Maxim #5 - Ask about the problem rather than your solution

When evaluating the potential of a proposed new product, a common but flawed approach is to talk to prospective customers, present them with a description or mock-up of your product, and ask them what they think and if they would buy it. This approach yields worse than useless information as it's likely to mislead you about the prospects for your offering. A much better approach is to ask those prospects about the problem you are aiming to solve and find out how valuable solving that problem is to them.

A massive problem with asking customers about your proposed solution is that no one wants to tell you that your baby is ugly. When you present your solution, the prospect knows you are invested in the idea and won't want to tell you it's not what they need. Typically, you'll get some positive feedback and a non-committal conclusion to check back in with them when you are further along. This result is dangerous because it could very well be a false positive, leading you to believe your new product idea is better than it is. Often, this result is magnified by confirmation bias, leading one to believe they have a great idea when they do not.

A much better approach is to focus on the customer problem you are trying to solve. Your prospects will be much more candid when you ask about the problem and will likely tell you, with a good degree of accuracy, how big a problem something is for them. People love to talk about their problems, and it's rare that anyone comes and asks them. By focusing on the problem, not the solution, you'll be able to learn if the issue you are proposing to solve is a problem for this potential customer and how valuable it is to them to solve the problem.

While exploring the problem, be sure to spend time on how the prospect is handling the problem today. An answer where the prospect is not doing much to handle or at least ameliorate the problem is a strong indication that this is not a valuable problem to solve. On the other hand, if the prospect is making extensive efforts to deal with the problem, that is a great indication that this is an important and valuable problem. It's even better if the prospect is dissatisfied with their attempts to handle the problem because either they can not fully solve the problem, or their current solution is expensive and difficult. For the product I worked on that had the most rapid growth post-launch, one of the major prospects had a team of in-house developers trying to customize an open source solution to their needs, but wasn't happy with the results they were getting. That level of investment shows that the prospect sees the problem as important and they are willing to spend significant money to solve it.

Another reason that understanding the problem is so vitally important is that it is the best way to understand what you might be able to price your solution at. Often, product managers ask what the prospect would pay for the solution. The prospect does not actually know what they would pay for the solution. Even for established categories, asking people what they would pay yields inaccurate information. People simply do not know.

For established categories, there's a technique called conjoint analysis that asks people which option they prefer from two options, each with a set of attributes and a price. Conjoint analysis then utilizes regression analysis to put a value on each attribute. For a new product, particularly in a new category, your prospects do not know what they would actually pay. By understanding the value of solving the problem, you'll understand the upper bound on pricing. Maxim 3 - Prioritize based on customer value discusses how customer value is the upper limit on revenue.

Once you've understood the customer's view of the problem, then describe your solution and ask how well it solves the problem you've been talking about. You'll still have some of the issue that no one wants to tell you that your baby is ugly, but it's mitigated because the focus of the discussion has been on the problem. And if the question is about the solution in relation to the problem you’ve spent significant time discussing, you'll get a better answer, but still take it with a grain of salt.