“As soon as we demonstrate product-market fit for a new market, we want the sales force to go out and find as many additional customers in that market as possible.” – Marty Cagan, Silicon Valley Product Group Founder
At the onset when my ex-co-founder and I began work on Highlights, the idea was to create an analytics product to help SaaS businesses internationalize their products.
Because domestic markets tend to be much smaller for European businesses, we started doing customer discovery in Europe. After a few dozen interviews, a pattern began to emerge.
The businesses that had managed to capture new markets the fastest had… well… just done it. They had simply identified opportunities—sometimes based on signals, sometimes based on analysis—and started selling or advertising their current product in those markets.
Although this insight limited the value of the solution we were hoping to build, it came with a good lesson on market expansion.
At this stage, your team should be able to sell or advertise in at least one segment. This gives you metrics to benchmark your market expansion against.
Map your sales or conversion funnel and get clear benchmarks.
Rules of Thumb for New Market Segments
If you’re acquiring customers through ads, start targeting the new market segments with the exact same ads and messaging. How does performance compare with your benchmarks? Is it 20% off? 50% off? What happens when users sign up?
- If they’re engaging with the product, but your funnel underperforms, the problem is your messaging.
- If the funnel performs well, but users don’t engage with your product, then adapt your onboarding.
- If both your funnel and your onboarding are performing but users don’t engage, the product might need more adaptation. Tread carefully, as this can lead to a feature loop, where features lead to the addition of more features.
Although you can also learn how to adjust your funnel or messaging by prompting users with timely In-App messages, sales might be a more effective way to learn.
You can start selling your product in a new segment, or get your sales team to start selling it. By starting with your original pitch, they’ll quickly learn about gaps, objections, value propositions that resonate, and the particularities of the new segment.
Don’t change your product—or the way you explain your product—until you’re sure that features are missing.
If you plan to change your product to meet the needs of a certain segment, first you have to make sure that it’s the best segment to expand in.
This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.