a very literal lemonade stand

How Experience Data Turned Lemonade Into a Profitable Neighborhood Business

4 minute read
Milind Kopikare avatar
Anyone trying to release new products needs to understand the experience gap: the difference between what a product delivers and what customers expect.

A few months ago my sons came to me with the idea of opening a lemonade stand in front of our house. In the highly crowded world of lemonade stands, especially on our block, I wanted to help my boys learn how to create a competitive advantage in the neighborhood market. 

Our first hurdle was to face the reality: lemonade is lemonade. Sure, we could offer ice, maybe some fresh mint or even undercut the competition, but we didn’t have a way to make our lemonade really stand out. Instead, we needed something different. 

I encouraged my boys to run their own product concept test, a way to evaluate how customers will receive a new product. They began by offering a few alternatives to the lemonade being hawked by every third household on the block. 

We then looked to our roots in India to help choose some alternatives to lemonade, including lassi, mango-sherbert and even rose-milk. The boys went into full testing mode, trying sweet vs. tangy, five ounce vs. eight ounce servings and milk-based drinks vs. water-based drinks. Taste tests were served in little sample cups like at Costco.

The results were pretty insightful (and I’ll admit I helped with the analysis). While most people agreed that lemonade was an ideal refreshing summer drink, a statistically significant number of people also liked a combination of mango and coconut milk.

We had found our product market fit! The boys had used insights to close the gap between what their product delivered and what their customers wanted, and the mango-coconut drink became an instant bestseller.

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Closing the Product Experience Gap 

As any product developer or marketer will tell you, releasing a new product is hard. Releasing an unforgettable product is even harder. 

That’s why a company trying to release new products needs to understand the experience gap, which is the crucial difference between what the product delivers and what customers expect. Developing concepts that account for the experience gap is critical to delivering a breakthrough product.

My boys could have simply set up their table and gone toe-to-toe with the competition, but that would most likely have ended in the same harsh lesson that affects 80% of new products entering the market each year — failure. For many, building the right product, at the right time, for the right audience, can be the difference between rapid growth and a billion-dollar hole in your balance sheet. 

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Learning Opportunities

Understanding Customer's Emotions to Design Better Products

Of course, if the process was simple, the new product launches wouldn’t have such high rates of failure. Designing a successful product comes down to knowing the beliefs, emotions and intentions of your customers better than everybody else. 

Looking at just the operational data (O-data) of my neighborhood, one would probably conclude people were happy with lemonade. But in looking beyond their behavior at what they think and feel, we could draw entirely different conclusions. The experience data (X-data) helped us understand that our neighbors were willing to pay a premium for something cool and refreshing that exceeded their expectations and delivered better than a simple homemade lemonade.

Related Article: Use Design Thinking to Put Yourself in Your Customers' Shoes

Gather Experience Data at Every Stage of the Product Lifecycle

Every product has a lifecycle, from the initial idea through design, production, testing, packaging, pricing, naming and finally offering it to customers. Although the ever-elusive product-market fit cannot be guaranteed, leveraging experience data throughout development helps companies minimize risk and dramatically improve their chances of offering something customers will love.

Product teams that make the effort to gather experience data at every stage of the product journey give themselves the unique ability to understand in real-time how to increase their products’ appeal and meet customers’ needs. Improvements to the packaging or changing the design can impact the perceived value of a product, for example, and will ultimately inform what price point sweet spot is going to maximize profits.

My boys' neighborhood business success proved once again the importance of closing the experience gap when launching new products. Insights gathered through experience data help product teams gauge consumers' reactions to a proposed product or service before ever introducing it to market.

Companies that build products based on the insights gleaned from their customers stand a much better chance of introducing something that will stand the test of time. Through closing experience gaps, businesses can make their product as desirable as lemonade (and coconut-mango) on a hot summer day.

About the author

Milind Kopikare

Milind Kopikare is the head of product for surveys at Qualtrics. Milind’s mission is to make sophisticated research simple.