3 questions to ask in the early stages of product operation

The core goal in the initial stage of operation is to test: Do users really need your product? Is your product market fit? Does your product reach product/market fit?

Everyone knows that operation is an indispensable part of a product. Operators should set goals and achieve these goals one by one. Therefore, in the early stage of the product, the core goal of operation must be to test the market.

1. Do users really need your product?

Let’s look at the experience of the next product:

1. Select requirements from the demand pool
2. Choose the right solution based on your needs
3. Create product features based on the solution.

We classify the demands in the demand pool according to the ROI method, and then give priority to high-value demands. The demands we choose here may not be the real core demands of users, so the functions of the product may not be able to solve the user pain points.

The significance of verifying needs is to determine whether we are the real needs of our product users. If the needs we choose are not the real needs of users, then this is a false demand. We need to know whether everything we do before operation is counterproductive.

Taking taxi as an example, the scenario is a rainy night. After get off work, the user finds that he has missed the last subway and stands on the roadside for a long time without getting a taxi. At this time, the user’s real need is to have an APP that can help them get a taxi quickly.

Even if our needs are the real needs of users, will what we produce definitely satisfy users?

Of course not. We may have multiple solutions to the same requirement, and we need to know whether our solutions can satisfy users.

Taking online taxi-hailing as an example, based on user needs, we can have multiple solutions, including online taxi-hailing; aggregating drivers and passengers on one platform to realize one-click taxi-hailing; allowing users to contact nearby ride-sharing vehicles on the platform, etc. But which solution is the best and most favored by users? We don’t know. If we want to know the answer, we can only ask the users.

The famous research organization CB Insights conducted a survey and revealed in its "Top 20 Reasons Startups Fail" report that more than 40% of the reasons for company failures are that users don't need what you create. Therefore, it is necessary to verify that your product is really needed by users.

2. Is your product really needed by the market?

Don Valentine believes that what investment always needs is a huge market. Even now, most venture capital institutions generally believe that there are three important factors that affect investment: market, people, and innovative products, among which market should be ranked first.

Andy Rachleff believes that even if you screw up everything, as long as there is one thing, that is, your product fits the market, you have a chance to win.

More than ten years ago, authoritative organizations generally believed that search was a tens-billion-dollar market, while e-commerce was a one-hundred-billion-dollar market. Therefore, even if you occupied the entire world market share in the search field, your valuation would only be tens of billions. In the e-commerce field, you only need to occupy 10% of the e-commerce market share to be able to compete with the entire search market. And occupying 10% of the e-commerce market is certainly much easier than occupying the entire search market.

Suppose now, your product is very useful and some people like it, but the market it is targeting is a tiny market that is declining year by year. In this case, even if your product is perfect and your team is great, you will not be able to achieve much success.

3. Check if you have reached product/market fit?

1. What is product/market fit?

We may often see a situation like this: a huge market suddenly emerges, attracting many companies to rush in, but the final winner is often not the first company to enter the market.

The first to discover and enter the shared bicycle market was OFO, but the battle of shared bicycles ended with the victory of Hello; old live broadcast platforms represented by YY Live were successively surpassed by industry newcomers such as Huya and Inke; China's first online car-hailing product, Yidao Car, was launched two years earlier than Didi, but Didi occupied the entire online car-hailing market; Lashou.com, which was the first to enter the group buying market, was surpassed by the up-and-coming Meituan.

What exactly is the reason for this "chaos"? The bottom line is that the product has not found the right fit with the market.

What is Product/Market Fit (PMF)?

PMF stands for Product-Market-Fit. Andy Rachleff, CEO and co-founder of Wealthfront, once said:

1. “A value hypothesis is an attempt to articulate the key assumptions about why customers might use your product. Identifying a compelling value hypothesis is what I call finding product/market fit. The value hypothesis identifies the features you need to build, the audience you might focus on, and the business model you need to get customers to buy your product. Companies often go through multiple iterations before they find true product/market fit.”
2. “When a great team meets a bad market, the market wins; when a bad team meets a great market, the market wins; and when a great team meets a great market, something special happens.”
3. “If your market truly needs your product, you’ll have a chance to win even if you screw up everything in your company. Conversely, even if you’re great at execution, but the market doesn’t need your product, you’ll have no chance of winning.”

Let’s understand it simply. If your product reaches the product/market fit point, it means that there are really many users who like your product. Then the product/market fit point represents a critical point, a critical point of your popularity among users, which indicates whether you can survive in this market.

2. How do you know when you’ve reached product/market fit?

First of all, before thinking about how to reach the product/market fit point, we still have a question, which is how to judge whether we have reached the product/market fit point?

(1) If your product’s user base can grow exponentially without human intervention, it means your product has reached product/market fit.

This is Rachleff’s philosophy. For a long time before, many product people believed that products were the primary marketing force. As long as the product was good enough, it would win the hearts of users without relying on too much marketing. To explain it in terms of product/market fit, the product has reached product/market fit and is therefore able to achieve exponential growth.

However, today, the cost of acquiring customers is becoming increasingly high, and it is extremely difficult to achieve growth in the number of product users without manual intervention. So are there any other methods?

(2) More than 40% of users love your product

This is the most common and most talked about 40% rule, which means that if you tell users that they will no longer be able to use this product, if more than 40% of users express great disappointment, it proves that your product has reached the product/market fit point.

The first thing many startups do after launching their products is to increase the number of users, but the products do not reach the product/market fit point, which leads to rapid acquisition and rapid loss of users. This kind of user growth does not make much sense.

Here we have to talk about the following growth hacker model that was particularly popular in the past few years, namely the aarrr model, acquisition->activity->retention->revenue->self-propagation. In this model, the first one is acquisition. One point that can easily mislead users here is that too much emphasis is placed on acquisition, but acquisition without retention does not make much sense. Therefore, some people have improved the growth hacker model, namely the rarra model, retention->activity->self-propagation->revenue->acquisition. The first task that needs to be done in the revised growth hacker model is retention, which is exactly the same as the concept of PMF.

IV. Conclusion

To sum up, the first thing to do after a product is launched should not be to engage in large-scale marketing to acquire users. The first thing operations should do is to test, including whether users really need your product, whether your product fits the market, and whether your product reaches the product/market fit point. Only by verifying the above problems first can we avoid detours in operations and maximize the value of operations.

Author:li

Source:li