Market Maturity Rules of Thumb to Live By
"Why can't we sell faster? Why aren't they buying more? Our product is fantastic, but they don't seem interested!" yells the CEO to their leadership team.
This is a critical moment in every company's growth. A crossroads dare I say. Many out there have worked at a startup or a new division of a large company tasked with building a new market for a new product. As with all things new and innovative, things tend to go in fits and starts as the team works to balance getting the product out the door with getting customers to buy it. Sometimes...it goes like gangbusters, other times not so much.
When things are not so good, someone in a leadership position whose butt is on the line will shriek that statement above. Everyone knows it's coming when things aren't going well, but often times we try to put a positive spin or better yet they put the lipstick on the proverbial pig to avoid the failure.
Unfortunately, on many occasions I believe people often ask the wrong question. They either think they have a talent problem, a strategy problem or even a product problem (which can be the case), but they don't think that have a market maturity problem. You know the funny thing about innovation, most times the visionary who has the idea is far ahead of others who have to buy it. Sure, there are many instances of people leveraging the right consumer insight like a prescient seer will become a bazillionaire overnight. For everyone one of these products there are thousands more failures. And the question of market maturation is often no where to be found.
Why is market maturation overlooked?
This is a good question. It seems that trying to delve into an issue like this is quite hard because putting your finger on how mature a market is can be elusive. What factors matter? How do I tell if it is actually the consumer/customer that is holding me back? Or perhaps, it is easier to blame the strategy because we created it. There are so many reasons a market's maturity isn't always considered as the main culprit. Honestly, I don't know why we have the habit of blaming ourselves all the time...sometimes the consumers/customers we trust to help build our business just aren't there yet.
What are the market maturation rules of thumb?
After many years in the "business market laboratory" there are three things to look for when gauging a market's preparedness to accept the fruits of all your hard work launching that product.
Question #1: Can the customer even understand/articulate the product/technology you are selling to them?
When you are having trouble getting traction have you ever stopped and asked your potential customers do they even get it? I would argue most people don't ask this question. Honestly, we think our ideas and products are great, and maybe the customer would too if they understood what the hell you are selling to them. Too often we get stuck in creating great marketing fluff that sounds great, but most people are too shy to tell you they don't get it. If you can have the patience to recognize they don't get it, you will take the time to create a pitch that helps them better understand. Frankly, if you can get your potential customers to tell you they need help understanding then you are half way home on this one. And more importantly, it shows you are listening to them, which guess what; they love. Let's simplify it even further and make it personal. Have you ever been in a meeting where people are speaking in TLAs throughout the meeting? And yes I am talking about three letter acronyms. Most people just sit there in their chair getting lost and are too embarrassed to speak up and ask what they hell people are talking about. This is what you are doing to customers in an immature market if you are struggling to get traction.
Question #2: Can the customer tell you how they would apply your technology to their business process, lives or way of doing things?
This seems pretty obvious but honestly it isn't. All customers are looking to your technology to solve what I like to call the business big three; drive sales, cut cost or reduce risk. As you sit there pitching to them, they are trying to build a bridge between your technology and their successful delivery of said big three. And honestly, all customers buy a tool to build or improve a process that their corporate culture will adopt as how they will do things going forward. Why is all this important? Because frankly, there is ton going on in their head when you are trying to convince them to buy from you. But in the end, if you want to understand the market maturity for your offering, they have to be able to help you walk across the bridge by acknowledging how what you are selling will help them do their job. This means they can articulate a business challenge they face that they believe you will help them with. And the more customers who can articulate a similar value between your technology and their business, the more mature the market is getting. Oh, make no mistake, you will need innovation partners at first, but as you continue to try to figure out the market's sweet spot, when you hear multiple people in a single industry say the same thing then you know you are onto something.
Question #3: Is there someone who's job it is to use your technology, product, or offering?
This is probably the most overlooked factor in all companies misinterpretation of market maturity. If a company does't have a resource who can dedicate time to bringing your technology to life then this is a sure sign that your market isn't ready for your technology. This can mean two different things. The first is as it sounds; is there a resource who can take the technology and use it. Sometimes, a company wants to work with you, they know where they want to put it, but if there is no one dedicated specifically to bring it to life then it isn't important enough to think about. The second case is similar but more subtle. The company you are selling to might have someone who is your target user, but their job doesn't give them enough time/space to spend time on what you want them to buy. What this looks like is a company buys your product and then it languishes because the operator who was asked to work on your offering doesn't make time. This means they don't see the importance of putting effort against it versus other parts of their job they know they will be rewarded for bringing to life. Your technology is merely an experiment and one that will fail unless something changes. If there is no one to run it or care enough to do so then you might be dealing with an immature market for your technology.
How do I apply this?
Let's be clear about one thing. A maturing market will have all three of these. And if you have two out of three or one out of three, it doesn't mean quit. It means it's time to get real. It means you need to take a step back an analyze the market as a whole. You created the product/service/technology because you believed there is a market for it. You just need to think that maybe you are ahead of the market. The reason it is critical to slow down when you reach this point is many companies get what I call point solution fantasia. Point solution fantasia is when a company's go to market product doesn't grow according to plan they quickly change direction and build something new hoping they will hit the grand slam home run next time. These market maturity rules are meant to avoid this problem by helping you see you might actually be on track, but hunting in the wrong vertical, building the wrong value bridge in your pitch or even perhaps not applying the product to businesses who need it but you aren't talking to. These rules are there to help you go at a pace that is in line with the adoption you are desperately seeking. Maybe you don't need to scale yet. Maybe you need think about who you hire a little more carefully. Maybe it isn't time to go out of stealth mode. Or perhaps the vertical you have serious traction in is mature, but the one you are about to attack isn't at all. It really doesn't matter. Finding simple ways to think about how you balance attacking the market with the care of getting your timing right is the secret to managing your resources effectively, minimizing unforced errors and building a successful company with a healthy culture filled with people who can take you to the promised land.