Must-have apps are more likely to succeed because they tend to solve big problems and address urgent … [+]
Out of all the products you use today, how many can you not live without? Those are must-have solutions and they are the best startup app ideas to build. They’re more likely to succeed because they tend to solve big problems and address urgent needs.
Even if they’re buggy apps, people will use them as long as they get the job done. Thus, if you’re building an app idea for underserved and underrepresented groups with limited alternative solutions, you’re onto something. Here’s how to make your app idea a must-have solution not by changing your idea but by focusing on the right group of users and buyers.
1. Segment The Market
If you look closely, the same app idea can be critical for one group and good-to-have for another. Take the example of LinkedIn. For some professionals, it’s just one of the platforms for networking and discovering opportunities. For others, it’s their most valuable customer acquisition, branding or recruiting channel. Without it, they could lose millions of dollars and access to the best talent.
Identifying to whom your product is essential is the first step in finding your target buyer, however, finding this group is usually not enough to make your product must-have. In many cases, many alternative solutions successfully address the needs of this identified group which makes it challenging to compete and capture market share.
To find the sweet segmentation spot, look for underserved groups. Are there groups of buyers that are currently using other solutions but have needs that are not addressed by existing products? For example, assume you’re building an email marketing platform for small businesses. As you may know, there are many great tools on the market but are they all the right fit for every small business?
Take your time identifying your most viable segment; a group with limited options but an urgent need for a solution. Capturing this segment will make it significantly easier to expand into new ones in the future.
2. Measure Gain/Pain Ratio
Having found this ideal group, one of the most effective exercises for evaluating customer adoption is by estimating the gain/pain ratio which compares the benefits obtained from using your product versus the cost for the customer to switch to your solution.
In other words, it answers the question: does my product really address an urgent need for an underserved market and does it solve the problem exceptionally better than existing solutions for the customer to find it a no-brainer to switch to my company?
To estimate your gain/pain ratio, first, list the potential benefits gained from using your product. These could be more revenue, lower expenses, time saved, an opportunity for your customers to build a competitive edge with your product, etc.
Second, list the challenges your potential users could face from using your product. These could be training costs and time, product cost, loss of data, technical challenges, risk of your failure as a new provider, etc.
As a rule of thumb, you want your gain to be 10 times higher than the pain of adopting and using the product. If you can’t deliver over 10X the value, most customers will prefer sticking to existing solutions even if there is a tangible benefit from switching to your company.
Time and money are the easiest variables to project in your estimations of customers’ gain. Could your customized solution for this underserved group help them make or save 10X more money? Could it help them save 10X more time? The more competitive the space, the bigger your ratio should be.
3. Customize Solution
With a strong value proposition that aims to deliver exceptional results for the target segment, creating a product for this group is no different from the approach taken to define who this ideal buyer is. Start by defining the must-have features and what existing solutions aren’t offering.
Qualitative research can only help you make educated and research-backed hypotheses. Customer interviews is the most effective channel for gathering actionable insights about user needs, product functionality and even effective marketing channels and strategies.
This post is a reminder about the importance of segmentation for startup success. Better, faster and cheaper products is one way to go, focusing on underrepresented and underserved groups is an effective differentiation strategy that will make you stand out without necessarily reinventing the wheel but by making it fit better into users’ vehicle.