It doesn’t matter if your software is amazing, no one wants to buy what you’re selling. Customers don’t care what features it has, not really. They care what it can do for them.
It’s not until you really spend time with customers that you can find that magical “market fit” and understand the difference between what you need to sell and what they want to buy.
Ted Levitt and Seth Godin said it better than I ever will:
“No one buys a quarter-inch drill bit because they need a quarter-inch drill bit. What they need is a quarter-inch hole. That’s what you should sell them.”…What would you possibly need a quarter-inch hole for? What you need is a place to put the expansion bolt so you can put a screw in the wall.
But actually, you don’t need that. What you need is to put the shelf on the wall. But you don’t really need that.
What you need is a place to put the books that are cluttering your bedroom. But you don’t even really need that. What you need is the way you will feel when your spouse thanks you for cleaning things up. What you really need are safety and security and a feeling that you did something that was important.
Levitt breaks this down into four myths
Myth #1 – Growth is guaranteed
We get lost in love of the idea that our ever expanding market of more affluent customers will guarantee our revenue growth. As a result, we focus on the wrong thing: products over customers. Remember, even when growth stalls, you may have an unbelievable base to build from.
Example: Oscars 2019 – Netflix vs the Film Studios
Myth #2 – There is no substitute for our industry’s major product
This makes us vulnerable to innovation from outside our industry. We own the infrastructure. We own the expertise. We own the customers. But, when we fail to innovate others will.
Example: Cellular phones leapfrogging land lines
Myth #3 – We can own the market through mass production
With high fixed costs, and comparatively low variable costs, software has enviable margins. But, this puts the focus on selling what you have. It encourages you to tell people what they want, not listen to what they need.
The remedy for this is really understanding what business you’re in. Are you selling rail capacity arbitrage, or transportation?
Example: Large production steel companies lost out to the little guys
Myth #4 – R&D will ensure growth
The impulse to focus on R&D makes perfect sense. It’s probably the roots of how you became successful. It’s something you can control. And, besides it’s fun to solve hard technical problems. But…
“Consumers are unpredictable, varied, fickle, stupid, shortsighted, stubborn, and generally bothersome.”
Levitt
Customer’s don’t care about any of the reasons it makes sense to rely on R&D. They rely on you to help solve their needs. If you can’t solve their needs, they’ll find someone else. If you don’t know their needs, good luck solving them.
Example: Xerox Parc learns business models matter
What am I supposed to do about it?
Here’s the kicker, you don’t get to decide what business you’re in. Your customers do.
Go get out there, do the hard non-scalable work to find a great market fit. And stay out there. Understand your customers better than they do. Make sure they really understand what business they’re in too.
Now, who wants to tell me about the latest version of your software? No thanks.
