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Tuesday, October 16, 2018

Lesson #303: How to Find Expert Consultants for Your Business

Posted By: George Deeb - 10/16/2018

From time-to-time, you may need to find a consultant to help you with your business.  Sometimes, those needs are high level, like settin...



From time-to-time, you may need to find a consultant to help you with your business.  Sometimes, those needs are high level, like setting strategies or marketing plans.  And, other times, those needs are more point solutions, like a pro in search engine optimization or product sourcing.  Whatever your need may be, there is most likely a consultant out there that is immediately available to help you.  The problem is finding them.  This post will tell you how best to fill your consulting needs.

BE CLEAR ON WHAT YOU ARE LOOKING FOR—FIND THE EXPERT 

Not all consultants are created equal.  A business generalist will not have the depth of a domain expert, as an example.  But, on the flipside, maybe your business problems are so broad, that a jack-of-all-trades is well equipped to point you in the right direction to start, to then dig deeper with a different pro on that specific topic, once it is identified.  And, consultants that are well versed in solutions for enterprise scale companies, are most likely not the right consultants to help early stage startups, with much lower budgets.  So, be very clear on exactly what is needed for your specific pain point and company size, and focus there during your consultant interview process.

DECIDE LENGTH, DEPTH AND LOCATION OF YOUR ENGAGEMENT

Now you need to decide how long you think this consultant will be with you, and whether it is a full-time problem or a part-time problem.  Some consultants prefer bigger, longer, full-time assignments.  And, other consultants prefer smaller, shorter, part-time assignments.  So, depending on what your business need is, will dictate what type of consultant you will need, and more importantly, where to look for them.  You will also need to decide if the work needs to be done on-site, in your office, or if the work can be done virtually from the consultant’s office.  The advantage of virtual consultants: it opens up the world of potential talent to you, instead of simply finding someone willing to work in your home market.  That said, some work simply needs to be done in the office working hand-in-hand with your team, for efficiency sake.

LEVERAGE YOUR NETWORKS

Like when hiring employees for your business, it is always best to start with someone you know and trust.  If not for the work itself, for the introductions to potential consultants for you.  So, maybe send an email to your fellow business colleagues or fellow CEO’s, asking if they have run into the same problem in the past, and if they are aware of any experts on that particular topic.  Having that “stamp of approval” from someone you trust that has worked with the consultant in the past, should increase the odds of a successful outcome from the project.

LEVERAGE CONSULTANT MARKETPLACES

There are several websites out there that have built marketplaces to find consultants by topic, budget and location.  Those include companies like Catalant (US focus), SpareHire (US focus), Talmix (EU focus) and Expert 360 (AU focus) where you can post your exact needs, and experts will bid their expertise and costs for you to choose from.  LinkedIn also has a solution here called Pro Finder, but it is not as big as the other sites listed here, in terms of activity on that site.  There are also sites like GLG and Coleman, where they have a network of thousands of specific domain experts, that you can get on the phone for an hour of their time, typically focused on enterprise scale companies.  So, consider posting your needs on these sites and see how it goes.

LEVERAGE SOCIAL MEDIA

Social media is also a good place to look.  Most people on LinkedIn have been recommended by their peers as experts on specific topics.  For example, my LinkedIn network has tagged me as an expert in startups, entrepreneurship, business development, e-commerce, online marketing and venture capital, to name a few.  So, search for people with the keyword topics you need to solve your pain point, and ask them to point you in the right direction.  Someone with 99+ recommendations around the key term “fundraising”, is probably a pretty good fundraiser.  Same thing on Twitter.  Many people on Twitter add hashtags to their profile description with skills that they want to be known for, so search for those Twitter users (e.g., #BusinessCoach).  The problem with Twitter vs. LinkedIn, in Twitter’s case, people are attaching tags to themselves, so you don’t really know if they are really a pro on that topic, or not.  Whereas on LinkedIn, the tags have been made by third party individuals, which adds materially more credibility to their expertise.

