Market Entry Strategies: Building a Strategic Growth Matrix
Here at COACT, we are often deployed as part of a new product/service launch strategy.
In my experience, there are four types of market entry environments (illustrated below):
Existing Product/Service into an Existing Market
The best approach within this market is to tell the stories of your success with current customers. The basic framework of your messaging should be: “Been there, done that, and we’re really freakin’ good at it.” Depending on the switching costs your market faces, you should get a crack at this market if the timing is right.
One of the challenges in this strategy is developing the target list, though the research is relatively front-loaded. It helps if you’ve already built out the logic of your account filters such as SIC code, revenue levels, geography, employee number, etc.
Once the account list is built, you should begin to look at your buyer persona(s) and determine how they like to learn about vendors.
COACT believes in a mixed approach regardless of the market because each buying influence is different, and one approach by itself doesn’t work, but that doesn’t mean you shouldn’t prioritize the content/contact strategy that best suits your buyers.
The best part of this quadrant is the low cost of entry; you’re already there! Growing market share should always be a piece of any business growth strategy since understanding your total available market is important to determine what’s realistic.
Quick tips here:
- Leverage your customers: Case studies, testimonials, etc. Third-party selling adds a lot of credibility here.
- Tell stories of success. The goal is to reduce your targets’ apprehension of change, reduce any fears of the risk of changing to you, and build the confidence that you can do it.
- Don’t push this market; teach it. The Challenger Sale is a great recommended reading for depth on this subject.
Existing Product/Service, New Market
The best part about this strategy is the ease for the operations team! The internal systems and processes are well-defined. The challenge is teaching this market how to use your product or service.
This might be a new application for them, or a change that they hadn’t considered. The speed to money in this quadrant is a little longer term, but the good news is that you have a history of serving customers well with the existing product/service, so there should be fewer changes or adjustments to your work as you enter into this market.
This particular approach in this market is still focused on leveraging your success, but the emphasis should quickly shift from the story of success to the logic of the product/service bringing value to their business.
It is important that the buyer in this new market knows you’ve done your research and understand their business.
Even if you have limited exposure in this market now, you need to show you aren’t out of your depth. This type of approach typically takes 2-3 times as many conversations to get to into the pipeline, but can reap great benefits as the market starts to see the value you can bring to them.
Your margins should be good since your upfront investment(s) is mostly in sales and marketing efforts to expand the value propositions and relationships.
The cost of entry shouldn’t be too bad here, either. Although some businesses choose to lower their margins to get into the market, long-term growth here typically is best served by avoiding this common trap.
Buying business will get you bad clients. Instead, find clients that see the value in what you offer and keep them. This will save you churn in the future and stabilize your long-term growth.
- Tell your success stories, but pivot quicker to value proposition-based discussions. Past success is useful, but painting a future of success for your prospects is how you’ll get the new market buyer into the pipeline.
- Study the market. Your biggest objection will be that you haven’t earned credibility in this market yet. In order to get a buyer to be interested in what you’re offering, there needs to be a high level of trust involved.
- Use more open-ended, conversation-based questions. The first few conversations in new markets are all about learning and helping the prospect visual where you might fit. (Learn more about this topic here.)
- Patience and persistence will pay long-term dividends. There will be a lot fewer first-call closes in a new market than in the existing service/product, existing market growth quadrant.
New Product or Service, Existing Market
/This quadrant can be really fun! Hopefully, you’ve built a brand that the market trusts and you’ve developed some deep relationships that you can leverage to help build the product or service.
If your product or service is able to have a “first mover” advantage here, most of your existing market will want to help you. Even if they can’t buy today, this can help speed the R&D process.
If the product or service is entering as a substitution for something the market is doing today, you are working to manage the timing of the buying cycle, so your focus should be on awareness of the offering.
Expectantly, you’ve done your due diligence in product/service creation, and if the value is apparent and if your brand is trusted, you’ll get a shot if you communicate it with your targets.
