The Risks of Skipping Market & Customer Discovery – A Cautionary Checklist: Go-to-Market Propeller

The latest in an occasional column on bringing products to market in emerging technologies, by industry marketing expert Amy T. Wiegand: Go-to-Market Propeller.  Go-to-Market Propeller is the practical support a growing industry needs – getting from innovation to sales.  In this article: the importance of market and customer discovery.

by Amy T. Wiegand

Imagine this: You’ve come up with a brilliant idea, invested months (maybe years) into developing it, and now, you’re ready to introduce it to the world. But the moment you launch, you realize…no one’s buying. What went wrong? This unfortunate scenario happens when companies overlook one essential step: market and customer discovery.

The risk of bypassing proper discovery is huge for emerging technologies, where innovation is fast-paced and competition fierce. Missing the mark on understanding your audience and the market can lead to flawed products, poor sales, and even the downfall of a promising startup. Let’s explore how skipping discovery can steer a tech company off course and what you can do to avoid it.

Why Market & Customer Discovery Matters

Market and customer discovery is like setting the GPS before you start a road trip. You need it to reach your destination. It involves digging deep into potential customers’ needs, problems, and where your solution fits. For emerging tech, where the landscape constantly evolves, discovery isn’t just helpful—it’s critical.

Without it, here’s what can happen:

• Misunderstood market: You risk targeting the wrong customers or overestimating demand.
• Legal & regulatory roadblocks: Emerging technologies, especially in fields like drones or AI, must navigate complex legal frameworks.
• Misaligned solutions: You might build something cutting-edge, but if it doesn’t solve a real problem, customers won’t care.
• False financial models: Without accurate market data, revenue projections can be way off, leading to either overfunding or underfunding.
• Wasted resources: You may invest in features or tech the market doesn’t value.
• Poor market positioning: Misreading your competition or audience can leave you lost in the crowd.

Real-World Examples: When Things Are Misaligned

Misunderstanding the Market: Virtual Hype

Remember when virtual reality (VR) was hailed as the next big thing? Companies jumped into the space, expecting immediate demand. However, many should have considered the barriers: expensive headsets, lack of practical applications beyond gaming, and consumer hesitancy. Startups folded because they overestimated how quickly VR would catch on. Today, successful companies are grasping first place in keeping VR relevant as it continues to decline as augmented and mixed reality are adopted.

Solution: Always perform detailed market research. Segment your audience and analyze where they fall on the adoption curve. Use data from early adopters, surveys, and competitive analysis to set realistic market size projections. Don’t assume they’re ready just because the tech is remarkable. Ensure your target market is ready. The market may grow, but not as quickly as founders assume. Anticipate blinders through validation.

Legal & Regulatory Missteps: The Devil is in the Details

Startups in emerging tech sometimes overlook the importance of filing patents to protect their intellectual property, miss due diligence steps, or take shortcuts. Getting caught up in the excitement of innovation is easy, but skipping steps can leave valuable ideas unprotected. Filing for patents early and solidifying your strategy is key to safeguarding your tech from competitors.

Another challenge for startups working on drone-based technology systems has been that FAA regulations are catching up to innovation. This makes it tough for these companies to move forward. Staying informed, being patient, and having a plan while regulations evolve is crucial for success.

Solution: To ensure patents are worth the effort and cost, founders need to be proactive, filing them carefully, having a clear strategy, and being ready to enforce them if necessary. Skipping steps or making assumptions when it comes to legal and regulatory compliance can lead to significant missteps, so it’s crucial to do due diligence. It may save you millions. Bringing in lawyers and regulatory experts is a smart way to reduce risks and avoid costly mistakes. When innovation outpaces legislation, founders will need to stay flexible and strategic, ensuring their go-to-market plan can progress even with regulatory hurdles. It might mean adjusting your launch timeline or entering different markets first.

Misaligned Solutions: Shall We Segway?

Segway was supposed to revolutionize personal transportation. But it didn’t. Why? It didn’t address a real problem for most consumers; it was expensive and hard to use in many environments. It solved a “problem” that wasn’t urgent for most people.

Solution: According to Prelaunch.com, 42% of startups fail due to a lack of product-market fit. Before developing a product, ask yourself: What problem does this solve? Define your target audience, conduct customer discovery interviews (not sales pitches), establish field test partners, analyze the data, create a problem statement or statements, and then go out and validate. Validate. Validate. Ensure your solution resonates with actual customer pain points.

