When it comes to offer creation, most entrepreneurs are split between two very vocal schools of thought:
- What we like to call the “Tesla / Apple approach” – where you design something the way you want it, and customers fall in love with it… or not.
- And then there’s what we call the “Airbnb approach” – of listening to your customers every step of the way, and frequently tweaking and iterating your offer.
Both methods have something to offer.
On the one hand, you don’t revolutionize an industry just by obeying your customers’ demands. Henry Ford famously said, “If I had asked people what they want, they would have asked for faster horses.”
On the other hand, ignoring the customer can get you in trouble, fast. Just do a quick Google search of “failed apple products” (we don’t mind waiting) and see how many results pop up. Or check how many failures Jeff Bezos can name.
So… if you’re not a multi-billion public company sitting on piles of investor cash, how can you create amazing offers to improve your cash flow and maximize your lifetime customer value?
Easy: you go with the safer, time-tested approach of listening to your customers and giving them what they want. If you end up innovating along the way, great! If you don’t… well, your bottom line will be infinitely better off anyway.
Today, we’re going to look at the high-level process of coming up with an irresistible offer. Let’s dive in!
Here’s what you’ll need
- An existing business model that’s proven to work: a product, a service, SaaS, something that could be considered your “core” business.
- A target market: your existing customers, your prospects, your leads, your online audience, you name it.
- A way to reach them and find out what they want: via surveys, emails, interviews, reviews and testimonials, etc.
Now let’s look into the process itself.
Step 1. Listen and Find an Idea
On the surface, customer research sounds easy – ask people what they want, get an answer, act on it. Simple!
However, that implies…
- That you’re always asking the right questions.
- That the customer gives you an honest answer (not always the case).
- That people’s feedback is always crystal-clear and actionable.
We have talked about customer surveys before. Namely, about how powerful they are when done right. A short, well-crafted survey that can tease out specific feedback without putting words in your customer’s mouth is one of the best research tools you have available. But it’s not the only one.
Here’s what else you can use to find out what people want out of your products or services:
- Email replies, positive and negative.
- Customer service chats.
- Comments on social media.
- Online reviews and testimonials.
- In-depth interviews.
- Results from contests and giveaways.
Going through customer feedback is more of an art than a science, so we can’t tell you exactly what you’re looking for. For instance, let’s come back to our example of Airbnb, and how their positioning changed over time.
At the beginning, it was just two guys renting out airbeds in their loft space, and promising people they would treat them to a home-cooked breakfast each morning. Not the most innovative business model, is it?
Then, they position their entire offer around conferences and events, trying to take advantage of hotel room shortage. Finally, they pivot to the famous “host and guest” model we’ve all come to love.
And curiously, one of Airbnb’s major business breakthroughs happens in summer of 2009: after Brian Chesky, one of the founders, has to live exclusively in airbnbs for a few months. In a way, he was gathering feedback about the business!
Our point is, it’s not the first step of the process that will make or break your new offer – it’s the following two…
Step 2. Validate
Right now, after you’ve gathered what is hopefully a heap of useful data, it’s up to you to come up with an idea for a new offer. It could be:
- A premium version of your existing product or service. Even a free platform like WordPress has a VIP version.
- A subscription to something that’s normally just a product. For instance, MeUndies are doing it with underwear, and ExoProtein does the same with protein bars.
- A productized version of your service, or vice versa, like productized consulting.
- A related, complementary product or service that helps customers make the most of your “core” offer. For example, Apache doesn’t charge anything for its software… but the user manuals are for sale!
- And anything else you could think of!
Hint: it’s not the idea itself that’s important, it’s executing and validating it.
It doesn’t matter how wonderful the customer feedback is, or how much potential the idea has. Before you build something, anything, you’d better make sure that people are ready to pay for it.
The easiest way to do that is to try and pre-sell your offer before you invest any time and effort into creating it. Validating it with a small sample of loyal customers is a low-risk strategy, and it gives you lots of wiggle room to fix things if they go wrong.
There is more than one way to validate an offer, but gathering pre-orders is the best one by far. Make your customers vote with their wallets, and you’ll know if your new offer is going to be in demand… before you ever build anything.
When it comes to quick-and-dirty validation, one of our favorite examples comes from LSTN. They have been making headphones for three years, and recently launched a line of Bluetooth speakers.
But rather than build a product and roll it out the conventional way, they surveyed people first, and created a crowdfunding campaign to gather pre-orders. The campaign was a smashing success, with over 200% funded. And so the speakers are now part of LSTN’s product line-up. Now that’s validation!
Step 3. Iterate, Pivot, or Scale
Depending on how validation goes, you will have one of three choices:
- If your new offer was kind of successful, but performed worse than expected… Iterate. Improve it, do another test launch, and see if you can’t move the needle.
- If your offer was a complete flop (happens to the best of us!)… Pivot. Test another idea, tweak your positioning, try a different subset of your target market. Do something different.
- Finally, if you knocked it out of the park and validated your new offer beyond a shadow of a doubt… Scale. Bring it to market and enjoy the fruits of your hard work and remarkable business foresight!
As the say, “Building something is exhilarating. Launching something is terrifying.” What if you’re wrong? What if nobody buys?
You know what? That’s OK!
Of course, it would be wonderful if every offer idea you you ever test were valid and scalable – but very often it’s just not the case. Failure is a normal part of being an entrepreneur, and it doesn’t have to be final. You can always try again and do better, or test something else.
The process we’ve laid out in this post isn’t fail-proof: nothing is. Taking calculated risks is part and parcel of being a business owner.
But what we hope it accomplishes for you is help you mitigate those risks as much as possible – so the next time you come out with a new offer, you will not waste time, money and energy on something that couldn’t possibly work. If we can do that for you, then we’re happy!
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