This is my favorite question to ask anyone contemplating a business. Big brands get it, startups struggle with it, really small startups have no idea how to approach it.
Having talked to multiple companies now that have an app as their primary way of using their product, they too often define their market demo as “anyone with a smartphone.” I honestly can’t tell you how many times I have heard this as a response. I laugh, then I cry a little bit. To me it tells me that a large majority of these startups either, 1. do not conduct enough market research to even whiff who they should be concentrating on, or 2. completely miss the mark on understanding people’s buying and engagement habits.
Beer companies get it, makeup companies get it, so why can’t startups get it?
I think this might be because a lot of startups thing near term, with short term goals. Hit 1 million users, or 100,000 for that matter. But the question is how much is being wasted targeting those markets and demographics that simply are a waste of money in the beginning?
I ask them all the same questions:
1. Do you know what the definition of a smartphone is according to PEW research (the research entity that is most often cited for these statistics)?
To this smartphones are defined as any phone that can access the internet. Also though app downloading is on the rise, my Mom is more likely to have angry birds and words with friends than some app used to shop or pay for something in the real world. Those skew the numbers to who is actively using smartphones with apps.
2. Which sex is more likely to use your product and why?
“We appeal to both sexes” is not an answer. I’m going to be straight forward on this one here, do not have the misconception that guys and girls will use your product the same amount. Heineken has great ads, they market to both guys and girls, but they know that beer consumption is far greater among men then women, thus their product placement is where men would see it. If you have a startup in fashion, you are going after the female market, they shop more, conversely if you are going after a different market, step back and see if men are more likely to use your app. I have heard my gf and my other friends all say “I’ll instagram it,” and every time I want to pull my hair out. I have had instagram since October 2010, for those keeping track that’s right when it came out. I don’t run around saying things like “I’ll instagram it.” I may be part of instagram but I do not spread the word like when it trickled down to all the 20s something girls that love sharing their lives on Facebook with everyone. Girls love taking pictures.
3. If it’s B2B, what is your value added?
Your real value added, this comes through one of two ways, bring the business money that they wouldn’t normally get otherwise, by saving them money on some feature of their business, or by bringing them more customers. So many businesses today want to provide added value to the customer in hopes of producing more business for the business. STOP. With the addition of technology, businesses can improve, but like Safeway, make it a worthy endeavor. Safeway self checkout is a great example, one cashier can supervise four self check stations. The self check stations take up the same space as maybe three checkout lanes. For those that aren’t good at math you are adding an extra isle and taking away three workers. This is how you make more money per square foot of your store while also reducing your labor costs. Genius.
If your company cannot provide the same benefit, requires staff to retrain on something else that is not as efficient as what currently is being used, or creates confusion or is cumbersome, forget it. If you are not driving more traffic to a location (this is only really accomplished through deals, which costs businesses money) people are pretty stubborn about where they go to shop, eat, drink, etc. habits and all. Forget it. If you are going out to eat, you know you are spending money and saving a few dollars doesn’t matter, eating out is a sunk cost.
4. If it’s B2C, think back to your days of kindergarten and answer is this something that you would bring to show and tell?
We are a show and tell society and don’t forget it. Build something that everyone thinks is cool and you won’t have to market. Instagram didn’t, Square just started to on TV. A good product or app will go viral on its own if it’s something that people want to show each other.
There is room for plenty of great ideas out there, sharing cool things, being constantly plugged in to the world, etc. Instagram wasn’t making money, it still got sold for a lot. Facebook makes money, but no where near what it’s valuation still is. If you are part of a startup and B2C, sell a product, SaaS, PaaS, something that if people can’t live without it, will be willing to pay for it.
At this point, I’d pay for Gmail if they asked me to. Would you?