Why Building A Great Product Matters
Geneve and I went out to dinner on Saturday with two friends of ours, Charles and Rachelle, and were joined by two more friends, Said and Annick, who walked in to the same restaurant we were at about 10 minutes later (what are the odds in West Hartford center, eh?)
It was a rollicking Saturday evening by WH standards, starting the night at 7:30 and finishing just after midnight. Good bottles of wine were shared, jokes were made, and conversation was had.
Two points in the evening still stand out (only two, mostly "sharing" and "wine" weren't holding hands in the playground of my mind that evening). Rachelle is going to business school, and so she and Charles are thinking about buying a new car. They're thinking of flying Rachelle's mom in, who they call "The Hammer" because of her ability to get a good deal, but I proposed a less costly (although probably less fun) alternative. I like being an informed consumer, and so when I bought my car two years ago, I did my homework and found a great service called Fighting Chance. Basically, Fighting Chance arms you with information about the car you're looking at buying, and how to go about soliciting bids from dealers. The system is brilliant, and saved me $2000 off MSRP--compared with a cost of $75 for the service--with no haggling and even less stress.
Later in the evening, the conversation (as it is wont to do in rural Connecticut) turned to vacuum cleaners, and both Charles and I brought up Dyson, makers of bagless (and cool looking) vacuum cleaners. Charles had seen a commercial about BMW of vacuum cleaners, but I don't see many of those anymore, what with my wonderful ReplayTV's autoskip feature. I first heard of Dyson from a post on Jeremy Zawodny's blog (which has turned into quite the thread--it looks like Dyson has lots of customer evangelists!). I then went and read the history of Dyson, which details James Dyson's struggle to overcome technological barriers, lawsuits from competitors, and pro-bag lobbies to invent the bagless vacuum cleaner. After sorta drooling over the Dyson's ratings at Amazon and over the purple machine itself in person at Home Depot, the Dyson was fixed in my mind as a product that people liked.
So what the heck is my point? And what do Fighting Chance and Dyson have in common?
They are both products that have very effectively solved problems for ravingly happy customers. The brilliance of developing a good product is that your customers do the marketing for you, helping each other solve problems over dinner and wine all across America, Canada, Western Europe, and possibly parts of Australia. No amount of money spent on marketing will reach those customers with the same effectiveness as a relevant recommendation from a friend over a glass of Shiraz.
So I hear about Microsoft (for example) spending $150M to market their products, and wonder what would happen if they spent $125M on making their product better than Google's, and a mere $25M telling the world how their product is better.
Help me solve my problem, and I will make up in relevence and reputation what your $150M brings you in reach.
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Comments (Post | Latest)
As I've found out as a freelance 'rent-a-nerd' and web programmer, word of mouth is the best advertising there is. I've gotten countless jobs because whenever I do one I make sure to do it right. I don't go half-ass and try to depend on that person having to call me back, I do a bang-up job and rely on having that person refer me to friends, and so far it has worked.
In your example, however, MS just spent countless millions in R&D; and they naturally want to start getting so RoI by advertising and not waiting to let the word get spread. Google, by comparison, spread almost completely by word of mouth... but they weren't trying to revamp their image.
As for car buying, anyone who goes to a dealer thinking about MSRP is getting ripped off. Find out what the dealer invoice is on the car (what they're paying for it), and work from there up -- not the other way around. Also, if you go to the dealer via their website, they're more than likely to give you a much better deal. Ask to speak to the internet manager when you go to the dealer in person.
Don't know much about vacuums though :-).
I understand what MS is trying to do; I just don't think that their approach will be as effective as if they improved their product to where it was better than Google's.
Agreed re: car dealerships. My $2000 below MSRP was also $200 below invoice, but that's really a moot detail.
The larger point is that people are helping their friends solve problems by recommending relevant and effective products and services, and they're only going to recommend your product if it works. Having a cool commercial or funny print ad likely won't factor much into their decision to recommend your product.
I have found that the main reason why better products are made in the first place is it is deemed to be too costly. Why wait an extra 4 weeks to get results when I can be making money in 1 week?
My old boss' motto was ship the product at 80%. He felt that was the best you could ever get. That attitude allows you to make up front money fast ... but I have found that it kills you in the long run.
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Dan, I agree that taking the long-term view is healthiest for growing a sustainable business.
However, there is definitely a point when there are diminishing returns to making a product 100% perfect. Many companies ship products with bugs --Microsoft is one, 37 Signals is another--but the questions is whether the bugs are important enough to fix and whether there are workarounds.
In other words, if a bug affects 1% of your user base, it's likely worth building a useful feature that 80% of your users will use, instead of fixing the bug. Of course, it's important to answer the question of how important that 1% is--are they your highest-paying customers? If so, maybe it's worth reprioritizing the bug higher :).