LEVERAGE FREELANCER WEBSITES

If you are looking for very specific point solutions, the freelancer websites could be the way to go.  For example, the other day I needed an expert on the cloud ERP technology Odoo, and I went to freelancer sites like Upwork, Freelancer, Fiverr or Guru, where you can type in keywords of what you need, and their search engine will bring back the various talent in their database that should fit the bill.  There are many other freelancer communities based on your specific skillset needed, but the ones I listed above are the big one-stop portal sites that have a little bit of everything.  What I like about the freelancer sites, is you can see how busy/engaged these freelance consultants have been to date, and what their past client reviews have been.  So, again, the importance of third party validation to make sure you are making a smart engagement.

CONSIDER CONSULTING FIRMS, OR INDIVIDUALS

Most of the above is talking about finding specific individuals that can help you with your consulting needs.  You could also consider engaging consulting firms that specialize in your particular pain point.  And, no not the big firms like McKinsey, Bain or BCG, as they work on huge budget projects for huge enterprise companies.  I am talking about the boutique firms you never heard of, like Maddock Douglas, whose expertise is around business innovation and are willing to work with early stage businesses in their target industries.  You can throw Red Rocket in this bucket for your growth strategy needs.  So, do a little digging on Google (e.g., “Chicago Brand Strategy Firm”) and see what you stumble on in the Google results.  Then, ask to speak to their references before engaging them.

CONCLUDING THOUGHTS

Hopefully, you now have a much better understanding around how to find a consultant for your business and your specific pain point.  It is very important you do your homework on that person or firm, to make sure they are the right person to solve your exact situation.  The worst thing you can do is try to force a square peg into a circular hole, as all that will do is result in you wasting valuable time, energy and money to only end up in exactly the same place you started . . . stumped!!

________________________

And, just like that, the content for our third book is now complete.  We hope you have enjoyed reading our 303 startup lessons, to date, and continue to leverage them as your trusted how-to handbook for entrepreneurs!!  And, given the topic of this post, we are hoping Red Rocket has proven itself over the years, as your expert growth consultant of choice.  If there is anything we can help you with, don't hesitate to call.


For future posts, please follow me on Twitter at: @georgedeeb.



Tuesday, October 9, 2018

Lesson #302: Business Lessons from the Great Conductors

Posted By: George Deeb - 10/09/2018

I don't usually talk about my personal life in this blog, but the opportunity presented itself.  Music has always been a passion of...




I don't usually talk about my personal life in this blog, but the opportunity presented itself.  Music has always been a passion of mine and played an important part of my life.  I composed a symphony at the age of 16, was the principal clarinetist, rank leader and fanfare band director with the University of Michigan Marching Band while in college, and am a self-taught pianist.  So, I know a little bit about music, as I do business.

I was not surprised when my life-long friend thought I would be interested in watching the below 2009 TED Talk from Itay Talgam, the Israeli musical conductor, which he recently sent to me.  What did surprise me was the content of this video, and how Itay was able to brilliantly tie together leadership lessons from the great conductors in music to similar leadership lessons in the business world.  Take a watch of this video, and then we will continue our discussion below.



As you can see, Itay does a great job of critiquing many different great conductors and their styles, including Carlos Kleiber, Riccardo Muti, Richard Strauss, Herbert Von Karajan and Leonard Bernstein.  A couple things really stood out to me in this video, that you can apply to your businesses.

THE ROLE OF THE CONDUCTOR (CEO)

In music, the job of the conductor is many fold.  The conductor will interpret the music as written by the composer.  The conductor will set the tempo changes.  The conductor will make sure the many individual players perform in unison.  Doesn't that sound familiar to a business CEO, that interprets the business climate, sets strategies, determines the pace of growth and gets all the employees working in harmony towards to goal.  They are exactly the same!!  In both cases, it is a balance between the leader and their staff towards hitting their goals, as a team, while leveraging the individual strengths of its members.

THE VARIOUS STYLES OF CONDUCTING (OR LEADERSHIP)

As you saw in this video, no two conductors are the same.  Some gesture with arms big and bold, and others are hardly moving.  Some use a baton, and others their hands.  Some overly emphasize each of their desires, and others only emphasize what they think is most important.  Some are most dynamic during dynamic points in the music, and then change styles entirely during softer points in the score.  Some take a very visible leadership role, and others let the musicians take the lead.  And, like in business, no two CEOs are the same, from A-type personality dictators all the way down to B-type personality enablers.  The key is finding the right style works best for you and is most needed for your business situation and team members; one that will resonate with the team and get them to follow your lead towards hitting your collective goals.

