Today I want to address something that feels like it’s for beginners, but everybody I’ve met in business, and in life, needs to reflect on this profound thought. In this episode, we will discuss the sunk cost fallacy, and knowing when to stay invested in an idea or product, and when to move on. Doing proper Amazon product research is important to avoid this.
“Sunk Cost” vs. Dismissing your expertise
Falling in love with Ideas vs. Dismissing your Experience
Call with a Client
What inspired this was a mentoring call with a future entrepreneur, doesn’t yet have any product or revenue, but has pretty clear ideas at the start. We discussed niche products for her to explore. The products listed here are purely examples of the types of products we discussed, but they are not the actual products that the client is selling.
Niche 1: Passion/ Wellness Product
The example of the product she researched was an essential oil diffuser. She had a vague awareness of this product and it’s consumers. In order to market her product the best, she needed to identify her customer avatar, and the pain points that her product would suit for the customer. After a period of research, she could not determine what her desired customer was and she only received vague answers to her questions. This left her without a marketing strategy.
- P&P – vague, not reliable, general
- Product – bit of a fad that suited people’s “wants” but not their “needs”
Niche 2 “expert”/mega consumer – medical eg “Arthritis wrist magnetic bracelet”
I asked her, when she is not working, what she spends her time doing. She explained that she spends her time dealing with medical issues within her family and she shared that there is one product in particular that she has become a mega-consumer of. An example of this type of product is an arthritis wrist magnetic bracelet.
- P&P in her house!
- Product – there is a deep medical need in the market and is a growing niche, strong future need etc.
In our conversation, she struggled with letting go of the idea of the essential oil diffuser because she had become invested in that product. However, a much better idea was right in front of her.
Sunk Cost Fallacy
It doesn’t make any difference whether you spent three years and $30,000 of your own money on a product. What matters is whether or not it’s a good product to sell right now. The past doesn’t make any difference to the reality. It’s totally irrelevant.
The power of letting go vs. “The Dip”
“Should I stay or should I go?”
When we put money, time, effort, or emotion into something, we assume that it gives value to that product or service. However, from a business standpoint, this is not the case. If you want to make money, you have to be willing to junk any ideas you spend time or money on, if necessary.
The way to determine if you should stay or go is to test the product in the market, one of the things I cover in the PLP Course, specifically in module 18.
Having the emotional discipline to let go of business ideas that are not, and will not become, successful is important at the very outset of product research before a product launch. This decision is also important at the end of the process.
If you are interested to work with me 1-on-1, I am offering outrageous deals, which are very rare. Once I’ve got the next few clients under my belt, the price is going to go back to standard price, and may potentially go up. So if you’ve been thinking about working with an ecommerce coach, now’s an amazing opportunity
Watch Amazon Product Research Mistake – The two Biggest Errors!
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