While everyone discusses the importance of growth and companies continue to spend millions on marketing, they are often neglecting the biggest shift in product success in the past one hundred years, quality. Most understand the benefit of good online product reviews and its impact on sales, but this understanding usually generates efforts to game the review system. In truth, the underlying quality of the product is now the key driver of success and growth.
Fifty years ago, it was the gurus of Madison Avenue, glamorized in Mad Men, that meant the difference between failure and success. Pan Am became a leading airline through great marketing rather than a differentiated product, General Motors dominated the global automotive market through great promotions and ads, Crest became the top toothpaste through fantastic branding, etc.
Now, regardless of how brilliants your growth team is and how often they post on growthacker.com, your success will largely come down to the quality of your product. More accurately, you will not be successful without a great product (you can still fail with a great product and poor growth/marketing).
Why product quality has become paramount
The need for a great product is the result of virtually unlimited online product and service reviews. When people are considering a purchase, not only do they see the messaging from the vendor but they cannot avoid feedback from other users. If you are considering buying a new razor, the cool new features and catch jingle are likely to get you interested, but if the razor has 1.5 stars with a glut of negative reviews saying the product is worse than a razor half the price, you most likely will not try the razor. This effect is not only present with a consumer good but any product. Why buy a book that everyone says is filled with plot holes or a car that most people say they would not buy again. Again, the marketing message is less powerful than the actual experience of users.
Not only physical products
Not only does the principle of paramount product quality apply to physical goods but it is even more important with digital goods. While growth marketing for apps has become an art and science, if the underlying app has two or three stars even Chamath Palihapitiya (the brains behind Facebook’s growth team) would not be able to gain traction. All the great virals and cool apps may drive people to the app page, but then when they see the rating and reviews they are unlikely to download.
Even the retail environment has been rocked by this change to having a great product. Years ago, restaurants could survive by having a terrific location or being in a central tourist area. If they were in the right place, they could always attract new customers even if they had poor food and were over-priced. They would not get return customers but there would always be new ones. Hence the term tourist trap.
Now, if a restaurant aims to take advantage of customers, it will be punished by poor reviews on Yelp and TripAdvisor. Thus, the naïve new customers they have counted on will not materialize. Anecdotally, whenever I see a restaurant with three or less stars, I assume they will not survive. When I check back, most of them are gone within six months.
Changes who is important
The principle of paramount product quality also changes who your key partners are. In the past, many companies succeeded by focusing on the distribution layer. Having salesman in retailers promote your product over competitors was one of the strongest “growth” strategies. Carmakers spent more on their dealerships than on their product development. Even video game companies devoted the same resources to creating a great box as they did to create a good game.
Those strategies no longer work. A salesperson trying to drive a customer to the big new game that is actually not very good will have no credibility, as the customer is likely to check online and see the awful reviews. The car salesman who tries to sell the pre-owned Yugo will get laughed at when the little old man pulls out his phone and sees that the car should have been junked ten years ago. Even the retailer who charges for an end-cap display will not be able to convince retailers of bad products to invest in the marketing when people scan the bar code of the product and learn it is over-priced and does not work well.
Only the good shall survive
If you look at the companies that are thriving and growing, it is the ones that customers love. Tesla cars have universally great reviews, compare them with the reviews for Jaguars. Clash Royale from Supercell, the newest billion dollar game, has over 89,000 reviews averaging 4.5 stars. Airbnb, which has changed the hotel industry and is worth well in excess of $1 billion, also rates at 4 stars. The challenge is finding a successful product or service that does not enjoy great reviews.
Build a great product
While most acknowledge the importance of building a strong product, the necessity of having a great product to success is not yet understood universally. Building a great product should no longer be one slide on your Powerpoint or a nice to have element of your strategy, it needs to be the central focus. You need to devote the same or more time and resources to your product, not just at launch but continually keeping it great, if the other elements of your strategy are to succeed.
- The plethora of user reviews of all products and services has the formula for success, no longer can you rely on great marketing, distribution or branding.
- The fastest growing and best performing products now are also best of breed, whether Clash Royale in the game category or Tesla in the car category.
- From the start, you need to dedicate sufficient resources to product development, rather than just ensuring you have enough for marketing or distribution.
2 thoughts on “The principle of paramount product quality”
Love the article, Lloyd. Very well thought out and reasoned.
Thanks Hal, great to hear from you. How are things?