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#1 critical question for startups: How to define what your customers really want?

You have a brilliant idea and you are brave enough to start your own business. You’ve already created an excellent business plan and found the funding… Everything’s going in the right direction, but even at this stage, you may have a lot of questions on how to start your project and how to escape the risk of failure.

The question: How to be successful?

Startup companies seem to have it all. They implement new progressive ideas, create new markets, make a lot of money for owners and other investors, introduce new business models, have good-looking websites and offices, and so on. It’s really hard to believe that 90% of all startups fail. If you would like to be among the 10% of the successful ones, you should realize the common reasons startups fail and have your own plan on how to avoid them.

The two main reasons startups fail (from CB Insight’s original list of 20) are:

A. Problem with product

B. Lack of money

Reasons startups fail Intetics startup advice

Of course, we can’t give you a “magic” recipe on how to avoid these problems in all business cases for all kinds of startups, but here we propose one approach that may help you escape trouble before launching your product or spending additional money on its improvement.

The tool: Explanation of Kano Analysis

Kano Model Analysis (first suggested by Dr. Noriaki Kano in the 1980s) is not a very comprehensive, but a really useful technique for deciding which features should be included in a product or service. It can give you an answer about what features your customers need and which of them make your product unique. It can also help you avoid the profit-minimizing approach, which says you must include as many features as possible.

Utilizing Kano Analysis can help avoid problems with no market need for the product and running out of money mistakes mentioned above. Keep in mind that (paradoxically) your product or service could be more profitable with fewer features and simultaneously meet the needs of your customers better.

According to the Kano Model a product or service could be characterized by 5 types of features:

  • Threshold (T). These are features that the customer takes for granted. Customers may not tell you that they want or need these attributes, but if one of these features isn’t there, customers will be dissatisfied.
  • Performance (P). These are features which aren’t absolutely necessary, but which have been explicitly demanded. The presence of these attributes increases customer enjoyment of the product.
  • Excitement (E). This type of features usually couldn’t be requested or expected by the customers, because they didn’t even know they wanted this attribute. The presence of these features leads to a disproportional increase in satisfaction. But, if they aren’t present the customer isn’t dissatisfied.
  • Indifferent (I). Customers don’t care if the features of this type are present or absent. However, these features could be useful or obligatory for something other than customer satisfaction.
  • Reverse (R). These are attributes that customers actively dislike. The presence of these features decreases their satisfaction level with your product.

Lack of Threshold or presence of Reverse attributes in your product could put your startup into the “no market need” problem. The presence of many existing, but more likely expensive to produce, Performance attributes, or redundant Indifferent features easily puts your business into a “run out of cash” situation. So, realistic insight into the feature list of your product and the type of each feature your product contains is a great guide for decision making.

The process: Realization of Kano Analysis

Kano Analysis consists of 5 main steps.

Intetics startup advice for successful software development

1. List product features

During the first step of Kano Analysis, you should brainstorm all features of your product or service. You may try to classify them into five groups mentioned above, but better you should ask your customers.

2. Create Personas

Identify customers who will be willing to participate in a survey. Try finding people who are representative of different types of customers in your target market. Creating personas and then finding a person to match this persona is a good way to start.

3. Conduct a survey

Interview each participant in the survey. Specifically, ask them two kinds of questions about each feature from your list:

  • First, you should ask a Functional question. For example: What would be their reaction if the feature was included in the product?
  • Second, ask a Dysfunctional question. For example: What would be their reaction if the feature was NOT included in the product?
  • For both questions use the same group of possible answers. For example:
    a) I like it that way.
    b) It must be that way.
    c) I am neutral.
    d) I can live with it that way.
    e) I dislike it that way.

4. Identify feature types

Collect and analyze the answers. For each feature, pair each of the participants’ responses to functional and dysfunctional questions, and determine each feature type based on that customer’s response. The table below is used to determine feature type based on the responses you received:

Customer survey responses

Answers to Dysfunctional questions

LikeMust beCan live withDislike
use “+”,”-” and “?”

Answers to Functional questions

Must beNeutralCan live withDislike
use “+”,”-” and “?”

The question mark ? means that the answers are probably inaccurate.

5. Sum up results & make decisions

For the last step, you should aggregate all the individual results and determine the type of each feature of your list. After that, you will have useful information for decision making. Here’s a simple decision guide:

  • Good products must-have features that are all Threshold and none that are Reverse.
  • If you would like to attract more customers, think about how to include some Excitement features into your product or service.
  • Where possible, cut out Indifferent features to save on cost.
  • Select Performance features so that you can deliver a product or service at a price the customer is prepared to pay, while still maintaining a good profit margin.

The result: Successful start of your business

The proposed approach can help you launch a product or service in the most efficient way. Producing goods or services which meet customers’ expectation with minimal expenses is the key denominator amongst successful, profitable businesses that are also attractive for investors.

We use this approach in practice and find that this analysis does help create more efficient software products for startups and mature clients. If you’d like additional consultation about this approach please feel free to reach out with your questions.

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