How to Validate Your B2B Go-to-Market Plan

What are we selling? This is where we determine the specifics of our offering, not just in terms of product features and functionality, but also in terms of uses, pricing, messaging and offers. Following the minimum viable product (MVP) strategy, we create as little of the product as necessary to prove its economic viability. In fact, there are ways to do this without actually building the product, which I will explain in a future article.

Who are we selling it to? At this stage, we do persona mapping — determining the demographics and psychographics (personal and business) of who we think will purchase our product or service. Remember that who you think will purchase and who actually purchases may be quite different, so it is important to test this in the early stages of the launch.

Go-to-Market-plan
Why do our prospects need this? Given all the ways our prospects can spend their money (or not spend it), why is our offering something that will grab their mind share and wallet share? What are the compelling factors that will make them overcome inertia and hit the “buy now” button or engage with a sales representative?

Where can we reach them? This is where you determine where your prospects hang out, what they read and who they listen to, and also where you discover which media are the best at reaching people who may not currently know who you are or why they may need you.

How do we go to market?  I’ve written a lot about marketing and sales models, including this recent post where I discussed sales models as a core component of marketing and sales alignment. There are four major types of B2B models, including direct, telesales, channel and online, with dozens of hybrids and variations. There are ways to test these models at very low cost, with the goal of achieving a consistent and repeatable go-to-market model as you scale the business.

When should we launch?  Okay, to confess, the “when” isn’t as important as who, what, when, where, why and how, but I needed it to complete the set. Actually, “when” can be important when you consider the impact of seasonal purchasing and competitive product launches. Enough said about this.

Marketing research does have its place in your go-to-market plan validation, but usually as a form of pre-testing. Conducting research online or at the library — or asking someone whether they would buy a product at a focus group – is not the same as proving whether there is a market for your product. Better to spend some time and a few dollars on the type of testing that really counts – whether your prospects will actually purchase of what you are selling.  That’s the type of testing that gets me excited!

Reprinted with permission from Great B2B Marketing. To view the original post, click here.

Three Ways to Disrupt Your Business Model

Technology is no longer the key disruptor:
Your Business Model is—So it “better be good”

David Skok is one of my favorite business writers because he tends to change the way I think about my business. He helps bring new ideas to entrepreneurs like me, who barely have time to do our jobs — let alone keep up with the latest in business model innovation. I know when I visit a Skok blog or SlideShare, I’m not wasting my time.

Take this recent statement from David in a SlideShare titled, “Business Model Innovation: The New Trigger for Great Start Ups”: “Unlike in the past where technology innovation was the primary driver of startup innovation,  in the last ten years it has frequently been innovation in new business models that has caused the disruption to create the opening for new companies.”

The 79+ page Slide Share brought me to some great conclusions about where my company might be headed. David uses awesome examples to show how the “business model as innovator” concept works in practice. Here are some of the most valuable insights:

1. Watch your CAC (cost to acquire a customer) – According to Skok, start-ups using the new model—spending money to get customers to your website and then monetizing the site with offers, etc—doesn’t take into account how much money it will cost to acquire not only a visitor– but a real customer. By monetizing a portion of the customer base and using free software to acquire customers cheaply, startups can keep their CAC more manageable—and make more money.

I learned this lesson the hard way. I loved attending the big, fancy conferences when I first started my company. I thought I would network with the big money clients—then, once they met me, of course they would hire me—voila! That $2,500 conference fee paid for itself.

When I finally broke down the average number of clients I obtained from attending twice a year, every year for three years, I came up with five clients that yielded about the same amount of money as I spent on the conferences. I deicided to cut down attendance to once every two years and spend my new business money on people who were already in my network.

I still go because I love to learn about my discipline. I just don’t spend as much in acquiring customers there. And even though $5,000 a year doesn’t seem like a lot to you, it was a lot of money to me back then. Today, I’d rather spend it on something that yields client contracts on a regular basis.

 2. Keep Track of Buying Behavior – Skok says that outbound marketing annoys your customers and is increasingly not working. Today, buyers use Google search, reviews, free trials, blogs and other content sources to learn about the offerings they need. The key point Skok makes resonates with start-ups in particular—you need “inbound marketing thought processes.”

 I see so much content “thrown at the wall until something sticks” by start-up companies. They “know” they need to be certain places online but they don’t pay thoughtful attention to what they want out there; who needs to be saying it (I love customer testimonials as a buyer and as a business); and where they need to be (to build a social following) basically, how to “educate and entertain.”  Spend a lot of time on this part. It’s worth it.

 3. Be a “New World” Business – The older business model had us charging for everything, even demos. Demos and trials are still widely used. But to move into the “new world” of innovative business models, you have to figure out how to simply give it away. For free. And only monetize a fraction of your customer base to make money.