THE CONDUCTOR (CEO) SHOULD NOT LEAD, LIKE MUTI

When you saw the video of Riccardo Muti, it looked like he was physically going to suffocate the life out of Don Giovanni, the primary character of the opera he was conducting.  His style was so micro-managerial in nature, that he had to overly communicate his desires to the musicians, at all times, as if the musicians couldn't logically figure out what to do on their own.  As Itay said, he was using the musicians as "instruments, and not as partners" in creating great music.  And, what happened to Riccardo Muti with with that leadership style?  The 700 musicians of La Scala all signed a letter asking him to resign, which he did.  That would be no different in the business world, when you have disgruntled staff wanting to leave a company being micro-managed by an authoritarian CEO.

THE CONDUCTOR (CEO) SHOULD LEAD, LIKE KLEIBER OR VON KARAJAN

On the flipside, the videos of Carlos Kleiber and Herbert Von Karajan showed exactly how a conductor should lead.  They weren't overly animated the entire time.  They only got more animated at certain times when they wanted to make sure the music reflected their most-important desires.  At the other times, they calmly set the tempo and let the musicians do their thing.  And, when things were going well, they just soaked it up, visibly showing their pleasure, which served as a pat on the back to the musicians for a job well done.  But, to be clear, when things were repeatedly going awry, a quick glance to the erring musician told them it was time to fix their performance.  This is exactly how a CEO should lead--only get involved when they have to, reward their staff for a job well done and put out business fires as they arise.

THE CONDUCTOR (CEO) SHOULD GET OUT OF THE WAY, LIKE BERNSTEIN

My favorite conductor video was the last one, by Leonard Bernstein, one of my favorite composers and conductors of all time, pictured above.  In his video, I was amazed to see his arms did not move once.  Is that even possible for a conductor?  He conducted the entire piece with his eye gestures only.  First, he did not want to get in the way of the musicians shining on this piece.  Second, without overt leadership actions by the conductor, the musicians are forced better to listen to each other in creating one perfect ensemble.  And, third, he is emphasizing the point: at times, less is more.  Each of these are equally important points in the business world.  CEOs need to let their staff shine and get them to work better as a team, even without excessive management, all while getting increased efficiency and focus.

CONCLUDING THOUGHTS

Anyway, I hope you like this comparison between the music world and the business world, two passions of mine that were expertly intertwined in this video by Itay Talgam.  As you have seen in this video (and in your businesses), great conductors (CEO's) "do not interfere" with the creation of great music (businesses) and mentoring great musicians (employees).  Instead, they study their score (business climate) and figure out the best interpretation (business strategy), which they clearly communicate to their musicians (staff), and get out of their way.  I really loved this video!!


For future posts, please follow me on Twitter at:  @georgedeeb.


Friday, October 5, 2018

Want Your Business to Grow? Complete One Material Action Per Day!

Posted By: George Deeb - 10/05/2018

When you are running a small business, it is really easy to get distracted. Firstly, your own CEO job most likely has a lot of differen...




When you are running a small business, it is really easy to get distracted. Firstly, your own CEO job most likely has a lot of different tasks, from chief strategist to chief bottle washer. Secondly, your team makes many demands on your time, mostly to help point them in the right direction on their projects. And, thirdly, it’s just too easy to get sucked into the random inbound contacts that come into your email box or through social media.

All I can say to you entrepreneurs who are “floating in the wind” of poor time management is: unless you are doing at least one material thing each day to move your business forward towards new revenue or profit heights, you are never going to grow your business as quickly as you could. Allow me to explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter: @georgedeeb.


Friday, September 28, 2018

Lesson #301: Sales Enablement Tools Help Accelerate Sales

Posted By: George Deeb - 9/28/2018

Over the last several years, many technologies have been developed to help accelerate and automate the sales and marketing functions.  F...



Over the last several years, many technologies have been developed to help accelerate and automate the sales and marketing functions.  First, it was upper funnel tools that help drive customer awareness and consideration through marketing automation, which I have previously written about.  Then, came the middle and lower funnel tools that help drive customer evaluation and purchase through sales enablement tools, which I will talk about in this post.  These sales enablement tools can make a material difference in helping you drive revenue faster, consistently across your entire sales team.

