{PODCAST} In-Ear Insights: Finding Product Market Fit

In this episode, Katie and Chris discuss finding product market fit in turbulent economic conditions. How do you determine what constitutes a need versus a want? What are the pain points of a target customer? Listen in for useful tips about finding product-market fit and some key proof points for your product marketing.

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Machine-Generated Transcript

What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.

Christopher Penn
In this week’s in your insight we are talking about product marketing, Product Market fit. Specifically, what do you want? versus what do you need in your business? So Katie wants to start us off with what is this whole want versus need? Is it even a dichotomy? Is it you know, how do we think about this?

Katie Robbert
What do you think about what versus need in terms of your job? You know, and in terms of bringing on other companies, other vendors, other software, other team members, you really need to think about? What do you want to be able to do versus what you need to be able to do to be successful in your job. So, you know, we know that budgets are going to be slimmed back for a while we know that teams are going to be thinned out and as agile as they can be. And so this is a time when you as a marketer, or you as a manager who manages a team, really need to challenge yourself to think through What do I want to be able to do versus what I need to be able to do? And that might mean taking some shortcuts in certain processes, where you would usually touch, you know, five different teams now, it really only stays contained within your team. So for example, the software development lifecycle involves usually project managers, business analysts, front end developers, back end developers QA it, you know, that’s five or six different disciplines. That’s the desired state, but can you get by with just a development team? Yes. Is that ideal? It depends. And so I think that that’s where we need to start thinking about what do I want to do versus what do I need to do?

Christopher Penn
Okay, when you first said that, I was thinking I wonder if this even applies to just like the, the analytics we look at. So for example, in good times, you focus on growth, okay. Don’t worry about anything else is grow, grow, grow. We got to get some growth on the aboard, right in leaner times at least has been my experience the past it, the conversation flips over and I tell ROI, you know, you have a certain amount of money, can you make that money work as hard as possible? So when we’re thinking about want versus need, how do you classify the various things that people think about? Like ROI is definitely a need. Right? revenue revenue is a is a need What? What do you how do you separate the two and and how do you figure out which goes in which bucket?

Katie Robbert
Well, I think it starts with what are your business goals and so you know, if your business goal is revenue, which most businesses that is the goal, then anything you do, should be tied to that. So if, if you want to have 100 clicks on an article, great, but does that help you bring in more revenue versus you need to have someone read the article, fill out the form and buy something so it’s repositioning it that way. You know, ROI is obviously the thing that people should be paying attention to. But I would even sort of break it down a little bit more simply. And so making sure that you’re making money, but also just making sure to baseline that you’re not losing any money. And so it’s, you know, what does it look like, in some ways to keep things status quo, in the sense that you’re almost doing nothing. So there’s a lot of work that goes into making it look like you’re doing nothing with your marketing and keeping just the trains running. That’s what you need to do is keep things moving forward so that you’re not losing customers. You need to not lose customers, you need to not lose revenue, you need to not lose employees, but you want to grow, you want to bring on more customers, you want to bring on more employees, you want to have more awareness in the market. Okay.

Christopher Penn
The point about customer retention is super important because yeah, it costs way more And and if we’re if we’re in a time of scarcity, then even revenue isn’t so net as important as revenue and margin together like how much profit do we make on on on $1? When we look at those that customer attention how much of our marketing should be focused on customer retention and customer experience? Because it’s hard to quantify until you until after you lose the customer. What that that marketers worth? Like? How do you say I prevented this customer from being lost?

Katie Robbert
Well, is it marketing? Or is it customer support? So is it having, you know, your customer support team or even your marketing team, your product managers, whoever, reach out to these customers, and just have a talk with them and say, Hey, how are things going? You know, we’re hopeful that we can keep you on long term. What does that look like for you? What do you need from us, in order to stay with us and so I don’t know that it’s necessarily putting a pixel on a webpage together that you know, returning traffic I think it’s literally just calling someone and saying, Hey, we value you, you know, as a customer as a member of our family, as you know, we value this relationship. So what can we do to make sure that you continue to feel valued?