False Financial Models: The Health-Tech No-No

Skipping proper market and customer discovery can lead to financial models that don’t match reality, making a company’s future growth and profitability look better or worse than they are.

Overestimated Revenue Projections: If you don’t fully understand your customer base or market demand, you might set overly optimistic revenue goals, leading to missed targets and frustrated investors.

Overfunding or Underfunding: Without solid discovery, a company might raise too much money for a market that isn’t ready to grow or too little for a product that could scale fast, putting the business at risk either way.

In one infamous case, a health-tech startup raised over $700 million, only to crash when their technology couldn’t deliver on its promises. Flawed market assumptions led to overly optimistic revenue projections, and when reality set in, investors were left empty-handed.

Solution: Financial projections should be rooted in real data and updated as you learn more. Use solid market research, test your assumptions with real-world data, and constantly revise your forecasts. Create a financial model from the get-go. Use modeling software and apps that help communicate financial transparency to all stakeholders versus antiquated spreadsheets to keep tracking and conversations honorable and efficient.

Wasted Resources: 3DR’s Lesson

In 2015, 3DR launched the Solo drone, marketed as the smartest drone ever. But despite its cutting-edge features, the drone flopped. Why? 3DR overinvested in tech that didn’t align with what the market wanted at that time. Consumers weren’t willing to pay a premium for features they didn’t need. Perhaps they were ahead of their time? In 2023, 3DR reemerged with a “Restart.”

Solution: Evaluating product-market fit for emerging technologies is essential to make sure you’re investing in ideas that people want. This means bringing or contracting the right team, listening to expert advice, and pinpointing your target market. You also need to understand your customers’ pain points and confirm your product’s value by conducting market research, building prototypes, or running pilot programs. Getting regular feedback from early adopters helps you fine-tune your product to meet real needs and grow. By testing your assumptions early and making adjustments based on user input, you can avoid sinking too much into solutions that won’t gain traction.

Poor Market Positioning: Airware’s Final Landing

Airware set out to offer a complete drone solution for industries like construction, mining, and agriculture, combining hardware, software, and data analytics to help businesses use drones more efficiently before these industries were ready for integration. Aiware’s heavy investment in product development also shortened its financial runway in a regulatory environment that wasn’t moving as fast as it had hoped. Potential clients needed more education on the benefits of drone technology, and many didn’t fully see the value in Airware’s platform. Unfortunately, this led to the company shutting down in 2018.

Solution: Market positioning is everything. Market positioning, realistic investment in education and awareness, differentiation, and customer communication are vital. To succeed, you must differentiate yourself from competitors, understand the value proposition for each segment, and then have the resources and know the effective channels to communicate why customers should choose you. Dig into why the market is not buying. Is it adoption paralysis? Is it pricing? Is it messaging? Is it advertising in too many channels? Resolve. Fail fast and be prepared to pivot if your initial strategy doesn’t resonate.

The Moral of the Story

Innovative technology alone isn’t enough to guarantee success. Without proper market and customer discovery, you’re flying blind. Back peddling will occur, and lost cash is guaranteed if this step is viewed as too time-consuming. Save time and cost by doing it right first and staying flexible to anticipated fluctuations. Understanding your audience, validating demand, and avoiding the pitfalls of overestimating or misaligning your offering is essential. As exciting as emerging tech can be, tempering that excitement with thorough research and careful planning is the best way to ensure your idea makes it to market and stays and grows there.

Something to take to the bank: Market and customer discovery isn’t a luxury; it’s a necessity.

Missed a recent column? Catch up here:

• 5 Ways Technical Leaders Kill Fundraising & Sales: Go-to-Market Propeller
• Be Aware of Compliments: Discovering Product-Market Fit; Go-to-Market Propeller
• An Investment That Helps Start-ups Scale Quickly: Go-to-Market Propeller

 

Amy T. Wiegand is a go-to-market professional, having worked with the best of tech start-ups and notables like Walmart, The Coca-Cola Company, NATO, UPS, local, state, and federal governments, colleges and universities, top ad agencies, and more. She has realized revenue generation growth throughout her career and champions brand management, pipeline strategy, organizational process and implementation, content, product and digital marketing, public and investor relations – and profitability. Amy is also a project architect and master director, having developed award-winning programs in aviation, technology, and special military operations. Amy was the first person to facilitate a sUAS training program for The State of Virginia in 2014, is an enthusiastic leader of STEM initiatives, and distant cousin to the notable Amelia Earhart. She is the founder of Earhart Alden & Associates, LLC, a go-to-market consulting firm, and the proud single mom of a college-age daughter.