WHAT IS SALES ENABLEMENT?

At the end of the day, sales enablement tools arm your sales team with the content, guidance and training they need to effectively communicate and close buying customers.  This includes tools for salesperson training, coaching, content development, communications and customer engagement, coupled with performance analytics reporting designed to best optimize the sales process.  Sales enablement is not about your sales operations (e.g., territory management, capacity management, compensation, systems/CRM/CPQ/SPM, sales forecasting, sales reporting, contract management), which is typically managed by an entirely different sales operations team.

WHAT IS THE GOAL OF SALES ENABLEMENT?

The goal of using sales enablement tools is to set up a scalable and repeatable process to drive revenues, for the entire sales team to follow, anchored by quantifiable metrics and reporting to help prove the ROI of the sales team as a whole, and the individual salespeople therein.  It also serves as the bridge between the sales, marketing, product, and brand teams, to ensure the appropriate documents and messaging desired by marketing, is actually being used by the sales team.  It is designed to make sure the customers see the most preferred content, at the most preferred times in the sales cycle, mapping to the customer journey and increasing conversion rates in the process.  It is also the best tool to create the feedback loop from customers through the sales team back to the product and marketing teams, so they can make the appropriate changes on their end, based on real time customer feedback.  Re-read this post on how important it is for the sales and product/R&D teams to be tied at the hip in creating this customer feedback loop.

PRIMARY USE CASES

There are really three major functional purposes for sales enablement tools: (i) sales content centralization and optimization; (ii) technologies to automate the process; and (iii) sales team reporting and analytics.  The first section is all about organizing the sales content (e.g., email templates, decks, case studies, white papers, competitor intelligence) so it is easily searchable by all sales team members, in a consistent format controlled and approved by the marketing department.  The second section is about setting up ways to automate prospecting, triggering automated emails or direct messaging.  The third section is about getting visibility and insights around the sales team’s activities, demos, win rate and leads generated, optimizing the sales process and qualifying leads along the way.  It tracks data not only from the sales team (individually and collectively), but from the customers’ engagement with the content (e.g., what content did they read the most in the deck, which email template had the best response, what message most lead to a conversion).

MOST DESIRED FUNCTIONALITY

Here is a list of the most needed tools within a sales enablement platform:

Content Template CMS—prebuilt for fast and consistent content creation
Persona Management—different content for different end users
Activity Alerts—triggered when prospects take a certain action with content
Automated Actions—emails automatically triggered when certain actions happen
User Success Analytics—are salespeople doing what you want them to do
User Engagement Analytics—which content most used by salesperson and team
Customer Engagement Analytics—at the customer and aggregate levels
Content Creation—ability to create content right inside the platform
Advanced Search—easy to quickly find content by user, type, customer, etc.
Content Importability—ability to quickly upload your current content into system
Presentation Support—ability to present live in person, screen share virtually or on mobile
Content Scoring—which content is most effective to getting a desired outcome
Machine Learning—system learns over time and makes recommendations

KEY PERFORMANCE INDICATORS

These are example metrics that will come out of a sales enablement platform that needs to be optimized, both at the individual and department levels:

Time to Revenue
Quota Attainment
Sales Cycle—Funnel Optimization
Time Spent Selling (vs. other tasks)
Content Usage (by sales team and your customers)
Product Mix (are we selling most desired products)

EXPECTED OUTCOMES

According to the market research firm, Aberdeen, who studied the benefits of companies using sales enablement tools vs. companies that were not, you can expect the following results, on average, by using sales enablement tools:

2.2x more effective at linking sales actions to revenues
83% more effective at improving productivity with technology
58% more effective at finding, training and retaining sales talent
32% higher sales team quota attainment
24% higher individual sales person quota attainment
23% higher conversion rate

So, as you can see in the above data, sales enablement tools are well worth the investment and should have an immediate payback, if used correctly by sales managers, the sales team and other stakeholders in the business.

