A Practical Framework to Improve Startup Go-To-Market Strategy

Every year, millions of startups are launched around the world. Yet the reality is sobering—only about 10% survive beyond ten years, and only a very small fraction, roughly 1%, reach the coveted unicorn status.

Contrary to popular belief, most startups do not fail because of poor technology or weak products. They fail because they struggle to:

• Identify the right customer
• Communicate the true value of their product
• Acquire customers efficiently
• Build a repeatable and scalable revenue model

In other words, many startups fail due to inadequate Go-To-Market (GTM) strategy or ineffective execution of that strategy.

If startups can significantly improve the effectiveness of their GTM strategy and its implementation, the success rate of startups could increase dramatically.

In this article, I discuss a framework that can help startups design better GTM strategies or validate existing ones. The framework acts like a mirror, highlighting potential gaps between what the company believes customers need and what customers actually value.

This framework is called the Differentiated Needs Pyramid.

It analyzes customer needs at multiple levels. Depending on whether these needs are satisfied or not, customers respond differently—by trying, buying, rejecting, continuously buying, or recommending a product.

Before exploring how this framework improves GTM effectiveness, it is useful to understand the typical components of a startup GTM strategy.

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Key Components of a Startup GTM Strategy

A GTM strategy for a startup defines how the company will reach target customers, generate demand, and create revenue in a repeatable and scalable way. It aligns product, marketing, sales, and customer success around a clear plan to acquire and retain customers.

The key components of a strong GTM strategy include:

1. Target Market Definition

This determines who the startup will sell to first, covering Total Addressable Market (TAM) giving full market opportunity, Serviceable Available Market (SAM) giving segment which can be realistically served and Serviceable Obtainable Market (SOM) mentioning near-term target.

This creates focus for start-up and prevents it from lure of selling it to every one

2. Ideal Customer Profile (ICP)

Defines the type of company/customer most likely to buy and succeed with the product e.g. Midsize retail company with high support volume operating in North America market.

This ensures sales and marketing focus on high-probability buyers

3. Buyer Persona Definition

Identifies who inside the organization makes or influences the purchase decision. VP procurement can be decision maker on commercial side and CIO could be decision maker on technical side where as Customer Experience Manager could be influencer.

Understanding personas helps tailor messaging and sales approach

4. Value Proposition

Defines why the customer should buy your product instead of alternatives. It should answer questions like What problem do we solve? For whom? And why are we better?

This is the core message across sales and marketing.

5. Product Positioning

Defines how the product is perceived relative to competitors; How we differentiate against competition.

Clear positioning enables customers understand the product quickly

6. Competitive Strategy

It is important for a startup to define how they will compete in the market. It could be a low-cost alternative or it could be high quality alternative or it could be faster deployment (value to customer) or it could be niche servicing or any combination of such things.

Strategy provides direction for marketing and sales activities

7. Pricing and Packaging

Defines how the product is sold and monetized. It defines Pricing model like subscription or user based etc.; Bundles /packages like starter/ experienced/ premium or it could be individual/ small org/enterprise and type/structure of contracts that company would engage with its customer.

Well defined pricing & packaging strategy simplifies sales conversations.

8. Sales Strategy

Defines how the startup will sell the product. It details how the product would be made available to the customer before the decision is made, it could be downloading software for a limited period of time and getting in to contract if customer likes the product or it could be sales person reaching out to customer and goes through multilevel customer engagement till the decision is made.

A company can use different strategy for different segments and well-defined sales strategy helps sales team to prioritize their efforts.

9. Demand Generation Strategy

Defines how the startup creates awareness and pipeline. Which channels it will use to create interest in PULL as well as PUSH scenarios. It also defines if company will be using partners to generate the demand.

The demand generation strategy is usually a combination of all these three strategies in varying % based on the needs of product.  

10. Distribution Channels

This defines how the product reaches customers. It could be Direct to customer or through Partner or through distributor.

Clear understanding of distribution channel preference helps team in moving the sales cycle forward.

11. Customer Journey Design

It is important to define the end-to-end process for buying and adoption experience. What would be the stages and how company will interact with customer organization to provide greatest experience during the sales process as well as post sales usage.

A well-designed journey improves conversion and retention.

