How to take advantage of an Economic downturn to build customer-centric products

Rising inflation, declining revenue. Businesses are taking firm stands in budget and headcount cuts. These are some of the most prominent challenges businesses are navigating through the downturn to keep them running. But is there a silver lining to it? In meeting these challenges, businesses are forced to narrow down their focus on the one essential thing- “their product”. They’re building for a better tomorrow by investing in their biggest opportunity.

In times of uncertainty similar to the recession we’re facing, it’s the must have products that will survive and you must make sure you are leading your company and product there.

Product discovery will help you narrow down to what are the must have features you should build, which will make your product recession-proof and something consumers will be paying for.

Downturn is not the time to build good to have features

Companies tend to introduce fewer new products during a recession, and for good reason. With people spending less money, it makes sense that companies might decide it’s not worth the investment to innovate.

The primary concern is that such features do not establish a robust foothold within a client's organization (for B2B products) or with the user (for B2C products). When budget cuts are necessary, these products are often the first to be eliminated. As a product manager or leader, you may require convincing about the necessity of your product, and if you can't effectively demonstrate its value, you may have to discontinue using it. Moreover, without dedicated advocates for your product within the organization, long-term customer retention or the ability to expand your offerings is not guaranteed.

While it is possible to sell a product with non-essential features, it should not be the primary focus of your business. Greater certainty is needed.

Downturn is the litmus-test for your product

Imagine this situation:

• You've come up with a new product idea.
• Market indicators seem promising.
• You're convinced that you have an innovative concept.

You proceed to create a minimum viable product (MVP) only to find out during market testing that your product is merely average. It offers some benefits, but it's not essential enough for users to consider it indispensable.

In similar situations, companies often make a mistake by expanding their features to include this "nice-to-have" aspect hoping that more features will bring in more customers. Regrettably, this strategy rarely succeeds. Acknowledging that multiple nice-to-have features can't replace a single must-have feature is vital. Thus, it is crucial to center your product around an incredibly valuable offering that users will willingly pay for.

Understanding your core value – something that your target users can instantly recognize and appreciate without extensive explanation – is essential.

If you haven't identified your core value yet, continue searching for it. You may need to reshape your value proposition, investigate new use cases, or focus on a different audience that can benefit from your product.

Numerous startups have begun building their products for one target audience, only to find out that another audience derived more value from it. Furthermore, some startups have shifted from their initial product ideas to new use cases that genuinely address their customers' pain points.

Here are a few notable examples:

1. Zoom - As remote work surged in popularity due to the COVID-19 pandemic, Zoom saw heightened demand for its video conferencing software. Rather than broadening its offerings, Zoom honed its core features, such as top-notch video and audio, a user-friendly interface, and scalability. The company also focused on improving security and privacy features to address unauthorized access concerns. Zoom maintained its leading position in the video conferencing market during the recession by emphasizing core features.
2. Mail-chimp- Mailchimp launched during the dot-com crash. Originally a side project, the service netted its co-founders a few thousand dollars a month. During the global financial crisis, Mailchimp pivoted from a paid service to a freemium model to ride out the recession. Since then, Mailchimp has experienced continuous success and grown from 85,000 to 450,000 users within a year. It has never accepted venture capital funding and has remained entirely owned by the co-founders since inception 19 years ago.
3. HubSpot - As businesses reduced marketing budgets during the recession, HubSpot, a marketing automation platform, prioritized its core inbound marketing and lead generation features. The company unveiled new tools to help businesses optimize their SEO, construct landing pages, and automate email campaigns. By emphasizing core features, HubSpot delivered genuine value to its users, enabling them to adapt to the shifting economic landscape.

In each instance, the companies highlighted their core features to address their users' changing needs during the recession. By offering true value through their core features, these businesses managed to maintain their market positions and draw in new customers.

Adjusting the product discovery process-

Salesforce and Publicis.Sapient found that “75% of consumers’ search queries are brand new each month, showing just how fast consumers are discovering new product types, brands, and features.”

1. Go over and beyond in understanding customer requirements-

Understand Qualitative and Quantitative Data-

• Qualitative Data: This type of data is subjective and focuses on feelings, thoughts, and interpretations of responses from people. It helps you understand the emotions and motivations driving customer behaviours.
• Quantitative Data: This data is objective and can be specifically measured or counted. It offers numerical insights and helps you make data-driven decisions.

