When you read about a successful company, the story of how they got from A to Z has a way of sounding straightforward:

After building a fan base in San Francisco, they expanded into Los Angeles, Austin, Seattle, New York and Boston…

As their file storage business took off, they introduced collaboration and chat tools that cemented their success…

We love stories of how startups got from zero to one in part because we know how hard it is. We’re so aware of the myriad difficulties involved in getting initial traction, that it sometimes leads us to gloss over the challenges associated with building on it.

The truth is that taking what works in one market and successfully porting it into another market is usually much harder than you’d expect. Whether you’re taking your product into a new geography or a new vertical (don’t even get me started on “going down-market”), chances are you need to be prepared for a fight. It may not be as hard from starting the business from scratch was, but it can be close – especially if you’re not ready.

Why New Market Entry Gets Bogged Down

Uncovering a new market is exciting. That moment of clarity when the voice in your head shouts, “All these guys need my product too!” is like a dopamine rush for most product people. Hey, if it works for segment A, it’ll work for similar segments B, C, and D, right?

Even if you’re right and your product could be a good fit for the new set of potential customers you’ve identified, you’re likely to run into some or all of these challenges:

  1. Your “quals” aren’t relevant – You can have great reasons why retailers will love a product that’s been a hit in the hotel sector. But where you see similarities, the buyers only see differences. Getting that beachhead customer is tough.
  2. Your marketing is be off-key – The language in your collateral, on your website, and coming out of salespeoples’ mouths isn’t calibrated to their needs yet. When you’re not speaking the customers’ language, they’re less likely to engage. You need to understand your new personas and execute accordingly.
  3. There are new competitors – You just started thinking about this market, but others have been obsessing over it for years. They’ve hired people who used to work in the industry. They’ve been talking and selling to them for years. They’ll try to outflank you, tell customers and prospects why you can’t execute, and generally prevent you from threatening their business however they can – just like you would to them.
  4. There are always unforeseen wrinkles – Whether it’s a regulatory concern, data quality issue, customer support cost or some other fly in the ointment, different industries are just different. It’ll probably take you time to untangle and surmount those.

Sending in the salespeople without preparing for any of these challenges is like invading Russia in winter. Progress is slow, avoidable costs are incurred, and morale for those involved can take a beating. Start adding new features hastily, and you risk doubling down on failure.

Product Managers Are the Advance Team for Market Expansion

As with any expansion, the critical work happens before the battle. If you think your product has legs in another industry, that’s a very testable idea. Talk to potential users and buyers in that market first and foremost to understand how they do their jobs. Look for the objections they’ll raise, and figure out what you’ll do about them.

Here are a few questions you might want to answer during the course of your market interviews:

  • Is the problem we solve as big a deal to these customers?
  • Does the target buyer have the budget size we expect?
  • Will the data we need from them be available like we’re used to?
  • Do target users have the skill profiles we expect?
  • Will customers in this market need more or less support than we’re used to offering?
  • How price sensitive are these buyers?
  • What other priorities are more important for them?
  • Are there new platforms that we’ll need to integrate with to be competitive?
  • Will it be easier harder to prove the ROI to them?

You should come out of these market interviews with hypotheses based on what you learn. A hypothesis might be, “We can win business without cutting price if we offer premium training upfront.” Whatever they are, the key thing is that you test your hypotheses as time goes on if you try to enter the market.

If you’re not winning business but the hypotheses still seem to hold, you may have a sales execution problem or you may just need to give it more time. On the other hand, if you find that your hypotheses aren’t holding, you may have a deeper product-market fit problem that tells you to pull back before wasting more resources.

Market expansion is rarely easy, but if the product team does the advance work, you’ll have a basis for making decisions that can and not get bogged down if things don’t work out.


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