Written by: Mark Fasken, Director of Business Development – Third Core Venture Expansion Partners
One of the biggest challenges to a startup is taking growth from initial adopters to a scalable model based on tangible business need. Lots of startups are seeing early growth as a result of PR, viral campaigns, general hype and early adopters but experience challenges converting that early hype into sustainable growth.
I recently worked with a company that had a great first year acquiring customers from a range of industries including retail, sports, outsourced business services, finance, and others. The founder and his team were extremely pleased with the early customers but when it came time to drive deeper into certain verticals they found their sales cycles extending, and win rates going down.
Companies suddenly find themselves thrown into conversations including market fit, pivoting, greenfield markets, and all sorts of other business jargon. The question becomes what can a startup do to ensure their product is needed and not just cool. In other words, how does a business identify a market defined need that they can use in their sales process and collateral to exert control over the sales cycle and in turn the growth of their business.
There are two approaches used to determine whether a product addresses a real need in the market:
- Lean Methodology
- The Lean Startup provides a scientific approach to measuring and adjusting products in response to market feedback
- Call the customer approach
- This involves having a conversation with your current customers (or prospects) to determine the business challenges they experience, the impact which those challenges have on the business and how your product addresses those challenges.
Here are a few things you can do to start on the road to scalability:
- Write out the top 3 top industries you think your product could help
- Define the ideal target in those industries
- Size of company
- Target contact
- Need your product addresses (or so you think)
- Call some people in those industries and determine
- Do they have the challenges you think they do.
- Any other challenges were you not aware of.
- What are they willing to pay to fix those challenges? (ie. budget)
- What is their buying process?
- Who makes the decisions. (ie. Authority)
There are a lot of other questions to be answered, but this is at least a start. There are tons of great books and resources out there that provide guidance on identifying product market fit, and then scaling up your sales process. I have included the links to two of my favorites below.
The Lean Startup (http://theleanstartup.com/#principles)
Predictable Revenue (http://predictablerevenue.com/)