Why Going Big with Your Go To Market Strategy Could Be a Huge Mistake

Crowd Valley co-founder Paul Higgins provides clear and effective tips for targeting the right market and taking it by storm.

 

It’s the first big strategic decision any entrepreneur has to make: what market should you be attacking? The right answer can mean the difference between failure and success, and unless it’s a market you can quickly establish yourself as a leader in, the result will likely be the former.

In this Q&A (adapted from a previously recorded Labcast), Crowd Valley co-founder Paul Higgins provides strategies expansion-stage companies can use to put themselves in the best position to achieve market leadership and bowl over the competition.

What is the first step companies should take to gain traction in a market quickly?

For starters, you should always try to find a market in which you can become the market leader. It’s really the first big strategic decision any entrepreneur has to make. Given what they know now, where are they going to place their bets? Are they going to go into a market where there’s no competition, for example, or do they want to challenge a competitor by either:

• Becoming the premium option and attacking them from the top
• Becoming the value option and attacking them from the bottom

What you’re looking for is a market in which potential customers have the sorts of circumstances that really compel them to buy from you and compel them away from the competition. It’s important to think about circumstances rather than attributes. Examples of circumstances are:

• What’s going on in the lives of the customers?
• What are they thinking about?
• What are they fearing?
• What are they hoping?

Compared to attributes, which are simply descriptions: size and location, number of employees, that kind of thing.

People buy food because they’re hungry, not because they’re thin or they’re fat or they’re Gen X or Gen Y.

Circumstances are really the reasons customers buy from you. Trying to build a picture of your ideal client is always going to be central to this. Write it down. Try to identify a market where you find those kinds of people.

What suggestions would you make in terms of selecting a target market size?

Targeting narrow markets can offer a significant advantage. Take UK supermarkets, for example. There are only four or five big supermarkets in the UK. If you manage to sell to one or two of them, then you can pretty much call yourself the market leader. Then you become the least risky option for the rest. You can go to the third and the fourth and say, “Why would you go with anyone else?”

That’s really why market leadership is such a powerful principle. You can be in the expansion stage or the growth stage, but still be the pragmatic buyer’s choice. So pick something narrow, pick something small.

What advice do you have specifically for expansion-stage technology companies that are trying to grow and scale as quickly as possible?

A lot of technology and growth-stage companies suffer from the burden of being able to solve too many problems in too many different sectors.

Sometimes you’ve got to ignore those opportunities, which can be pretty hard. You want to demonstrate that you’re growing rapidly, quarter on quarter. You’ve got a team morale to keep up. Sometimes somebody will call in and say, “Can I buy some stuff from you,” and you’ve got to say, “Well, I’m focused on this sector now.”

If you don’t become the market leader in anything, you’ll never become the obvious choice, and it’s really from there that you can grow.

Geoffrey Moore in Crossing the Chasm talked about the fact that a market is only a market if the companies within that market reference well when they’re making a buying decision.

Say you’ve sold to McDonald’s, and you have a great case study about how McDonald’s saved a million dollars a year, and you show it to a buyer at Hilton Hotels. Does the buyer at Hilton say, “Right, I can understand how that would work for me,” or does he not? If he doesn’t, then you’re not really in the same market.

What you should focus on is becoming the market leader of a small sub-market, a small sub-sector. You grow out. You get to the edges of that market, and then you start to see some overlap. Then you start to realize, well actually, a big restaurant is not too dissimilar from a five-star hotel, which has a restaurant onsite. You don’t talk to one about gross profit, and you don’t talk to the other one about revenue per available room, but the business case is kind of similar. You work up from there.

But you’re only able to do that because you’ve established a market leadership strategy of starting from a small point and then growing outwards.

What are some key factors companies should keep in mind when developing their market strategy?

Gaining market traction in the expansion stage is really about three things:

• Understanding what your assumptions are about the market and your go to market strategy
• Trying to validate those assumptions and learning from the results as quickly as possible
• Revisiting your assumptions regularly

Developing and sharpening your go to market strategy means asking a lot of questions and revisiting them on a regular basis:

Which market are you going after? Who are the companies in that market? Who’s the buyer? What’s the value proposition? What’s your approach? How are you trying to get in front of these guys? Are you trying to cold call your way in? Are you trying to get in through a networked approach? Are you trying to meet them at events? When you get in front of them, what do you say? What marketing collateral do you need? What tools? What knowledge?

Another project we were involved in a few years ago was with a technology company that had an online platform for analyzing visual information from camera phones. They initially thought that the retail sector was going to be pretty strong for them since they had won a few early customers in that sector.

At that stage, they could have said, “Our go to market strategy now is to hit the rest of the retail market, go in, go big, hire some sales guys, raise a load of funding, and just go for it.” But actually, as we went along, we realized that there was probably more value in other areas.

We identified a couple of other sectors. We investigated where the other value might be. We ended up on the utility sector. We realized that there was a big health and safety issue there which had a legislative compliance issue behind it, and the value there was much greater.

Being agile and being able to review your whole go to market strategy on a regular basis is crucial to making adjustments like that.