12. Customer Success & Expansion

Revenue doesn't stop after the first sale. Company must define its Land and Expand strategy upfront so that structure is created to onboard the customers, measure their success and identify expansion opportunities.

13. Metrics & KPIs

Every GTM strategy must define how success is measured. Key metrics are defined in three areas - Sales (Pipeline, win rate, etc.) Marketing (Cost of Acquisition of customer (CAC), Lead Conversion ratio, etc.) and Customer Success (Retention, Expansion Revenue, NPS etc.).

These metric help measure progress and guide the whole process throughout the life cycle.

14. Execution Roadmap

GTM strategy is always accompanied with a roadmap for execution i.e. how it will be rolled out over time. E.g. 0-3 months ICP definition, 3-6 months sales team formation, etc.

Clear definition of execution roadmap provides the necessary milestones to track.

15. Organizational Alignment

Startup GTM requires alignment across various departments like Product, Sales, Marketing, Customer success, etc.

Alignment ensures everyone understands their role and work toward the same customer outcomes.

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Why GTM Strategies Fail

Despite having structured plans, startups often experience failures across multiple GTM components.

Examples include:

• The target market (SOM) may not prioritize the problem the product solves.
• The ICP may be incorrect, resulting in low product traction.
• Buyer personas may be misunderstood, leading to ineffective engagement strategies.
• The value proposition may not address the most critical customer need.
• Demand generation strategies may not match the buying behavior of the target segment.

At the core of these problems is a mismatch between what the company believes customers need and what customers actually value.

Startups therefore require a mechanism to validate their understanding of customer needs before executing their GTM strategy.

This is where the Differentiated Needs Pyramid becomes valuable.

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The Differentiated Needs Pyramid

The Differentiated Needs Pyramid helps organizations analyze and categorize customer (it could be Market Segment or Individual Customer or Buyer persona or specific buyer/decision maker) needs across multiple (5) Levels.  Each level depicting specific aspect of the customer. This categorization provides clarity in terms of what are table stakes needs, what are safety/security/risk/performance related needs or it could be needs making real differentiation to buyer.  

It also determines the impact it will have if these needs are satisfied or partially satisfied or not satisfied. This impact influences buyer decision which could be - try, buy, reject, continuously buy or recommend.

Company can create Differentiated Needs Pyramid for buyer categories like Target Market identified, ICP, Buyer Personas, and specific decision makers.

By comparing these pyramids with GTM assumptions, startups can identify gaps and refine their strategy. In some cases, this analysis also reveals opportunities to enhance the product itself, strengthening its value proposition and competitive advantage.

I have explained how to create Differentiated Needs Pyramid in my earlier blog post Can a Product Manager create a Perfect Product in first go and keep it running forever- Dream or Reality? https://personalandprofessionalexcellence.blogspot.com/2025/10/can-product-manager-create-perfect.html

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Applying the Differentiated Needs Pyramid to GTM Strategy

The framework can enhance multiple GTM components. These are explained in the table below

 