KEY VENDORS TO CONSIDER

There are several key players serving the sales enablement tools market, including Guru, Clearslide and CloudMap.  You can get a good overview of the strengths and weaknesses of the various sales enablement vendors in this great market landscape and list of customer reviews from G2 Crowd.  In addition, beyond traditional sales enablement tasks, there are many other tools to consider to help accelerate sales, including outbound sales call/email tracking and analytics (from players like Outreach, SalesLoft and Yesware) and sales team coaching and onboarding (from players like Gong, Level 11 and Brainshark).  So, research which tools are most needed for your business, and put the most appropriate sales-related technology stack in place.

CONCLUDING THOUGHTS

With sales enablement tools in place, it has never been easier for sales managers to get visibility into what is working and what is not working in their sales process, and training the best of those activities across the full team.  And, it has never been easier to get insights from the actions taken by your customers around your content, to optimize what is most likely going to accelerate conversions from your future efforts.  So, if you are not using sales enablement tools today, perhaps it is time to start.  Especially, if you are a B2B company looking to optimize your outbound sales team.


For future posts, please follow me on Twitter at: @georgedeeb.



Friday, September 21, 2018

Lesson #300: Top 10 Traits of High-Performing Marketing Teams

Posted By: George Deeb - 9/21/2018

eCommerce marketers today face two big challenges: designing strategies and campaigns that will stand out from the competition and stayi...



eCommerce marketers today face two big challenges: designing strategies and campaigns that will stand out from the competition and staying abreast of the technological developments needed to compete with and conquer other online companies worldwide.  I reached out to my colleague Erika Jolly Brookes, the CMO at Springbot, an ecommerce marketing data analytics company, to help me in identifying some common traits that are found in some of the most powerful marketing teams in the industry.  Here is what we came up with.

1. They Don’t Make Excuses

The only thing worse than an apology is an excuse. Customers and managers don’t want to hear either one. To be clear, marketing companies DO face circumstances beyond their control: system failures, family emergencies and customers with unreasonable expectations. In all cases, a professional marketing team takes responsibility for all problems or issues that arise in their products or services – even if these issues are not their fault.

2. They Creatively Find Ways to Exceed Expectations

Effective marketing teams always under-promise and over-deliver. They wow their customers with their exceptional customer service, impeccable work ethic and innovative marketing efforts. They solve problems, provide answers and finish ahead of the deadline. In an industry where mediocrity is commonplace and often expected, marketing teams understand one thing: going over the top for customers and managers produces greater job security than any other element of business.

3. They’re Constantly Evaluating Their Performance

High-performing marketing teams are never satisfied with their performance. Their success is not determined by what they’ve accomplished, but instead how that accomplishment springboards to the next challenge. They scrutinize every element of their workflow and look forward to refining their processes for each new campaign. Celebrate your victory, and then get ready to make the next one even more effective.

4. They’re Always Innovating

If there are rules in marketing, your top executives know about them, but they are more focused on finding the next big trend, bright idea and game-changing solution. Great marketers take what they’ve been given from management and create something new out of it. They utilize all tools at their disposal and even develop a few new ones to fuel their high-minded ambitions.

5. They’re Customer-Focused

If marketers are to remain relevant, they have to understand their audience. Translation: They have to care about the customers the business interacts with every day. They have to understand what their customers’ needs are and what they are looking for from the company. They have to adopt their customers’ success as essential to their own. Top-level marketers are empathetic, good listeners and always looking out for their customers’ best interest.

6. They Know How to Make Money

Marketing teams know all too well the impact of revenue. Today’s online marketing tools and strategies, such as omni-channel eCommerce, give marketers instant gratification by allowing them to generate revenue faster than ever before. Marketers can also enjoy a wide range of revenue streams. This produces new challenges and opportunities for growth. Being driven by revenue is fiscally healthy and leads to a greater ROI on your marketing spend.  Re-read this post on driving marketing ROI.

7. Their Goals and Growth are Measurable

Marketers deal with numbers every single day. So, it should be no surprise that their goals and level of growth can be measured using hard data. Without a data-driven marketing approach, online companies have no clue where they are or where they’re going. You can’t dispute metrics, but you can learn from them to carve out a path moving forward.