The biggest mistake I often see with this quadrant is a mentality of: “Oh, they know us; they’ll buy when they’re ready.” When companies have this kind of mentality, the sales team ignores the conversation until it’s too late and they learn they’ve lost the business. Polite persistence is the key here.
What I like to do with this strategy is find a subset of current customers to have many conversations with about developing the product or service more fully so they feel a part of the process while simultaneously working to take what I’ve learned in these conversations back into the rest of the target market.
One of the best things the market can see is a nimble organization really working on continuous improvement to their product line. Again, the challenge here is being an overconfident seller. A shiny new toy to sell is great, but the existing market still needs to see the value to buy.
An additional risk to remember here is that some of your targets may not want to consolidate too much business with one vendor. Despite how great you’ve been for them, too large a portion of business with one vendor is a risk that companies always consider.
The speed to money in this market is less standardized across the targets. Some might jump at the chance to buy due to their experience or perception of your company, but others will be more cautious.
This quadrant requires an extremely personalized buyers’ journey. Really listen to the buyers and tailor the process, but don’t be afraid to have discussions; again, overconfidence will kill the sale.
- Lean on personal relationships to help learn more about the processes and workflows you’re trying to sell into.
- Dual approach: lean on current customers to learn and see if there’s potential to cross-sell.
- Avoid overconfidence; take a learning approach. Don’t be afraid to go back to customers/prospects you’ve talked to as you learn from other outlets to take the conversation deeper.
Watch this video to learn more:
New Product, New Market
This quadrant takes a great deal of foresight and strong leadership to find the value. The investment is great both from a monetary perspective and from an effort standpoint. The common pitfalls in this quadrant are a lack of patience or succumbing to feelings of being overwhelmed.
An important piece of the go-to-market strategy for the new product/new market quadrant is pre-planning your schedule. You have to build time into your sales team’s week if you’re the sales leader. If you’re a salesperson, avoid the belief that it’s a low priority to target these prospects.
If you’re like a lot of salespeople I know, the last thing you want to do is make a “cold call” and will find anything else you can do to convince yourself you don’t have time to do this work. But don’t fall prey to this common behavior. Break out your call plans and make outreach efforts; they’ll pay off in the long run.
The other area where this growth strategy can fail is a wavering confidence in the logic of the product/service in the market – or put another way, giving up too soon.
Buyers are smart, but cautious; if you’ve done your work to develop a good product that is priced well and adds value to the market, your prospects will come around once they trust you.
It’s worth noting that the market may not think that this new product or service is the highest priority change at the moment. After all, the modern-day buyer is faced with hundreds of options, but limited resources both financial and otherwise to be able to accomplish all the initiatives they want.
Helping prioritize and being considerate of your market is key, but don’t take “no” sitting down. This quadrant is one where you need to be willing to be more aggressive in your messaging and countering objectives.
Again, The Challenger Sale is recommended reading here. We aren’t looking to only Teach and Tailor our message. The third portion is the biggest game changer if this is to pay dividends down the road. So, Take Control of the conversation.
- Make the time for this quadrant once you start. It’s going to be long-term, but it’s key to scaling the business in the long-term.
- This even more than the other three quadrants needs to be a collaborative approach between all members of your sales and marketing teams. You’ll need to go back to the drawing board multiple times, and there will be a lot of stops/starts. Nevertheless, building in collaborative sessions will allow the learning to happen faster. The faster everyone knows something in this quadrant, the faster improvements can be made.
- Don’t give up. This quadrant takes 5+ times as many conversations and has an exponentially long-time horizon to impact business growth, but once you get to the hockey stick growth pattern, it’s fun.
- Take control of the conversation. Follow the sales professional archetype outlined in The Challenger Sale. Be a Challenger, not a Lone Wolf, a Problem Solver, a Hard Worker, or a Relationship Builder. Challengers take control of the conversation and have the most success per proven research.
In closing, I hope this matrix helped you think through your business growth strategies.
We love this stuff at COACT and would love to discuss more deeply if you have questions or thoughts on business growth!
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