2. Follow the Money and Align with Business Priorities-

• Trace Leading Indicators: Identify key levers and leading indicators for your objectives, such as reducing churn. When talking to people or looking at the numbers, always keep in mind how they add up in the end, as that will be the spine of your strategy.
• Connect with Decision Makers: Establish a connection with your C-suite or department heads and find out what is important to the business right now. Prioritize your discovery efforts based on what they are worrying about or what needs movement and positive progress.

3. Adopt the Columbo Approach: Ask the Extra Question-

• Be genuinely curious and ask open-ended questions to encourage deeper conversations.
• Don't be afraid to ask follow-up questions or explore new topics that come up during the discussion. This can lead to valuable insights and discoveries. Ask if there is anything else they would like to talk about and do some open-ended follow-ups to get the best answer.

4. Iterate and Involve Your Team in the Discovery Process-

• Continuous Improvement: Learn from your past discovery efforts and refine your methods to achieve better results.
• Collaborative Discovery: Involve team members from different departments in the discovery process to foster a deeper understanding of customer behavior and build a shared appreciation for the challenges involved. Even if it's just one user interview a quarter or data analysis. This will help them appreciate how much is still unknown about customers and the difficulty of getting discovery right.

5. Define "Done" and Share the Outcomes-

• Synthesize Findings: Conduct a thorough analysis of your discovery data to validate your findings and avoid bias.
• Communicate Results: Share the outcomes of your discovery process with your team, allowing them to understand the rationale behind decisions and participate actively in the development process so they can become active participants and partners in the decision-making process.

6. Concentrating on cost-efficient approaches-

In an economic downturn, it becomes even more critical for product teams to focus on cost-efficient approaches to stay competitive and maintain profitability. To achieve this, product teams should optimize the various steps of the product development process, also, using artificial intelligence (AI) to reduce time, resources, and costs. These are some ways in which AI can be leveraged to improve cost-efficiency:

1. Idea generation: Automate the process of generating ideas and identifying customer needs, saving time and resources.
2. Research and validation: Quickly analyze existing data, market trends, and user feedback to validate product ideas and make data-driven decisions.
3. Design and prototyping: AI will Assist in the design process by generating and optimizing concepts, creating prototypes, and conducting user testing.
4. API and data integration: It can automatically integrate APIs and manage data touch points, streamlining the process of connecting different systems and services.
5. Organizing and sorting data: Categorize large amounts of data to make it easier for teams to analyze and make informed decisions.
6. Resolving the blank slate problem: AI-powered onboarding, guided walkthroughs, and context-aware help systems can provide personalized assistance to users, increasing user adoption and reducing the need for costly support resources.

By integrating AI into the product development process, teams can create cost-efficient solutions that minimize resource expenditure and optimize return on investment. This is especially important during an economic downturn, as it allows businesses to maintain their competitive edge and continue innovating despite financial constraints.

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Crafting customer-oriented solutions

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Finding Pain through Customer Discovery

People buy either to reduce pain or create some gain. Through customer discovery you can uncover what triggers both the ideas and the value proporistion for the customer if you solved the certain problem.

The value proposition could mean-

• Saving time or money.
• Making more money.
• Lifestyle or professional benefits.

A "product" encompasses more than just the physical product itself; it also includes pricing, services, the sales process, and much more. With such a broad definition, there is ample opportunity to discover the frustrations that customers face with their current solutions or problem-solving methods.

To get started, begin by speaking with at least ten potential customers. Even with a small sample size, these interviews can provide valuable insights, especially if you start to notice a consistent pattern of pain points.

1. Ask the Right Questions

It means asking open ended questions which helps people expand the horizon of their answers, include how they feel and perceive your product. This, in turn, will bring more questions, you otherwise wouldn't have considered asking before. 

Rarely, should you limit the conversation after the initial response. Always follow up with a "why", this can get you to the crux of solving any pain point.

After identifying an issue, it's crucial to determine its significance in your prospects' list of priorities. A fundamental aspect to consider is whether the customer even realizes they have a problem. If you must inform them of the problem, it could indicate that raising awareness and gaining customers may be challenging. Moreover, if the customer is aware of the issue, you should assess if it's substantial, widespread, and distressing enough for them to pay for a solution. Additionally, consider whether they possess the budget and decision-making power to make a purchase.

Sample questions for testing-

If we picked up your tool tomorrow and you could never use it again, how upset would you be?

1. Very disappointed
2. Somewhat disappointed
3. Not disappointed
4. I don’t use the product anymore.

If the issues you're addressing aren't important to your intended audience or if they're unwilling to pay for them, then your product lacks a viable business model.

