How to Make your Product Pivot a Success — Four useful tips
There are some things that you can’t plan for in business, no matter how much market validation planning, customer research and risk management you invest in. A whole variety of unexpected changes to your external environment could mean that your initial product or service is no longer fit for purpose. An obvious example is Covid, but sudden legislation changes, the appearance of a bigger competitor or even a topical announcement in the news, can all have a detrimental effect on your business planning. Some of these circumstances are so significant that a product pivot is needed.
What is a product pivot?
A product pivot is essentially a change in the direction of your business when you realise that your current products or services are no longer meeting the demands of your clients.
The ultimate goal is survival on the market and revenue generation. Usually, the decision to pivot is a result of changes in your competition, shortcomings in the original business planning, or new information about the market.
Are product pivots always reactive?
No. In fact, there are some well-known companies which base their business planning around pivots. Slack famously started as a gaming company and developed a side product for its own internal comms. It then quickly realised that this is the product that is likely to get much bigger traction in the market than the original core business.
Many startups use a ‘fast fail’ process to figure out their potential place in the market. As a starting point, they focus on building a target audience, and then they later figure out what products and services would best appeal to that audience, and how they can monetize these.
When put this way, product pivots seem sensible and simple. But it's important to note that you’re essentially starting from scratch, which means that all your investment of money, resources and time are being abandoned.
Crescent - an example of a product pivot due to legislative changes
When Crescent first came to 10Clouds for web development and design support, it was intending to build a Crypto Investing and High Yield Savings platform. Due to legal timelines to launch the investing side of the platform, they opted to focus its initial product on Crescent Save, while continuing in the background to push legal forward to allow for an eventual Crescent Invest product.
The national average interest rate for savings accounts is 0.06%, while the average high-yield account is 0.5%. Crescent offers are 100x and 12x higher, respectively. Crescent is able to offer a 6% high-yield interest rate.
The Discovery and Market Validation phases of the new product
Many product pivots stem as a result of poor product-market fit. Consumer adoption is perhaps slower than expected, or through user research a company discovers that its product does not solve the problem it was intended to. Or perhaps most commonly, that the solution provided is not something consumers are willing to pay for.
In the case of Crescent though, the decision to change its primary focus from a crypto investing platform to a high yield product stemmed from a desire to ship a great product on a shorter time horizon and begin to build up product trust. We had an option to wait to launch Crescent Invest, which at the time had more unknown regulatory implications, or to reprioritize or focus on the things that were within our control.
So after talking with prospective users, and evaluating the decision, the team decided to pursue it. Its next challenge after the mental hurdle of making the decision then became “How do we make the best possible savings experience for everyday people, using the sharpest tools crypto has to offer”.
Developing the new product
10Clouds developed a Mobile App for Crescent with three core functionalities, all of which were the result of extensive research into the target audience.
These enable users to temporarily increase their account APY by performing simple challenges. The more challenging the boost, the more APY users earn for themselves.
2. Scheduled Investments
Users can set up recurring investments on a daily, weekly, or monthly basis.
Users can link spending accounts (credit, debit, Paypal, etc.), and then automatically the spare change will be round-up from every transaction.
4. Social Impact
Users can direct an additional 1% APY to one of a handful of causes or nonprofits for free. Crescent encourages and supports not only great savings habits but also allows users to make a positive impact in the world.
Our top tips for a successful product pivot
If conducted well, product pivots can give you a good chance of weathering changes in the market and launching a product that will stand the test of time. Here are our top four tips on what you can do to make sure that yours is a success.
1. Take the time to understand the pain points of your target audience
This may sound obvious, but it’s surprising how many companies don’t go through a market validation phase. That’s why it’s so important to really take the time to understand not just who your audience is, but also what its pain points are. If you’re certain that these are the people you want to be pitching your product to, be sure that you’re doing everything possible to solve an important problem or need that they have; and make sure that there isn’t already a key player in the market who has pipped you to the post.
But, and this is important, maybe your existing product is actually useful to a different audience? Perhaps you’ve been pitching to individual consumers, when actually it’s much more suitable for enterprises? Maybe with the right research, you could figure out whether it’s worth keeping your existing proposition and just tweaking it slightly?
2. Focus on one feature at a time
The mistake that many new companies make is trying to offer their customers a range of amazing features all at once. In many cases, it’s worth focusing on just one core feature and testing its impact, before working on subsequent features which would add to this offer. In the case of Crescent, it’s high-yield savings tool was just one element of the original platform, but it offered a lot of value to the end user in the savings that it was able to generate.
When it comes to pivoting, it’s definitely worth adopting a ‘less is more’ approach. That way you can more easily isolate what's working and what isn’t before making the decision to scale.
3. Define new goals that align with your values
If you decide to conduct a new product pivot, remember that your old company performance goals and objectives will no longer be relevant. It’s important to take the time to set yourself a new realistic set of goals based on the research you’ve conducted into your market and the target audience. Make sure that these still align with your core values as a business.
Speaking of values, the past few years have seen a consumer marketing shift towards ‘marketing your culture, not your product.’ Studies have shown that increasing numbers of consumers are drawn to brands that align with their own values. Crescent realised that it’s target audience was motivated by social impact, which is why it developed a core functionality which specifically responded to this.
4. Work with the right software development partner
Pivoting can be costly, which is why it’s all the more important to choose a software development partner who you can trust and who is aligned with your values. Understand whether they offer pure development and/or design, or whether they will also take the time to go through the discovery and market validation phases with you, to give your pivoted product the best possible chance of success.
Planning is key to pivot success
A product pivot is a big decision, which is why adequate planning and research is absolutely crucial. Begin by taking the time to understand what exactly isn’t working with your current product and figure out whether you’re approaching the wrong target audience. If you still feel that the product is unlikely to succeed in the market in its current form, figure out whether there is an element of it that is useful, and which you could focus on. Then find the best possible software development partner who will help you conduct further discovery testing, then build and launch your new product. Good luck!