Written by our Master Pieter Jan Doets
Many of the new scale-up candidates that we have the pleasure helping at Masters of Scale are (digital) technology products companies. Often the request we receive is to assist in organizing the ‘Go-2-Market’ or ‘branding’ and facilitating the next funding round with favorable conditions. Although every case has its own unique characteristics, these areas are where many scale-ups experience risks in realizing a radical breakthrough after many years of investing in a sensational product and selling to the first enthusiastic buyers.
Most entrepreneurs act as if they mainly face a technology risk and so they start building and financing their product, after which the challenge arises ‘how to sell this new brilliant solution’. Indeed, the reality is that over 90% of businesses fail because they couldn’t get anyone to buy it, not because they couldn’t build it. These and many other major hurdles in preparing the scale up for a breakthrough comes back to one central theme: ‘Customer Insight’.
Understanding the market opportunity
Several markets could be addressed with a single innovation with different technological options. For example, wearable communications systems can serve both young and elderly people, as well as healthcare and consumer goods markets. Particularly in the early status of a company a relatively ‘generic’ product will be sold to a broad variation of customers. As soon as the product-category matures and competition gets more intense, ‘generic’ players will lack the level of competitive advantage necessary to dominate and perhaps to survive.
With a clear picture of the ideal client profile and the customer problem, it is much easier to understand the total addressable market, potential competitors and the business case to set up a prosperous company.
Tuning the Go-2-Market machine
Particularly scale-ups with a focus on large enterprises will be faced with strong procurement teams and sophisticated asks. Enterprise buyers need their partners to understand their needs and articulate how they could add value. With easy availability of information online, the buyer’s journey has changed. Providing general product collaterals and information does not cut it.
In individual selling situations adopting to buyer needs may well lead to a series of successful deals. However, meeting the needs of a growing number of different clients will most certainly lead to a not differentiated generic product (adding new functionality for individual buyers) and additionally a huge service-workload.
A deep and nuanced understanding of customer needs, therefore, is critical to truly deliver a differentiated promise and experience via an effective Go-2-Market machine to your focus market. This requires not only understanding the company requirements but also the personal motivations and barriers in the client team – buyers, influencers, users, champions.
Level of effectiveness prior to ‘scaling up’
Your organization, your earnings and business model are scalable if you can deliver your solution and your value proposition quickly and flexibly to as many paying customers as possible.
Prior to that, the scale-up in the making should reach a level of effectiveness in the four areas of Customer Problem, Customer Value, Go-2-Market and Business model. At the heart of reaching the required effectiveness, lies ‘Customer Insight’:
Looking deeply at what your customer is trying to accomplish—or the purpose for which they purchase a product—can yield surprising results. Market insights come from actually interacting with customers and deeply understanding the problems they are trying to solve. However, it is usually not something that customers will just up and tell you; it comes from deep observation of customer pain.
‘Deep’ customer insight should really be interpreted as deep. To find an ‘underserved’ need within a mature product category like ‘CRM software’ for example is very difficult. Drilling down for example into ‘usage situations’, might bring several underserved needs onto your radar as a starting point for competitive advantage from four different pain point perspectives:
- Financial pain points
- Process pain points
- Productivity pain points
- Supports & customer experience pain points
To set the stage for finding and implementing the right Customer Insight for your company, it is useful to think about your venture as an experiment and think about your efforts in the light of a creative but unemotional scientist trying to test whether your assumptions are right or wrong.
Your motto might well be: “Winners are motivated more by meeting a need than a target”.
Click here for a useful tool for Customer Insights called The Big Idea Canvas.
Want to know more on this topic? Send us an email at hello@mastersofscale.nl.