Sr No	Component of GTM Strategy	How to use Differentiated Needs Pyramid
1	Target Market Definition	Create a Differentiated Needs Pyramid at Market segment level to crosscheck if our product is addressing the ‘Right’ needs of the segment   Validate whether the segment’s most important needs are addressed
2	Ideal Customer Profile	Create a Differentiated Needs Pyramid at Customer Profile level. In case of B2B scenario, we can create Pyramid specific to any large customer that we may be considering as anchor customer.   This will refine the product based on critical needs at customer level
3	Buyer Persona Definition	Needs of different buyer roles are different and creating Differentiated Needs Pyramid at each role level shows us the mirror as to what each one is expecting in the product. When we are dealing with a large contract or expansions, it is beneficial to create Differentiated Needs Pyramid specific to a specific person in the decision-making role to create a product satisfying their higher-level needs   Understand priorities of each decision maker
4	Value Proposition	Craft the value proposition using various Differentiated Needs Pyramids created covering the critical needs that are satisfied by the product better than the competition   Focus messaging on the most important needs
5	Product Positioning	Create positioning based on the Specific needs that are satisfied by the product   Highlight differentiation aligned with customer priorities
6	Competitive Strategy	A mapping of how the product satisfy the needs identified through Differentiated Needs Pyramid v/s how competing products satisfy needs provides us insight in to crafting a competitive strategy and differentiation   Identify needs competitors fail to address
7	Pricing & Packaging	The Needs identified through Differentiated Needs Pyramid will guide / refine Pricing and Packaging that will be acceptable to customer   Align packages with perceived customer value
8	Sales Strategy	Needs identified will guide formulation/ refinement of Sales Strategy   Tailor engagement model to buyer needs
9	Demand Generation Strategy	The Pyramids created at Customer level will guide which method will be suitable for specific set of customers – will they prefer to try out on their own or will they prefer handholding …   Choose channels aligned with buyer behavior
10	Distribution Channels	The needs identified will guide in refining Distribution channel strategy   Select channels preferred by target customers
11	Customer Journey Design	The needs of customer drives ‘how’ portion of each step in the customer journey. It will help what actions in each stage from company will be appreciated by customer and create a great buying experience   Improve buyer experience at each stage
12	Customer Success and Expansion	The mapping between Customer Needs and Satisfied needs (from product) provides guidance in terms of actions necessary for retention and expansion   Identify expansion opportunities
13	Metrics & KPI	Specific Metrics could be created based on needs at different level so that company can measure customer satisfaction as well as opportunities for improvements   Track satisfaction of key needs
14	Execution Roadmap	Differentiated Needs Pyramid could be used to cross check the impact of execution at every milestone and refine it if necessary.   Validate progress at each stage
15	Organization Alignment	Here the organization should create a Differentiated Needs Pyramid for internal Customer-Supplier pairs which will help improve the operational flow and smoothen the product movement from raw material to finished product in the hands of customer     Align internal teams around customer needs

 

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Conclusion

A strong GTM strategy is critical to startup success. However, even well-structured strategies can fail if they are built on incorrect assumptions about customer needs.

The Differentiated Needs Pyramid provides a systematic way to validate those assumptions, ensuring that startups align their products, messaging, and sales strategies with what customers truly value.

By incorporating this framework into GTM planning, startups can significantly improve their chances of building a repeatable, scalable, and successful revenue engine.

 

Detailed explanation about Differentiated Needs Pyramid, its construction and usage are available in my book “Customer Experience Decoded” (available on Amazon in kindle and print format) https://www.amazon.com/dp/8195052657.

I would be happy to discuss any specific situations and help organizations refine their GTM strategies for greater success.

 

Is AI Really Improving the Customer Experience — or Do We Still Have a Long Way to Go?

 Artificial Intelligence has become the new mantra for improvement across industries. Whether it’s revenue growth, operational efficiency, product enhancement, or customer loyalty — AI is positioned as the solution. Companies often highlight how AI enables personalization, faster service, and customer delight. Today, over 90% of organizations use some form of AI in customer experience, most commonly through chatbots and recommendation engines.

But the central question remains:
Is the customer actually experiencing better service — or is the experience becoming more rigid, impersonal, and automated?

Consider a few scenarios:

• When product recommendations only show what we liked in the past, do we get more personalized value — or are we being narrowed into a content bubble?
• When a customer’s issue doesn’t match predefined chatbot rules, do they get routed to a human fast enough — or do they end up in a frustrating loop?
• When we receive medical ads after casually discussing a symptom with Alexa or Siri — is that personalization, or an invasion of privacy?

Many current AI implementations seem designed primarily to benefit the company, with customer experience as an indirect outcome rather than the core objective.

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10 Common AI Use Cases — and Their Real Impact on CX

Use Case	Who Gains Most?	Customer Experience Impact
Predictive Maintenance	Company (cost reduction, reliability)	Indirect. Customer benefits only if service continuity matters.
Computer Vision Quality Inspection	Company (less waste, fewer returns)	Minimal direct impact. Product quality may improve, but customer doesn’t “feel” it.
Intelligent Document Processing (OCR + NLP)	Company (faster back office, fewer errors)	Limited direct CX impact except in service processes tied to customer requests.
RPA + Cognitive Automation	Company (lower cost, faster workflows)	Little direct CX impact unless linked to customer-facing processes.
Conversational Support (Chatbots / Voice Agents)	Both	Positive for simple requests, negative when complexity requires human empathy.
Demand Forecasting	Company (inventory optimization)	Indirect benefit: higher product availability.
Supply Chain Optimization	Company (reduced logistics cost)	Customer benefits only through reliable delivery time.
Fraud Detection	Both	Strengthens trust. Strong positive impact on confidence and loyalty.
Dynamic Pricing	Company (profit optimization)	Mixed. Can feel fair or exploitative depending on timing and transparency.
Recommendation Engines	Company (higher spend)	Customer convenience improves — but risk of content “echo chambers.”