Christopher Penn
How does that apply to things like community management and things where you are? How much do you how much more let’s say you’re in marketing and you’re you have a content marketing responsibility? How much of our resources should we devote to something like creating content exclusively for paying customers so that there’s, there’s something that if Tom Webster calls this the tombstone question, right? If your company were to vanish tomorrow, what if anything, would your customers Miss right? Well, oh, you know, I really miss it would miss that weekly newsletter, I really must set that slack community. How much of our marketing should be focused on creating that content that That customers get that they would miss, like, ah, I can’t do without this. And I know the only way I get this is I stay a paying customer.

Katie Robbert
Well, I think there’s two things. One, I think you can ask them. What would you you know what things that we do we do that you find valuable. But I do you think that when you’re looking at, you know, leaner and meaner times, you should pivot to making sure that the majority of your time is going to that customer retention. So if you’re, you know, a 5050 split right now creating content for existing customers versus creating content to bring on new customers. I would say that, you know, back of the envelope math, I would say add 25% more to keeping the existing customers. So you have 75% of your time devoted to customer retention and then only 25% devoted to bringing on new customers especially because we know right now, people are not looking to spend any additional money. So your need is to keep all of the customers that you have in your roster, and you want to bring on new business.

Christopher Penn
Can you make a value proposition that that that has actual numbers. So for example, if you say, we’re going to intentionally over service our customers by 10%, and it’s going to cost effectively, you know, $5,000 a month in time and labor, but it prevents us from losing a customer that’s $50,000 a month Do you? Do you make that calculation and say, This is a worthwhile investment? And how does how does that how do we justify that to our CFO or our board of directors and things like that?

Katie Robbert
You have to do some sort of back of the envelope math that says, This is how much it will cost us if we lose these customers. So if we have the marketing budget, anyway, then we want to pivot to spend it on keeping these customers. So I want to spend, you know, of my $20,000 budget a month, you know, that’s you know, it’s for easy math. I usually only spend 5000 on customer retention at 15,000 on, you know, awareness and being on new customers, I want to actually reverse that. Because if I lose one customer, that’s $50,000. So my $15,000 investment in customer retention will prevent me from losing $50,000. How do you get

Christopher Penn
out of the envelope math? How do you deal with the VP of sales, though? Who says Well, I still need leads, you’re cutting my you know, the number of leads I’m gonna get?

Katie Robbert
I think that you need to rethink, it’s, it’s a, it’s an opportunity to rethink how you’re doing lead gen. So if you’re relying solely on paid ads to do lead gen right now to have people fill out a form, what are the other channels that you’ve maybe been ignoring? So you know, email, aside from the cost of the software and the cost of someone running it, you know, is pretty inexpensive and so that’s a really great way to do additional leads. You know, organic posting is still a thing. SEO is still a thing. And so just rethinking how you’re spending your monthly budget on lead gen is where you should start. So yeah, of course, the VP of sales is always going to say, I need more leads, I need more leads any better leads. But if nobody’s buying right now, those leads aren’t going to do anything for you.

Christopher Penn
Okay, so how do you quantify the want versus need for that person? Like you say, yes, you want more leads, but do you point them to their sales closing rate and say, Hey, in case you hadn’t noticed, your, your closing rate went from 15% to 2%? In the last three weeks?

Katie Robbert
Absolutely. You know, and, you know, you start to unpack Well, is it because we’re selling the wrong things? Is it because you’re selling to the wrong people? Or is it just because you have a really crappy sales team? I mean, it could be all of the above. It could just be you know, you go through ebbs and flows. You look at your historical data and say, Well, we know that typically between April and June, your close rates go down. So between April and June, we’re going to pivot to customer retention versus bringing you new leads, you know, you have to look at all of the data, you have to look at the lead cycle. So how long it takes for someone to become a prospect to a paying customer, like if that’s a very long lead cycle versus a very short lead cycle. So there’s a lot of information to look at. So you don’t just arbitrarily move money around and switch strategy. But you need to think, which is the most important thing to me now? Do I want to keep my current customers? Or do I want to try to find a whole bunch of new customers and ignore the ones that already have?

