Before You Attack a New Market
As you expand your business beyond your initial territory, anticipate an expensive launch.
I believe that sales in always best when done locally, but not for the reasons you might expect. I am forever hearing customers and salesmen explain that “this market is completely different within our market”; however, I usually discover that the real differences are minor and few. Yet, knowing these subtle differences is almost as important as knowing the industry/technology in general and therefore local sales is a necessity. Why? My theory is that people like to know that others cannot do their job better than they do it. There is comfort in knowing that only “special” people can work in this market. If they could use outside products/services, then they might also be replaceable. They form a ‘club’ of insiders and create special terminology that exclude others. (any organization that loves acronyms and otherwise naming things is likely this type) By understanding and highlighting these “special” features of their industry/market, you demonstrate that you are an insider that understands and respects their daily struggle.
Whenever I expand markets with an existing product(or service offering), I often think about the Silicon Valley cliche that “every problem is an opportunity”‘. The problem is that you are walking into this new market without any credentials and that everyone will view your first approach with suspicion. Until you can get a few reference customers, it is going to be an expensive, slow battle. You will need to exhibit at lots of events, employ lots of lead creation techniques (like cold calling) and be very patient. Most recognize, but underestimate, this problem and nearly all miss the opportunity of a new market entry. So there is a problem with entering a new market, but is there an opportunity associated with being “undereducated and unknown”? Answer– yes, you are a threat to no one.
Before you announce your intention to invest in the market, you can credibly say that you are “investigating” the opportunity in this new market. The difference is huge. Contact a potential customer and explain “we do XYZ in region ABC and now offer this to your market”– watch the defensive response and suspicion in your potential customer. Instead explain “we do XYZ in region ABC and we are considering making an investment into this market. Could I ask you a few questions?” At this point, you have told him that you are not selling, that what you make is not even available on his market– therefore he does not need to have his usual salesman antibodies. He is also likely to be flattered that you are seeking his advice as an expert and will often try to reinforce your perception by demonstrating his expertise with advice. He also inherently wants anything that he can’t have and curiosity will drive him deeper into the conversation. What you want to know is who are the competitors, amongst the buyers who does what, what are titles of people who would buy, etc.
Done correctly, you can summarize the last investigative meeting to the next person and get them to confirm or refute the first customer’s opinion. You can also explain a bit about the decision process in your market and ask them to tell you what is different. All the while, they will then want to add information that you don’t already know to confirm their ‘expert status’ that you have given them. You can even learn about how they might justify such a product, what would be the internal politics, etc. Customers often want to know how their competitors solve similar problems or want to know if other companies have the same difficulty. Simply telling them what is normal difficult and what is abnormal difficulty has great value to them. ‘Differential questioning’ is often faster, identifies political as well as technical problems, and establishes that you do some something but are not arrogant.
It is my experience, that such an approach can reveal fantastic information after just a few customer conversations. Often, I find that we learn enough that we start to question some of our assumptions within or legacy, core market. Most importantly, however, is that you will soon be recognized as an insider even though your product has never been proven on the local market.
There are a few important things to remember when doing the “market research” exercise:
- You must keep your promise to never sell. Done correctly, they will beg you to call them when you decide to sell in their market.
- You must look for problems that the customer faces and avoid thinking about how your product could solve them– this is for a later step.
- You must give the customer some education in return for his information: often they want to know about your product and price, about other similar companies, etc. Gifts and money are not usually good substitutes.
- Value their time and ideas. Keep the questions short so you can call them back later and ask more questions.
- The first few interviews will be very awkward because you know so little. Events and Fairs are great places to meet large numbers of such people, quickly. The customer’s salesmen are often the most open and can give you good insight into internal politics of such companies and general business challenges.
Ultimately, however, this information needs to be converted into your product, your promotional material, and your sales force. One of the great questions you can ask during the exercise is “who do you buy from” and “could you think of a partner that we should be talking with”