Many of these use cases optimize internal efficiency and cost, with limited direct emotional or experiential value for the end customer.

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Key Observations

1. Most AI use cases today are designed for the company, not the end customer.
2. Cost optimization is a stronger driver than experience improvement.
3. Conversational AI is improving speed — but often lacks empathy, leading to dissatisfaction in complex scenarios.
4. It is assumed that Organizations will eventually translate savings to customer experience improvements — but this is not seen happening intentionally.
5. Public sentiment is affected by layoff headlines, creating distrust unless customers see tangible benefits themselves.

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What Needs to Change to Create Real Customer Impact

1. Share Cost Savings with Customers, — real benefits customers can feel.
For example:

• Lower insurance premiums
• Reduced product pricing
• Zero wait time for call support

2. Prioritize AI Use Cases at Real Customer Touchpoints

AI product development has focused heavily on back-office efficiency.
The next phase must be:

• Emotional intelligence in digital interactions
• Contextual understanding in service journeys
• Proactive support rather than reactive troubleshooting

3. Use the “Differentiated Needs Pyramid” framework to Select AI Use Cases

Refer book “Customer Experience Decoded” for the framework-

( https://www.amazon.com/Customer-Experience-measure-customer-experience/dp/8195052657/ref=sr_1_1?crid=3H5TBTR3C5AZZ&dib=eyJ2IjoiMSJ9.TibkhNsQyDuHjykrKwhhirFraAc1DliWb3WRoDDrX4n_AU4QH6FAaO6eAMmcNxhK4RCFFaWVfuBbZzNn2GQDWjTxMh1TutiOtrbVnGOFdGE.Qu76l95vgnxotwTLbMBZgR1LuG5m2RCWd0387JJztIY&dib_tag=se&keywords=customer+experience+decoded&qid=1762375891&sprefix=%2Caps%2C214&sr=8-1))
This framework helps understand which human needs are being satisfied and how it impacts customer satisfaction:

The higher the need addressed, the stronger the loyalty impact.

Organizations can use this pyramid as a decision filter when prioritizing AI investments — selecting those that elevate the customer, not just the process.

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Conclusion

AI is evolving rapidly — and its potential to transform customer experience is enormous.
However, we are still early in this journey. Most AI applications today are focused on internal efficiencies, not on enriching customer relationships.

True customer experience improvement will come when:

• AI becomes more emotionally aware
• Organizations intentionally pass benefits to customers
• AI augments humans instead of replacing human empathy

We are only scratching the surface of what AI can do for meaningful, human-centric experience design.

This is a topic close to my heart, and I welcome your thoughts and perspectives.
Feel free to share your views or reach out for a conversation.

#AIinBusiness #HumanCenteredDesign #ExperienceLeadership #ExperienceMatters

#CustomerLoyalty #AIethics #TechnologyWithPurpose #BusinessTransformation #AI #CustomerExperience #CX #Automation #Chatbots #DigitalExperience #Personalization

#CustomerSuccess #ServiceDesign #DataStrategy #FutureOfCX #Leadership

Can a Product Manager create a Perfect Product in first go and keep it running forever- Dream or Reality?

 Every product manager dreams that he/she can create a product which perfectly fits the needs of its customers right from get go and no iterative refinements are required. The product serves all the needs of its stakeholders and it is a HIT at the launch itself. This indeed is very difficult and mostly remains a dream. There are several pieces of the puzzle that should fall in place to create a successful product. Understanding of customer needs is primary piece, however understanding needs of other stakeholders like manufacturing, logistics, communication, pricing/profits is equally important to create a successful product. Product Manager has to balance all these needs while creating product. Any mismatch can create imbalance and will not create the impact in terms of customer interest or revenue.

