B2C founders commonly reach out to thoughtbot when they are looking to bring their digital sales model to life. In particular, in the United Kingdom, the B2C E-commerce market is expected to grow by 12.24% on an annual basis to reach US$285.5 billion in 2022 (Researchandmarkets.com). A few catalysts for this uptick include the reliance on online shopping during the pandemic and the need for services to be translated into a digital medium. The UK is also going through a time of change as the cost of living crisis started to gain momentum in late 2021. This has caused prices for basic things such as utilities and food to increase at record rates, prompting consumers to revisit their monthly budgets and limit spending on disposable items. This crisis is expected to continue well into 2023. Working hand in hand with B2C founders in recent months, we wanted to share our strategies that are helping them realise their goals despite these challenges:
Conducting research when starting a product company that supplies services and/or products (B2C) during a time when folks are cautiously spending, is non-negotiable. By research, we mean two things: first define your target audience through user personas; and second, gather feedback from them through a variety of mediums, like 1-1 interviews, surveys, and polls.
As you connect with your audience, have a set of clear questions to be answered and/or assumptions to be validated. Make sure to save their contact information and all rough notes so you can come back to them. As you complete research, you will build an audience of potential future customers who may already be invested in the success of your business. The goal is to develop a deep understanding of audience goals, needs, motivations, and purchasing habits. Purchasing habits will give you insights into competitors, which we suggest you dig deeper into in the form of competitive analysis to help inform your business plan.
Your competitive analysis will capture an understanding of where you might fit amongst competitors, gaps in their current offerings, and a pulse on the overall market. We suggest using a clear set of consistent attributes to define each competitor (direct or indirect) so you can draw comparisons between them, identify takeaways, and turn those learnings into an action plan. Bringing together both aspects of research will build a great foundation for outlining your own value proposition and roadmap.
The next step is translating your findings into a prioritized roadmap. Keep in mind your first version should deliver your value proposition in the most simple way possible and also allow you to get to market quickly. We suggest using low-code tools to build out a prototype and proof of concept to describe your roadmap. The final tooling should be something you can easily use to create, tweak, and manage as a visual, potentially even a usable medium that allows you to try things out with customers before investing in more costly software development (e.g. Webflow, Shopify). This approach will also earn you some kudos with investors who will value your ability to move forward strategically with your current skill set versus relying on outside investment to make progress too early.
Now that you have a sense of your features, and what your final product will look like, it’s important to spend time thinking through how that experience will result in revenue. Each feature should be tied to and prioritised by a business case.
For example, if you know customers are looking for flexibility right now, but as a business you would benefit from the recurring revenue a subscription model would provide, exploring a model with flexible cancellation terms, the ability to pause a subscription, or shorter terms as options could be a nice middle ground. This is particularly helpful if you are hoping to bring in outside investment, you can instill confidence in your investors by having a clear picture through financial projections showing how your product’s experience and overall services will bring in revenue.
If building custom software is an area where you really need to invest, those financial models should funnel into costs associated with running your business, including hiring your own product team or bringing in an experienced consultancy. The velocity those team members can bring and the rate at which they can evolve your product should be emphasised, especially when the next version works to expand revenue or bring in a larger part of the market.
At thoughtbot we love sharing any insights we have and recently hosted a panel discussion with a group of experts and discussed their insights into the changes we are seeing and the outcomes we expect for technology companies. We are always looking to engage product thought leaders in our community and have free resources like Office Hours, Purpose Built, and our Blog as ongoing channels for engaging with our team. If you need help taking these tips and moving them forward, let’s start a conversation today.