Christopher Penn
Let’s talk about let’s change perspective and talk about the customers themselves? How do we identify what our customers want versus what they need? How do we identify like, you know, we know customers need to have revenue we need customers need to have customers of their own. But then there’s a whole bunch of other things that customers probably want How do you set it? How do you distinguish between the two so that you’re marketing to the customers need, and you’re getting customers to buy? what it is they need. And hopefully your company is included in what they need?

Katie Robbert
Well, you know, I think honestly, it starts by asking them those kinds of questions, you know, us, it helps with that relationship building just to have a very frank conversation with them. But also, you know, putting out, you know, market research surveys, looking at the language that they’re using, you know, do they want to know your perspective on the latest trend? Sure. Do they need to know it? Maybe not. So maybe your time is better spent on making sure that all of the features of the widget that you sell, are very well explained so that they don’t necessarily have to spend their time going back to your customer support team saying, How do I use this thing? So making sure that all of your, you know, when you think of the hero hub, help content, all of your help content is Very clear, so that they get everything that they need in order to use the service, use the product, sell the thing and satisfy their customers versus the thought leadership stuff that doesn’t help them really do anything right now.

Christopher Penn
Is that a a mechanism for measuring where the customer is based on where they are and that spectrum of hero? how helpful the why the what and how do we see do you look for that balance to change to be focused much more on the how and during rough times?

Katie Robbert
If you’re asking me personally, then I would say yes. I think my on data driven on scientific response is yes, that focusing on the how, how do I do this? How do I do that? Because what we know anecdotally is that when budgets are cut and teams are smaller, people really try to DIY As much as they can, and so if you are the resource that they are going to, to figure out how to do the thing, they will remember that your name, your company will stay in their brain. When their budget opens up again, of I got a lot of help. From Trust Insights, I got a lot of help from Chris Penn. So when I have additional questions, I’m going to keep coming back to him because he continually helps me do the thing. Hmm.

Christopher Penn
So from that perspective, then when we look at our marketing, kind of want versus need, how do you change the messaging on that? Is it as simple as you know, hitting somebody that faces the two by fours, and here’s how you do the thing. How do you justify your company’s involvement? Because to your point, if everyone’s trying to DIY it themselves, this is the contrarian view. And I we heard, you know, we’ve heard a number of people over the years say this, well, if I tell you how to DIY it, then you won’t need my company and also why should I release content that tells you how to do my job.

Katie Robbert
I think what we know is that people are willing to try to do it themselves to a certain extent. But ultimately, the reason that they hire vendors and consultants is because they either don’t want to do the thing, the thing themselves, or they don’t have time. So, you know, again, when things get slashed, and you’re a lean team, you have to take on multiple roles. But that’s what leads to burnout. That’s what leads to employee turnover. So as much as people can avoid doing that, they want to bring on additional help. And watching one video on how to you know, set up goals in Google Analytics isn’t going to tell you every single thing you need to know about all of the new ones. Things are constantly changing, you know, your goals may change, the technology may change. You may need to update a regular expression within your goals, and you may not have the information you need to do that. So there’s always going to be more things to learn and it may be Just be, you know the path of least resistance to bring on a consultant to do that, in the long term in the short term, you just need to get it to a good enough place where you can measure something

Christopher Penn
is the need for third parties. Obviously, we know your budgets general go down. But one of the things that we’ve seen companies do time and again, is when they hit rough patches, they immediately freeze headcount where they you know, and then they say you just can’t hire. Do you foresee something like that in the next couple of years where, you know, people go to headcount freezes and things like that? And then if so, does that present an actual opportunity for folks who have built that audience to fulfill those needed roles, even if those new roles are things that you know, that you, you should have the capability to do internally?