8. There is Structure in Their Organization

Many high-level marketing teams can appear to be running around chaotically, but don’t be fooled by the hustle and bustle. There is a method to the madness, if everything is thought out and well executed. Effective marketers plan, schedule, analyze and create endless strategies for nearly every move they make. They rarely go into a marketing campaign or new phase of business without a game plan
.
9. They Collaborate

The highest performing marketing organizations are exceptional at working together and collaborating on projects. Each member of the team understands the value of experience and knowledge. Everyone knows that the entire team is better and stronger because of the experience and knowledge of the other members. They approach collaboration with the mindset of discovering and drawing from each other’s talents and expertise.

10. They Can Operate on Flexible Budgets

Large brands operate on expansive budgets, but small-to-midsize eCommerce companies (like most of your businesses) have a fraction of the resources. Invest in building an agile marketing team that knows how to materially move the revenue needle without a material marketing investment, and you’ll be well-suited to ensure your success online against bigger competitors.  Re-read this post for example growth hacking techniques.


If you follow these tips, you can build a marketing team that is highly skilled to execute marketing strategies that will out-perform the competition.  Thanks again Erika for helping me with this piece, and be sure to follow Erika on Twitter at @ebrookes.


For future posts, please follow me on Twitter at: @georgedeeb.


Monday, September 10, 2018

Lesson #299: The Search for Product-Market Fit (the Holy Grail)

Posted By: George Deeb - 9/10/2018

Every entrepreneur believes they have the greatest product that is going to revolutionalize the world, worthy of venture capitalists bat...



Every entrepreneur believes they have the greatest product that is going to revolutionalize the world, worthy of venture capitalists bathing them in piles of cash to achieve their dream.  But, venture capitalists don’t back products, they back winning business models.  And, winning business models are anchored by companies that have the potential to generate lots of revenues with easily scalable, repeatable and profitable sales and marketing strategies.  And, none of that will be truly determined, until you successfully test and optimize your product-market fit with potential customers.  This post will help you learn exactly how to do that.

WHAT IS PRODUCT-MARKET FIT?

Product-market-fit is the point at which you have identified the best target industries, buyers and use cases for your product, to the point sales become repeatable and scalable and your product is flying off the shelves.  It is the holy grail for most startups, that dictates whether they are on the path to being the next one-in-ten “10x” investment return companies for their investors, or the next three-in-ten flameouts that crashes and burns out of business. 

HOW TO IDENTIFY PRODUCT-MARKET FIT?

To me, there are several distinct phases in the search for product-market fit: (1) you need to have a basic understanding of the market landscape and the key pain points being solved by your products; (2) you need to research the various industry verticals and potential buyers where your product may sell, to find the one where you think your business will have the most success to start; (3) you need to take your product to market to validate your hypotheses, and begin to optimize your target clients, use cases, messaging, price points and go-to-market strategy; (4) you need to close your first clients and learn your conversion funnel metrics, marketing economics (e.g., CAC and LTV) and learn user behaviors like their product engagement levels, utilization rates and lost customer churn rates; (5) you then optimize the above to make your sales process repeatable and scalable in a large market vertical, including optimizing your hiring, employee training, customer onboarding, the sales-to-operations handoff; and (6) you validate your ability to scale is profitable, your churn rates are low and will result in a material size business.

THE RIGHT WAY OF GATHERING MARKET INTELLIGENCE

The best way of doing market research is actually talking to your potential customers, dozens of them.  And, no, not in some online survey; in an actually face-to-face or phone meeting with them, that is more interactive, and you can see how the conversation evolves in real time.  Ask them what their current painpoints are around your industry, products or competition, or how much they would be willing to pay for that solution, you would be amazed what great insights come out of their mouths.  They’ll tell you exactly what you need to build to make their lives materially better.

In addition, seek insights from your employees, especially your sales and operations team.  Your sales people are in the market everyday talking to customers, you need to have a process to get those insights into the head of senior management.  And, your operations team is typically seeing all the problems with the product and hearing the complaints from your customers.  Any customer facing complaints need to bubble up to management and the product team, so they can quickly fix them.  But, worth mentioning, make sure you have a large enough data sample here—the opinion of one person, is just that, an opinion.  But, hearing the same points over and over again from multiple stakeholders, is something you most likely need to jump on fixing.