I am going to discuss a technique in this article which will help product manager understand the stated and unstated needs of their customers/stakeholders, which when incorporated in the product process, increases the probability of successful product many times. This technique is called as “Differentiated Needs Pyramid”, which guides product managers in identifying customer needs, segregate them in to multiple levels and assess the impact of satisfying as well as not satisfying the needs. This impact assessment enables product manager in prioritizing one need over other in terms of inclusion in the features and investment that will be required to build the product.

Let us look at typical process of Product Management and where & how the Differentiated Needs Pyramid technique can guide. Product Management comprises 7 key steps, i.e. Idea Management, Finalizing Specifications, Roadmapping, Prioritization/ Sequencing, Development/Delivery, Analytics, Feedback & Iterations.

1.      Idea Management

This is the first step when a spark / thought in the mind of product manager starts getting well rounded to become a product idea. This is the step where the product manager and team try to understand what customer is looking for. They connect with target customers individually or in a forum or through survey to understand needs as well as bounce back ideas. They also undertake secondary market research / social media analysis to corroborate the needs. They review competing product to identify any needs which were not identified by other method. These needs are then prioritized for inclusion in the product and a unique product idea is born.

This is one of the critical steps in the process, which decides acceptance of the product by customer. To ensure that we have considered all the right needs of customer, we should create a Differentiated Needs Pyramid for the customer. One pyramid for every segment of customers serviced by the product. Product manager should segregate the needs in to 5 levels as defined in the pyramid. Analyse the segregation to see if we have needs in all levels? Do needs crowd in one or two levels and other levels are empty with no needs or a very few needs? The needs should be balanced in the pyramid. Any lopsidedness denotes that product is addressing only a portion of overall needs and chances of failure to meet customer expectations are high. Product manager should do further research to identify needs at the levels which do not have sufficient needs and refine the pyramid. Once the pyramid is finalized, map these needs against specifications / features considered in the product. This mapping will provide, which customer needs are getting addressed by the product and which are missing. This mapping will throw light on what customer is going to like and what they will miss in the product. The process for finalizing the specifications begin.     

2.      Finalizing Specifications

In this step, the product team finalizes the specification of the product, the features that will be included in the first release. The team also decides the customer segment it wants to target as well as identify the competition that needs to be handled. The team also defines what outcome they are expecting after launch, what impact they want to achieve in the market, what behavior change they would expect from the customers etc. The specs decided in this step will go on floor for build.

The product team revisits the high-level specification created in the previous step and goes through each feature to check its need and impact in terms of customer attractiveness. The Differentiated Needs Pyramid created in the first step acts as a mirror and helps team to identify impact of each feature on the customer. The product team can select needs which can create higher impact on customer and select features which can satisfy these needs.

There are multiple iterations made to refine this list by comparing the features with competitor products or ideally create a category of its own so that there is no competition in the market at the time of launch. Few more rounds of iteration take place by considering other factors like “Cost/Profitability”, “Time to Market requirement”, “Logistical requirements”, etc.

Every iteration will throw a bundle of features which can be tracked using Differentiated Needs Pyramid and feature set is finalized. Product managers would have clear understanding of customer segment they are targeting, the USP of product which will attract its customers and budgetary idea regarding costing, marketing plan etc. Once these specs are agreed and approved, team is now ready to get detailed plan for development build a roadmap with milestones and other stuff.    

The next three steps deal with actual building of product.

3.      Road mapping

Product team will create a road map i.e. High-level plan with milestones, dates, ownerships etc. The plan typically follows the business strategy and collaborates with other stakeholders who are going to be party to the building process. They could be internal departments or external vendors or agencies. Once everyone is aligned, this plan goes in to planning tool and made available to different entities to detail out for actual feature building.  

4.      Prioritization / Sequencing

This step deals with sequencing of features for building considering aspects like criticality, time required to build, dependency, build capacity etc. Once this prioritization is completed, teams are formed as per requirement and development is initiated.

