When zooming in on start-up challenges we will take time to explain the market need. Many ISVs are asking us how we are able to build international business and start with our geo-expansion as we are a small company in the Netherlands. Let us share our best practices with you when it comes to the market need.
You can have great technology, great reputation, great expertise, but if you are missing the right business model and value proposition you will miss the opportunity to scale your solution in the market. The market will simply not be attracted by the solution, understand your value proposition or what problem it actually solves. You can create a business model to engage with an existing market or you can build your own market, either way you will need the input and feedback from your customers to create the correct value proposition and business model.
A quick checklist, if you are missing one of the following checkboxes, please use this article as a beginner’s guide to define your market strategy.
- I have a solution/services offering
- I have a working business model
- I know who I am targeting, I know my customers
- I know my focus industries and market / I know their challenges and the market trends
- I have done a competition analysis
- I created a value proposition
- I have multiple business models to adopt the different markets and industries
- We are ready to accelerate our sales
Why it is important to know your market. A good marketing strategy helps you define your vision, mission and business goals. It will outline the steps you need to take to achieve these goals. It consist of describing the business and its services/products, the position in the market, identifies the customers and competitors, the market tactics and will lead to a marketing plan including the value proposition.
Must do: read Business Model Canvas
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Same customers different contexts
Before jumping into the value proposition we need to identify the needs and expectations from our customers. It is important to realize every customer has different requirements and experiences during different moments. Let me explain by example.
Recently I went to the Zoo, we went with the kids and with friends and a baby. When entering the Zoo we discussed what to do first, the children wanted to play at the playground and the parents suggested to go look some animals first. When waiting in the cue for seeing the panda’s, it began to rain. We decided to go inside a food place, after a 15min discussion we finally agreed everyone’s preference. We went for some pancakes and our friends had their own lunch.
This example is describing the different contexts when going to the Zoo. Besides the moment of visiting a Zoo (during the week, evenings or weekends), there are also a lot of extra expectations from the customers. When building a solution or service you will have to understand the same contexts of your customers. When building your value proposition you need to understand the different contexts and start focusing on those who meet your customer’s needs you would like to address.
Same customers, different solutions
From the other hand we have to understand the different solutions who are targeting the same customers. If we are making a decision we are not only looking at the competitors and similar solutions, we are also exploring the alternatives. Again, let’s explain by an example.
A teenager is going to spend 50 euro’s. She wants to be having a couple of hours of fun by herself and needs to be entertained. Preferable she would like to decide when to be entertained and doesn’t want to spend more money on the same topic the upcoming months. She can buy an adventures book, or she could buy an action game for the console. She could buy a subscription for a video-streaming platform and watch multiple videos or series or she could buy a subscription on a magazine. She could also start following (digital) courses for a hobby.
This example is describing the different solutions what are addressing the same customers. You need to understand what the customers would like to achieve, trying to avoid and what is inspiring them in their lives.
Value proposition
Coming back to the market strategy we now know what type of customers we are addressing. The next step will be understanding the value proposition. To have a working value proposition you need to integrated this with the business model, match with the full customer profile – emotionally and functionally (benefits and pains) and differentiate to outnumber the competition.
The value proposition starts with a list of products/services. This list will complete functional, emotional or social needs. It is essential to acknowledge the relevance to your customers. The second step would be to explain the value to your customers, what pain does it take away. The third step would be to describe the benefits. Think about explaining features and side effects. By creating a map of these three steps and prioritize them in order of importance for your customers, you should be able to identify and create your value proposition.
Business model
A business model combines amongst other things the value proposition and customer profiles. Obviously it contains revenue streams, cost structures, channels and key activities. As I will not zoom in these topics I would like to briefly explain them.
- Revenue streams; what is the price customers are willing to pay to your product/service and what additional revenue streams, i.e. bundles are attractive to increase the revenue
- Cost structures; all costs needed to operate
- Channels; all communication, sales and marketing
- Key activities; all activities to create value
Some key elements when designing the business model. Try to find a model where customer get value for their products/services and do not want not switch companies. There are lock-in options and these will work in the short term, but when focussing on the customer we need to find the balance with the long term and customer satisfaction too. Therefor keep in mind to develop a strategy what matches the goals and you want to company to emit. Also try to find the right balance between earnings and spending. What is the model the revenue is coming in and you need to pay for expenses.
Last would be scalability. When it comes to rapidly growing your business you need to have a scalable business. 3 supporting questions:
- Can I handle an extraordinary amount of orders?
- With my sales?
- With my current infrastructure?
- Support?
- The way we build our products/services?
- Can something or someone else deliver our services/products?
- Is the process repeatable?
If there are no road blockers you can start practising your value proposition through your channels and start accelerating your business.