Building Early Stage Product
Building product at an early stage business is unique. Many times you’re starting from scratch—it’s not about iterating on what’s already working, but instead about taking big swings.
But that doesn’t mean product strategy is just about throwing everything at the wall and seeing what sticks. This guide provides a framework to develop product for your B2B or D2C business, with a focus on action: defining go-to-market (GTM) strategy, testing your hypothesis, and tracking results. We’ll also provide some examples from our client work.
The Product Strategy Pyramid
To start, let's look at the product strategy pyramid:
- Product Mission: Long-term mission of the product. It should define what the product is, and why it exists.
- Product Strategy: How to achieve that mission given market realities. Who the product will serve (aka personas). How it will benefit those personas. The goals for the product throughout its life cycle
- Go-to-Market (GTM) Strategy: A subsegment of Product Strategy. This plan specifies how you will release and scale the product. It should vet the product strategy and be formulated with the target customer in mind.
- Product Roadmap: Transforms product strategy from theory to reality. It lays out how and when the product will evolve to achieve its key goals.
Developing a Rigorous Go-to-Market (GTM) Strategy
Let’s dig into GTM. Here you’ll formulate a step-by-step plan to successfully (hopefully!) launch our product. Once you develop your GTM, you’re ready to work on your product in earnest. Let’s review the questions you’ll need to answer.
A. Unique Value Propositions:
- What is unique about your product? Price / Distribution / Feature Set / etc.
- How can you communicate these succinctly?
B. Ideal Customer Profile (ICP):
- Who is the customer that derives the most value, and is mostly likely to purchase?
- Does this customer exist?
- How big is this segment/TAM
- Is this customer reachable? How?
C. Pricing and Profit:
- This is always a contribution margin (CM) equation: CM = Lifetime Revenue (LTR) - Cost of Goods (COGs) - Customer Acquisition Cost (CAC).
- You need to understand each of these pieces to set a price that works for your customer and your business.
D. Sales and Distribution (aka how will you drive sales?)
- How do we build awareness and interest?
- Is revenue sales led / product led / advertising led?
- Who do we target, on what platforms?
- Are the channels scalable?
- Can we do this for a reasonable cost?
E. Key Metrics:
- How is Success Defined?
- Use SMART Goals (Specific, Measurable, Achievable, Relevant, and Time-Bound.) e.g.:
- Revenue / AOV
- # of Users
- Attach rate
So you’ve formulated your entire GTM strategy. Now what? At nf&co., we’re big fans of the lean startup method, with some caveats.
Test quickly and fail fast, but be sure to build your MVP with the design and UX that is required to compete in your space. We’ve seen viable products fail because the messaging, UX, and overall design did not communicate their value appropriately.
GTM in Action: Beyond Pricing
Beyond aims to be the best partner for short-term rental (STR) managers to get, grow, and keep revenue.
Vision: Be the best partner for STR (Airbnb) managers to get, grow, and keep revenue
Product(s): Dynamic Pricing and Insights
A. Unique Value Propositions:
What is unique?
- ROI vs. internal tools and competitors
- Proprietary data
How can you communicate these succinctly?
- Top-of-funnel media (ads, editorial)
- Website messaging.
B. Ideal Customer Profile (ICP):
Who is the customer that derives the most value, and is mostly likely to purchase?
- SMB and Enterprise property managers looking to increase their rental revenue
How big is this segment/TAM?
- Large; 1m+ STRs in USA
Is this customer reachable? How?
- Yes, top-of-funnel media (search, social, affiliate, press)
C. Pricing & Profit
CM = LTR - COGs - CAC
- 1% revenue share unique and easy to explain. Very high LTV potential
D. Distribution
How do we build awareness and interest?
- Top-of-funnel media, PLG (Insights product), owned media nurture
How are sales led? Sales, product and/or advertising?
- Sales led / product led / advertising led
Are the channels scalable?
- Yes, majority of TAM reachable on channels
E. Key Metrics
How is Success Defined?
- Lead volume, Lead conversion, CAC
Parting Thoughts
Launching a successful product at an early stage business requires a clear vision, along with a detailed understanding of the product value propositions, economics, customers, and distribution. Follow these steps, and you’ll give your next launch the best chance to drive ongoing growth and profitability.