5.      Development / Delivery

This is where the product is actually built, feature by feature. Every feature is built, tested and demonstrated to internal customers (sometimes to selected loyal customers). Features are integrated with each other as per plan and tested. It is best practice to follow an iterative method so that any changes that need to be made can be made early in the game as well as product team can also witness customer reaction. Another important activity is to validate the feedback / reaction against Differentiated Needs Pyramid; check the matching between the expected and actual reaction. The results will tell the product managers if they have understood their customers correctly, and have they considered their needs correctly. If there is a mismatch, which means understanding of customer needs have to be refined and features tweaked if necessary. This comparison with Differentiated Needs Pyramid gives early indication on how the product will be received by customers. Product team can do the necessary tweaks to the product features if required early in the game and saves a lot of work in making the product successful.   The build is tracked with respect to plan and necessary actions are undertaken to keep the build process moving smoothly.

Once the product is developed and tested, it is launched and customers get view of complete product.

The next two steps are predominantly assessment of product performance, gauging reactions of customer, understanding positive and negative criticism and identify modifications for next iteration    

6.      Analytics

Here the product team collects data using various metrics appropriate to the product and assess how it is performing. All the aspects including technical performance like access, availability, speed and feature functionality as well as Outcome performance like usage, revenue improvement, social media buzz etc. are measured. Graphs plotted over a period of time depicts how the product has been received by customers as well as predict revenue impact on long term basis.  

7.      Feedback & Iterations.

It is critical to seek feedback from the customers once the product is launched. The feedback can be direct as well as indirect. In the direct feedback, product team gets views from customers through survey, interviews, forum discussions etc. This clearly establishes featured liked by customer, features disliked by customer as well as features that did not create any impact on customers.

The indirect feedback is obtained through the outcomes observed by the company, it could be additional inquiries, it could be additional usage, it could be additional revenue, it could be likes or complaints or trolls. This feedback also could be assessed using the latest tools available to figure out which features are liked by customer, which features are disliked and which features did not form part of any reactions i.e. did not create any impact.

Once the first set of feedback is received, the product team goes back to the drawing board and compares it with what they started with, what kind of reactions they were expecting from customers and what outcomes they were expecting. If they are matching, team is a winner - the product is successful. If they are not matching, then they can use their Differentiated Needs Pyramid again to create a new baseline for locking in refined customer needs, refined levels for the needs. Re do the feature mapping and identify the gaps that need to be addressed in the second version of the product. This process of collecting feedback, mapping with Differentiated Needs Pyramid and adjusting the features of the product in next release will keep the product up to date with customer needs and continue to enjoy customer loyalty.

Differentiated Needs Pyramid shows mirror to Product managers where they can check if the visualization of the product is equal to the real product that is getting built and it is very important to stay on right track as well as course correct, if necessary, at the earliest in the product cycle.  

Following figure provides a little glimpse of how the Differentiated Needs Pyramid will look, it needs to be filled in for specific product. 

Detailed description and examples are available in my book “Customer Experience Decoded” which is available of Amazon in Print and Kindle version. https://www.amazon.com/Customer-Experience-measure-customer-experience/dp/8195052657/ref=sr_1_1?crid=BYSYS0LUA9MU&dib=eyJ2IjoiMSJ9.o0TM6MXfetSBFqEu278Tr7FraAc1DliWb3WRoDDrX4koE_lQ9QWpQIF44kUR4vNKd-qope-v1E63q8fHlLl9Ng.2bmJpjyxDqKPLAFACSzEEnzC5wFFTr0B0txwYYfg94c&dib_tag=se&keywords=customer+experience+decoded&qid=1761412362&sprefix=customer+experience+decoded%2Caps%2C149&sr=8-1

I would be glad to help anyone who would like to learn how to build a Differentiated Needs Pyramid for their product. Please contact me through e-mail and we can take deeper dive in to your specific case. 

Top Proactive Strategies to Avoid Start-up failure- Startup Success Framework.

 

Millions of start-ups begin their operations every year in the world, but only 10% survive beyond 10 years and a very very few i.e. @1% reach the unicorn level. Since entrepreneurs are trying out new and unique ideas, something which is new to customer, something which can change the business perspective; a high failure rate is expected. However, 90% failure rate looks very high and signifies higher risks in investing in start-ups. If we are able to reduce it even by few % points, it will benefit the customers, industry and investors to a great extent. The additional money available with investors can trigger a new boom.