TEST, TEST AND TEST AGAIN

There is not only one correct answer for determining product-market fit.  You need to be tinkering and testing with all the inputs along the way.  For example, try three different price points, and see how far you can push it, before the customers start complaining or your conversion rates fall.  Or, as another example, A/B test various sales pitches, emphasizing different aspects of your product, to figure out which specific feature is the one that gets your customers the most excited.  Then double down on the winners after each iteration along the way.

FOCUS ON ONE VERTICAL AT A TIME

It is very easy to say your product appeals to many different industries and many different use cases, let’s go out and sell our products to them all.  That is a recipe for disaster.  When startup budgets are limited, it is always better to have a much more narrow focus, to start, and go really deep in that one narrow vertical.  That will make you the clear industry expert in that domain, which will help spread the viral word-of-mouth and stimulate growth materially faster.  In this case, it is much better being the master of one domain, than being a Jack of all trades.  After you have built your scale and profitability in your first vertical, you take those “bullets” and fire them away in the second and third tangential verticals to your first.  But, before doing do, make sure you have documented your process, learnings and framework from the first vertical, so you can apply to the next verticals, so you don’t make the same mistakes twice.  And, at all times, make sure you stay focused on the long term vision.  Don’t get swept up in the whims of the market that can having you chasing rabbits into unprofitable rabbit holes.

CREATE BUYER PERSONAS—CUSTOMIZE ACCORDINGLY

As you will learn, the behaviors of one industry, buyer role or use case, may have a materially different “rhythm” that another.  So, you can assume what worked in one vertical, will work exactly the same way in the next vertical.  Everything could be different.  From your go-to-market strategy, to your sales cycle to your sales funnel metrics.  For example, let’s say you are selling marketing technology.  The needs of an enterprise level chief marketing officer (more strategic), will be different from the needs of lower level enterprise marketing manager (more tactical), will be different from the needs of a marketing agency serving that same enterprise client (more service oriented).  So, customize your pitch accordingly, depending on who you are pitching.

IMPORTANT BUSINESS CONSIDERATIONS TO MAXIMIZE PRODUCT-MARKET FIT

First of all, you need to calculate your total addressable market size, to make sure you have a realistic chance of materially scaling your revenues.  Second, you need to make sure you have a product that can withstand the onslaught of competition that will follow you into this market, if you are successful.  That typically means having some clear competitive moat or customers who are not sensitive to price.  For example, products related to “wisdom” typically come at premium and defensible pricing to “widgets”.  And, third, think through your lifetime value of your revenue stream.  You want products that are consumed frequently, to drive high repeat purchases, and solve major pain points for your customers.  As I have said many times in the past, you need to be building “painkillers” for your customers, not “vitamins” to have any chance of materially scaling your business.

HOW TO MEASURE PRODUCT-MARKET FIT?

You can’t manage what you can’t measure, and the same holds true for your product-market fit.  So, you need to figure out what key data points will help you track your success here.  Some of those data points are pre-transaction, like sales cycle, unit-level economics and conversion rates.  And, some of those data points are post-transaction, like repeat buyer percentage, lost customer churn rates and average daily usage of your product by your customers (e.g., how sticky and engaging is the product).  So, figure out what makes your business tick, in terms of product-market fit, and track and manage against those data points.

David Skok, the venture capitalist at Matrix Partners, wrote a terrific blog post on this product-market fit topic.  It included a great list of the key questions you need to be asking yourself along each step of the product-market fit process.  And, it included a great calculator template to see how you can score your product-market fit.  Create a similar calculator for your own business, and you will quickly learn if you are heading in the right direction or need to retreat into a new direction.

RINSE AND REPEAT THE PROCESS

Just because you found the holy grail of product-market fit, doesn’t mean you will keep it.  You need to constantly be re-learning the market conditions and talking to your customers to learn how their needs may be changing over time.  Constantly stay “paranoid” of losing your customers, to keep your competitive edge at all times.

CLOSING THOUGHTS

As you can see, determining and optimizing for product-market fit is a really big deal.  It can be the difference between a huge win for you and your investors, or a complete loss of invested capital, even with a really great product.  If customers are not lining up to buy your product, or your product isn’t sticky enough to retain them, or your product creates unnecessary strains for you or your customers while fulfilling your services, it is time to go back to the drawing board, and start rethinking your product strategy.


For future posts, please follow me on Twitter at: @georgedeeb.


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