Five Steps for Capturing the Connected Customer: Build Your Minimum Value Proposition

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In this installment of our “Capturing the Connected Customer” series we shift our focus on how connectivity changes the product development lifecycle itself and how to make the most out of these changes.

Perhaps one of the greatest inefficiencies of the traditional product development lifecycle is the information deficit that it generates between product companies and the consumers who use the products. Once a product leaves a retailer’s shelves, neither the retailer nor the manufacturer has any real visibility into how consumers actually use their products. What’s more, even if the product companies could gain more insight into how consumers use their products, they wouldn’t have a way to add or remove features from the product. In other words, once the product leaves the shelves, its features are set in stone.

Connected products are a game changer in this respect, as they enable product companies to remotely upgrade their products long after they leave the shelves. This opens up a completely new approach to bringing products to market. Rather than blindly building features into a product with little insight into whether or not customers are actually using the features, product companies now have the tools to ship a streamlined product that only supports the core features of that product class (we call this the product’s “minimum value proposition”), use analytics to identify which missing features are in high-demand, and then incrementally build these features into the product over time.

We should clarify one point. In the paragraph above we talk about “building new features into a product over time”. Let’s review exactly what that means. In Arrayent’s design philosophy for connected products, product companies push product features into the cloud as much as possible. So when we say that product companies build new features into their products over time,  this is usually accomplished by building new features into web apps which control the products. The example below should clarify how this works.

Honeywell’s first connected thermostat perfectly demonstrates the new paradigm of building out features from a minimum-value-proposition product. When Honeywell shipped that first connected thermostat, the app for controlling the thermostat was exceedingly simple. The app enabled you to raise and lower the setpoint on the thermostat, and that’s it! The app did not even support programming schedules. This last point, the inability to program schedules, is especially noteworthy, as many thermostat manufacturers consider schedule programming part of the “minimum value proposition” of any thermostat. Through market research Honeywell knew that most users did not program schedules into their thermostats, so Honeywell decided to hold off on incorporating a scheduling feature into their app, instead focusing their resources on the true core of their app: remotely controlling and monitoring the current setpoint of the thermostat. Despite the simplicity of the app, or perhaps because of it, the app received solid four-star ratings in the Apple App Store. And several months later, as requests from Honeywell customers  for a scheduling feature reached critical mass, Honeywell released a new version of the app that supported scheduling.

This new strategy of establishing a minimum value proposition and then building out features from that core is well adapted to our brave new world of highly visible, crowd-sourced online product ratings. As we are all aware, product revenues are becoming increasingly linked to that product’s ratings on online retailer sites, Amazon being the most obvious example. However unfair or undeserved, a poor product rating can ruin a product’s potential revenue, whereas a strong rating can lead to a network effect in which consumers buy a product because of its strong ratings, who then themselves leave good reviews on the product, and so on, creating a positive feedback loop. Long story short, the products that perform best in this environment prioritize quality over quantity. These products strip away all of the “nice to have” extra features, focusing instead on making the core product experience dead simple and rock solid.

Stripping away extra features and focusing on core use cases is standard procedure among software companies, where “Feature Creep” — the ongoing expansion and addition of new features into a product — is the single biggest obstacle to success. Apple is famous for this strategy. Take the first iPhone for example. Apple nailed the core value propositions of the smartphone experience, such as the iPhone’s web browsing interface, which was far superior to the web experiences of Blackberry and Nokia at the time. Yet the iPhone couldn’t multitask between apps well, and it couldn’t support Adobe Flash. Although nice to have, Apple correctly identified that these features were not core to their product offering. The iPhone was a smashing success even without those “nice to haves” in the initial release.

In short, the words to live by are “successful products are victories of verification.” Connected products enable you to abandon the rigid product development model in which features are set in stone once a product leaves the shelves in favor of a more flexible, more streamlined model that emphasizes focusing on core features for initial releases, validating those core features, and incrementally building new features into the product over time.

End of Part 3 or 5.  Continue to Part 4: “Make it a No Brainer”

By Kayce Basques