When we look at the key reasons for failure, they can be categorized into 4 buckets

1   Product / Customer mapping (40-50%), which covers all the transformational aspects the product is going bring to customers life. It could be features, cost, delivery mechanism, when/how it is going to be launched, how they are positioned/marketed, what is the competition, how it is better for customer than its competition, if it is pathbreaking, then what are its unique benefits to customer, what is going to change for customer after using the product, what is the ultimate value customer is expected to get from the product, etc. These all relate to failure in understanding the needs of customer and/or failure to address them through the product. Sometimes, the customer needs evolve over a period of time and product fails to catch up with appropriate changes resulting in failure of capturing customer wallet share.   

2   Financial challenges (25-35%), which cover lack of funding, high cost, low volumes, low margins, cashflow issues etc. Poor cashflow management creates significant challenges to operate and grow.  

3   People / Relationship related challenges (15-20%), which covers non availability of skilled team, poor leadership, poor HR practices, poor relations with investors, leadership getting distracted, lack of agility to adopt to changes, etc. This stifles the organization and fails to generate the enthusiasm as well as focus required in the early stage of the life cycle. 

4   Others (10-20%) which include Technology related issues, Operational challenges, Legal Challenges etc.

As you can see, the biggest bucket relates to customers and their needs being satisfied by the product, which also presents biggest opportunity to improve the success percentage. I am going to discuss a framework which can help start-up entrepreneurs and their team understand customer better, validate their needs better and determine whether the product they have in mind is viable or not early in the game. This will result in creating a product which is better aligned with customer needs, raising its chances of success. This framework is called as Differentiated Needs Pyramid. It uses a principle that “customer has multiple needs from a product / service and every need fulfilled by a product gives different level of satisfaction / experience, and customer makes a decision based on aggregate satisfaction score”. Certain needs once satisfied give overwhelming experience where as certain needs do not move the needle for customer experience upon satisfaction. The game is to identify these needs and satisfy the needs which give higher level of experience. This helps creating a good bond between product and customer increasing its chances of success.

Let us dive a little deeper in to the framework and how it could be used by start-ups.

Differentiated Needs Pyramid, the framework

Differentiated Needs Pyramid provides a way for logical segregation of needs based on the impact they create on customer satisfaction / experience resulting into a specific buying behavior. The following picture illustrates the 5 levels of needs for a product which is going to be launched by a start-up. The needs are stacked in a manner to provide ascending level of satisfaction. Needs at level 1, when fulfilled, provides lower level of satisfaction than those at level 4.

The first level covers customer needs such as basic features / capabilities that a product should have; without which they will not look at it. Also, one needs to look at how these features / capabilities compare with competing products available to the customer.

Once basic needs are satisfied regarding features / capabilities, customer needs to understand how secure they are or how / where they are made available or how data is handled etc. customers will have specific needs in this area so unless these are addressed, product is not aligned with customer.

The needs at first two levels are simple and easy to identify; most of the competing products will have them. They become table stakes rather than becoming a factor determining alignment & purchase decision. So, the product being launched must have a way to satisfy these. The next two levels i.e. Level 3 and Level 4 are the key levels which drive the decision making for customer.

The third level will address the customers needs to feel connected or be part of some community; The needs to feel life simplified or enhanced; the need to feel camaraderie with like minded people; the need to feel like family taking care of each other etc. e.g. If your product has a feature which enables a transaction in a single click instead of many complicated steps with data entries etc., you have addressed one need of making life simple. The product customer alignment is a bit stronger now and can influence the purchase decision.

Forth level talks about the needs of customer to feel elated or free or strong or proud about something. Do you know what your customer would like to feel proud about and is your product satisfying this need in some form? E.g. If customer has a need to feel unique amongst his peers, if your product can satisfy his need somehow, then you are taking your customer on a high, elevating product customer alignment to significantly which should result in purchase decision.

Fifth level is ultimate, which means your product satisfies all the needs that customer may have from such kind of product and he does not have to look anywhere else. This is an ultimate state and normally not achieved.

How to use this framework?

