Acquire - Retain - Monetize
Growth Strategy for Subscription Business and SaaS Companies
HOW WE DO IT
Excerpt from Demand Horizon
The rules of new product development have changed. The fundamental nature of supply and demand has shifted and markets have undergone a reversal. Users are in control now, determining the success and failure of every company and product in the market. Companies that underestimate the implications of this shift are guaranteed to fail, wasting time and resources pursing products the market will not accept.
Below are mental models for understanding and adopting to the demand-driven economy. They're the framework for making sense of the new rules in product creation, offering both strategic understanding and practical actions for adapting to the new rules of business.
The Demand Horizon Lifecycle
The diagram above illustrates the three stages of user demand. Imagine user demand as a kind of radio signal that increases and decreases in strength depending on the fit of the product solution. Represented are varying degrees of strength and clarity of that demand. Starting all the way to the left at "Potential" (demand), there's not much of a signal at all. The demand density for that signal is very weak. As users become clearer about what they want, that density solidifies into a stronger signal. At the point when that signal is clear enough to show there's a market, the opportunity crosses the demand horizon--the point where invisibility becomes visibility--and moves from potential demand to current demand. That's where the demand density becomes something identifiable; the market can be described; competitors can be identified; the trajectory and the growth of the market can be estimated, based on reasonable mathematical expectations.
The rigor process was created to put actionable, substantive stages into the iterative prototyping cycle and facilitate the drive to eight-second success. It helps solve the riddle of how to build what people can't articulate. it's focused on unearthing real user needs from within potential demand. The process is very simple. We start with a broad concept. The broad idea that is something that meets a general need. Progressively, via feedback and through a series of questions, we refine the concept. From there, we immediately get into prototyping, which gives us something that people can actually see and interact with. This process has a strong bias for interaction with real products because that's where you get the revealed preferences. and that's where you get the spark. We're seeking to nail the 8-second rule through this process. The diagram starts with a concept and moves from that concept to prototyping, testing, and interpretation in a circular motion as we zero in on a highly resonant product. It's not good enough to A/B test or validate a hypothesis. Within the rigor model, we are zeroing in on the most tangible validation of user demand: recognition of the usefulness of a product and desire to obtain it.
In exploring potential demand, we know it's very hard for people to articulate what they want. It's difficult to know exactly what solutions the potential market is seeking. This is where the 8-second rule is valuable. It's based on data regarding how long visitors stay on websites before they bounce out, how much attention is given to mobile apps and a significant amount of direct testing. It comes down to a very simple idea: when introducing a new product, you have eight seconds to hook someone. Remember, it's a very noisy market and there are countless things competing for the consumer's attention. To determine if your new product is hiring potential demand, all you have is 8-seconds. This is a good rule of thumb for getting that cursory validation that a concept, prototype or alpha product meets some existing user demand. Why eight seconds?m In the first four seconds the goal is to validate understanding of the value proposition. "Here's a concept. Here's an idea. Do you understand it? Does it make sense to you?" That's the beginning of the eight-second rule. If your prospective users look at the page and confirm they understand what it does, you've got the first part of the 8-seconds. The next part of the 8-seconds is figuring out if those people love it and if it tape into something they really needs. If you can get a user to look at something and say, 'Yes, this is something that I need to have,' and you see the excitement or engagement in that person's face, you'll know you have the spark.