & Customer/New Geography – you sell the exact same product to the same type of customer but do it in a new city or country. This is the essence of international expansion.
Your product offering is never done
Your product offering requires a continuous process of development and feedback.
You not only have to deal with the natural decline in a product’s life cycle, but with unexpected changes in a constantly evolving competitive marketplace.
Don’t get discouraged it feels like you didn’t get something right the first time.
As long as you follow this five-step process, you’ll have plenty of time to get it right and to reap the rewards of achieving product-market fit.
Need help identifying your product offering?
Imagine how much easier it would be if you had an experienced business growth mentor by your side to help you fix your biggest challenges.
Schedule a 30-minute FREE STRATEGY SESSION with me and discuss how to create a clear product offering that aligns your value proposition with your target customers’ needs.
I’ll also share with you how I can help you find your focus and accelerate your business growth as your mentor.
Get in touch and I’ll help you and your business ‘Blast off!’