Granted, your customer base has to be pretty big for most of us to afford the mortgage, the car, and our kids’ tuition with this model. But if you are watching your CAC carefully; writing and posting targeted content in accordance with how your buyers really behave (and not how you wish they would); and figuring out how to give it away while monetizing enough to feed your family and please your investors—Skok says you can get there.

Use the Center for Business Modeling SWOT tool to figure out your strengths, weaknesses, opportunities and threats in these three areas. And then get to work disrupting your market.

How to Find Your Total Addressable Market

Businesses love talking about total addressable market because it’s exciting for them to see the available opportunity for their product or service. So exciting, in fact, that they often clammer to craft specific campaigns or shift messaging around new potential markets. However, if this is done hastily or without thorough research, it can turn into a waste of time and resources.

Determine Your Ideal Customer Profile

To find your total addressable market, you first need to determine your ideal customer profile, then find look-a-likes that accurately fit the mold.

Determining which data are relevant to your total addressable market is a challenge. With so much data available on both current and prospective customers, it’s hard to distinguish the signal from the noise.

The traditional way of figuring out significant information was to look at the accessible firmographic data. Firmographic data includes basic information such as industry, location, size, and revenue. While this is useful to include in your analysis, this type of data is only the tip of the iceberg. Additional business signals that are harder to obtain, such as web savvy or social presence, may actually be better predictors of success.

Let’s pretend for a moment that you are a point of sale (POS) system looking to sell your product. Perhaps you target restaurants, because they fit your ideal customer profile. You may have performed well with them in the past, so you continue searching for other look-a-likes in the same industry. But what happens when you throw a new industry in for comparison?

addressable market

On the surface, with solely the firmographic data taken into account, the mechanic appears to have a lower success rate than the restaurants. This is where most marketers end their targeting exercise and launch campaigns targeted solely at restaurants. But look at how the success rates change when you add additional business signals:

addressable market

With the additional signals taken into account, the business in a new and unexpected industry has a significantly higher likelihood of success than a formerly considered look-a-like.

This example reveals that before you deeming a category unfit, make sure you are looking at the best possible predictors of success. This advanced segmentation uncovered a more effective go to market strategy than the original idea to sell to restaurants.

In this case, social media presence was more indicative of success than industry. 

The restaurant segment performed well because restaurants are more likely to be socially savvy than other small business industries. This new perspective with additional business signals revealed almost as high of a success with mechanics that were on Facebook as with restaurants on Facebook.

Discover the Size of the Market Opportunity

Once an ideal customer profile is solidified, the next step is to figure out how large the market opportunity is that fits the description.

Understanding your total addressable market will help you answer 4 key questions:

  • How long will my sales pipeline remain satisfied?
  • What is the real size of the market?
  • How many prospects can I expect?
  • What is the potential revenue for a particular quarter or year?

You can think of your total addressable market as the sum of your ideal buyer profile look-a-likes.

Let’s look at two scenarios to help understand how valuable it is to understand total addressable market for a product or service.

In this first scenario below, you have a segment that has a very high success rate compared to your typical conversion rate. Here is a highly targeted segment with an impressive success rate of 85.7%:
addressable marketsegmentation

It is clear that this segment will perform well. However, the addressable market opportunity – as shown in the number of new and open records – is small. This segment should still be used, but it will soon need expansion to provide a full sales pipeline and fuel sufficient business growth.

Below is another scenario for comparison with one signal removed to widen the net of potential businesses.

segmentationsegmentation

In the second scenario, you have a segment that converts at a lower success rate, but with a much larger market opportunity available to target – as shown in the number of new and open records. Even though the success rate is lower in this scenario, it still has a high success rate at 67.7% – and is well worth targeting. The sheer volume of the potential in the new and open records make up for the slightly lower success rate.

The results from the second scenario are more helpful in determining the size and scope of the total addressable market because it is scalable. Continue this analysis process with additional high performing segments that have ample market opportunity to effectively visualize your total addressable market.

Conclusion

Estimating the size of your market used to be a struggle that involved informed guesswork and complex calculations. Now, there are tools available to businesses that automate the total addressable market discovery and execution process. Taking advantage of these tools gives marketing and sales teams confidence that they are focusing on the right market segments and opportunities. Marketing organizations in particular need to be more strategic in their analysis because their efforts span a large scale that requires significant resources. Gaining a realistic understanding of your ideal customer profile and your total addressable market will help your entire organization become more targeted and effective.

The images in this post are of the Radius product. If you would like to learn more about Radius, click here.

To view the original post, click here.