There are four simple steps that the start-up should take so that they can achieve a better alignment of their product with their customers. These are, Create consolidated list of needs, Level wise segregation of needs, Map features v/s needs and identify gaps and Create an action plan.

a.      Create a consolidated list of needs

First step is to list down all the needs that customers can have from this product. They can talk with potential customers, read journals, study competitor products and their customers to see if you can find some needs that the products are not satisfying. Each feature could be a need, some customer fears could translate in to needs, some social media discussions can provide indication about needs, some industry/technology challenge can suggest a few needs. All these needs are consolidated in to a list. It is critical to identify the needs by grouping the customers in to specific groups/segments who are likely to behave in similar manner with respect to product consumption. If there are diverse groups, then create the specific lists for each group.

b.     Level wise segregation of Needs

Each need is then analyzed to determine the level it belongs to. A simple feature in the product could be part of level 1 needs, where as a simplified process (e.g. one click operation discussed in earlier paragraph) could be a level 3 need. At the end of this step, we have level wise list of needs of customer from our product.

c.      Map product features / capabilities with the needs and Identify Gaps

In this step, you map your features / capabilities in the product with needs. Identify which needs are getting fully satisfied with your product features, which are getting partly satisfied and which are not getting satisfied. At the end of this step, you have a level wise list of needs with understanding of degree of satisfaction at each level and gaps that needs to be filled.  This mapping portrays a clear picture about alignment between product and customer.

d.     Create action plan

If the alignment between product and customer is tight, you can go ahead and move forward with the product. If there are gaps, then a determination needs to be made about can we fulfill these gaps through additional feature / capabilities? If yes, then include these feature / capabilities in product spec and run the mapping again to confirm. If gaps can not be fulfilled through any feature / capability, the product most likely will not be liked by customers and may be dropped.

How to use this framework in the start-up lifecycle

To be a successful product, a start-up must apply the Differentiated Needs Pyramid framework throughout its lifecycle. Its application at every stage provides a clear picture of how the product-customer alignment is progressing and increases the confidence of success in the end. It also provides a clear idea of challenges product may face early in the lifecycle and enables mid-course correction. The results of the framework application can also create a Go-NoGo decision point early in the game to safeguard the investment.  

a.      Ideation

A start-up starts with an idea of doing something differently / efficiently, or building something new, or bringing in some new technology to transform certain processes / functions etc. Typically, it starts with one core need of the customer that needs to be fulfilled. Once the Idea gets groomed, features get added, clarity regarding customer base appears. Once the feature bundle reaches basic comfort level, it is time to build the first Differentiated Needs Pyramid and perform gap analysis. This exercise will certainly provide more clarity on “target customer” as well as “features in the product”. After a couple of rounds of adjusting the features, MVP definition could be completed with clear understanding of what goes in MVP and What goes in the final products with all the bells and whistles.

b.     MVP

After MVP is prepared and checked with select users, we come to know how the product is actually performing; is it really satisfying all the needs as it is supposed to? This is another stage where the Differentiated Needs Pyramid is reviewed and Gap analysis is made. Some actions might come out of this analysis, which can enhance the product further

There is a chance that customer needs might change while the product is being built due to some factors like introduction of new technology, new product launched by competition, changes in some regulations etc. These also needs to be captured while reviewing the Differentiated Needs Pyramid and Gap analysis and addressed appropriately.

c.      Launch

Once these fixes are completed, product is launched and real customers start using the product. Hopefully, we have understood the customer needs well and build the products catering to these so we expect a good acceptance from customer. This is the time where we review the Differentiated Needs Pyramid based on customer feedback and create another Gap document which can help building next releases of the product.

d.     Scale Up

The product is successful in a first customer segment and we are now ready to scale up to include wider customer base and geographies. This is another point where Differentiated Needs Pyramid needs to be redrawn. We might be scaling the product to different customer segments based on culture, geographies, countries, languages, income strata, etc. The Differentiated Needs Pyramid should be drawn separately for each segment as the needs from each segment might be different. We will get the gaps for each segment and an idea what needs to be done with product before it goes big.

e.      Continue the relevance in long term

Once the product is successful in wider customer base, it is a good practice to review the Differentiated Needs Pyramid every six months to incorporate the changes in the business environment, competitive scenario, and other changes. This will help the start-up in keeping the product relevant to its customer and this alignment will drive its success on the demand front.

Detailed explanation about Differentiated Needs Pyramid, its construction and usage are available in my book “Customer Experience Decoded” available on Amazon https://www.amazon.com/dp/8195052657. You can always reach out to me for any discussion you may want to have about your specific situation.