2. Recognize patterns

Many individuals believe that validating a new product is a rigorous scientific process that involves conducting numerous interviews, such as 30 to 40, to obtain statistically significant results that reveal the truth. However, this approach can be subjective and prone to biases, leading to skewed outcomes. In reality, understanding what people are truly saying requires reading between the lines, which deviates from a scientific approach.

After conducting approximately 15 to 20 interviews, patterns begin to emerge, with the same feedback recurring. Ideally, by the 21st interview, similar observations to those previously heard gets apparent. If, after conducting a dozen interviews, a pattern of pain or problems is not evident, it is possible that there is no issue to solve. While there is no specific number of interviews required, conducting more interviews reduces the risk of failure incrementally. For instance, 10 interviews lower risk somewhat, while 20 interviews lower it even further. After conducting 90 interviews, assuming the right questions are being asked, the risk can be significantly reduced.

Throughout the interview process, questions and pitches should be adjusted and pivoted based on feedback received. The fourth interview should not be identical to the first. By recognizing where the mark was missed, one can make adjustments and progress. Flexibility is particularly crucial when validating a solution in a domain where there is limited experience, which may require learning how to phrase questions and use industry-specific terminology over time.

Elevating user experience with Product Discovery

To ensure the product idea matches user needs to test it using mockups and prototypes. This allows product teams to compensate for possible discrepancies between user responses and user experiences with the product.

Consider this scenario: Your users have expressed a desire for additional video editing capabilities on your subtitling software's dashboard. However, adding these features may lead to clutter on the dashboard, ultimately hindering their ability to enjoy a seamless product experience. Without conducting tests, you won't be able to ascertain this outcome.

Building mockups or clickable prototypes and observing user behavior when using similar products can help identify potential issues before the product is released. Developing a MVP that can be tested further is also crucial.

Usability testing interviews are conducted in multiple iterations with users to test the prototypes, focusing on finding issues related to findability, content or feature usability, and validating UX flow assumptions. The findings from these tests are used to help the product team decide on the final set of requirements for the MVP or a specific feature.

The prototypes created during the product discovery process serve as documentation for development and help ensure that the user experience is optimized for the product's intended audience. By focusing on user experience during product discovery, product teams can create products that solve real user problems and ultimately lead to more satisfied customers.

Navigating market volatility

Market research can help businesses make strategic decisions during a recession by providing data and insights for predictability in an unstable economy. Here are a few ways market research can benefit business organizations:

• Get an Edge Over Your Competitors- "What are our competitors doing?" isn't necessarily the greatest question to ask during a recession. Instead, businesses should concentrate on what their rivals aren't doing. According to Harvard Business Review, market research expenditure decreased for four consecutive quarters during the Great Recession of May 2009. Larger corporations tried to reduce research investment by up to 20%. This meant businesses worldwide were cutting back on spending, particularly on market research. According to the same report, 9% of firms survived the Great Recession and thrived. These companies outpaced rivals in sales growth by more than 10%. Market research helped these companies carry out essential work, which revealed how their audience responded to financial difficulty and how they would still purchase products given; they gained enough value from that product.
• Ride the Change in Customers' Spending Trends- Contrary to popular belief, consumers do not necessarily limit their purchases during a recession. Instead, they divert their purchasing power to other areas, such as mid-tier brands. The most intelligent businesses recognized that consumers were not inclined to stop spending during the crisis but divert their purchasing power elsewhere. In reality, the values that matter to consumers change during a recession, not necessarily the amount of money they spend.
• Make Precise Pivots- Business market research enables companies to pinpoint exactly which part of their operations needs to pivot and, more crucially, what change(s) to make. As opposed to a wild guess, you can make these judgments knowing they are sound and supported by solid business market research. So while your competitors spend months discussing layoffs and downsizing, you can dominate your market by launching new products and services with the best possible chance of succeeding based on consumer feedback.

Adopting customer-centricity in downturn times

To stay connected with your customers during an economic downturn, it's essential to utilize technology that can capture and analyze various customer signals beyond just surveys. This approach can enhance customer loyalty and stimulate growth for your business.

For instance, during the Great Recession, financial services firms that prioritized their distressed customers and helped them maintain stability earned customer loyalty for life. Similarly, companies that listened to customer feedback during the pandemic and analyzed it were able to pivot and rapidly deliver superior digital experiences.

Furthermore, in times of economic uncertainty, it's an opportune moment to reconnect with your partners regarding previously identified customer experience (CX) improvements that were never implemented. To achieve effective product discovery, consider connecting with Zeda's feedback and feature module.

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