Katie Robbert
Yeah, absolutely. So, you know, bringing on a part time consultant or a, you know, a service agency like TrustInsights.ai can be more cost effective than adding to your headcount. And so it’s really taking a step back, looking at your skill gaps, looking at the things that you know, you have on your roadmap and your marketing plan, all of the things that you want to be doing, and I say, what are all the things you want to be doing over the next couple of years? And then who do I have on my team currently, who can do those things? And if I say, you know, what, I really want to be doing, you know, user experience research. Should I be bringing on a full time person and you know, have the cost of the salary, the onboarding, you know, the health insurance, the business insurance, all of those things? Or do I really only need someone a couple of hours a week or month and I can outsource that to an agency, and that would be more cost effective?

Christopher Penn
Right. So in the end, it comes down to cost of cost of need.

Katie Robbert
Exactly. What do you mean? What’s your perspective? You’ve been asking me all the questions. So I’m going to turn the table and say what do you think about what versus need when headcount is frozen? And so we’re budgets?

Christopher Penn
I tend to think in terms of efficiencies first, what are the things that you know, don’t fit to your KPI mapping models. So we have things we talk about all the time is to have you done a KPI mapping with line of sight, draw, you know, connect the dots to the outcomes you care about. Now, we know in a downturn, you are talking about different metrics, you know, ROI, and margin and cost of profit and things like that. You may have to do new KPI maps to map to those different new objectives because they haven’t been previous concerns. But once you do that, then you can identify this metric feeds into, you know this, this outcome. You may get great results out of Facebook ads and good times. But once you start mapping to margin or cost of acquired customer, you may like ooh, now you know, that’s That’s that’s not the way we want to go anymore. And it may require rebuilding your analytics infrastructure. The other thing I would say is that, and I know this is the case, in the last downturn, the great recession. If you’re not using time tested proven measures of leading indicators in your data, you really leave yourself to being ambushed. you’re open to being ambushed by by your own data. So real simple example. I was doing this on Saturday night and has a video up on YouTube, if you want to check it out. It’s really boring is taking a time series data like website traffic, for example, and then doing a first order derivative, which is the rate of change from day to day, you know, did traffic go up from yesterday or down yesterday, and then doing a second order derivative of change of change which tells you whether things are accelerating or decelerating that and then you set to 70 moving averages on top of that. That Set of math, if you use it well tells you Hey, business is starting to slow down. And you could see that in the data before it gets severe. And you can know, guys, we got to do something here, you know, the same for seven and 30 day moving averages. Looking at that and saying, guys, we got to do something here, this is not looking good. But a lot of people have not learned those techniques. And as a result, they get caught unawares by the data, and then they’re in a crisis. And the worst thing in the world in a downturn is a crisis because you expend a lot of time, energy and budget unnecessarily, as opposed to preventing the problem to begin with, or mitigating it early on. Soon you can catch the problem, the sooner you can address it. So I would say in terms of want versus need. Yes, it’s great to want all this great data and be data driven, but you need to find those one or two indicators on your KPIs and watch them like a hawk and say, these are the ones that we’re going to look for the vulnerabilities first and No, we’ve got to pull the levers sooner rather than later.

Katie Robbert
I mean, I think that makes a lot of sense. And my assumption is that, you know, to your point, not a lot of companies know how to do that. And if they don’t, this is a perfect time to learn the basics of how to do that type of analysis so that you can look at your own data. So, in conclusion, Chris, do you think that we have properly defined want versus need?

Christopher Penn
We have defined it. But here’s the challenge for all of us. Now we need to go and do something about it.

Katie Robbert
Isn’t that always the way?

Christopher Penn
It really is? If you have follow up questions on anything we’ve talked about on this show, please leave us comment on the associated post, or just drop us, drop us a line. Go to Trust insights.ai You can also ask in our slack community Trust insights.ai slash analytics for marketers love to have you there. It’s totally free network with over 500 900 of your peers in the space. As always, please subscribe to our YouTube channel or podcast and our newsletter and we’ll talk to you next time. Take care

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