Of the four possible ways to grow a company (according to Ansoff’s Matrix), market expansion is more challenging than selling into a well-known customer type (“market penetration”). You won’t find it as easy to leverage your company's established strengths, brand awareness and market knowledge as key advantages.
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B2B SaaS companies move through predictable stages of marketing focus, cost and size (as described in the popular T2D3 book). With people cost being a majority of the cost involved, every hire needs to be well worth the investment!
The best founders, CFOs and COOs in B2B SaaS work at getting the best balance of marketing leadership, strategy and execution to produce the customer and revenue growth they require. Staying flexible and nimble is a key asset in a hard-charging B2B world.
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Brian Graf: Hi there, and welcome to episode 64 of B2B SaaS Marketing Snacks. I'm Brian Graf, I'm the CEO of Kalungi, and I'm here again with Kalungi's co founder, Stijn Hendrikse, who's a serial SaaS marketing executive and ex Microsoft product marketing leader.
Today, we wrap up our series on strategic growth by tackling the last two quadrants of Ansoff Matrix: Product R&D and the pivot. Both of these quadrants are critical to your company's growth, but if they're taken lightly, they can distract from your core strategy and get your company into some dangerous waters for each quadrant. We'll tackle how you should decide to pursue the strategy, how to execute it, and how marketing can best support it to maximize its impact.
Let's get into it. Welcome back to part three of our series on how to grow your B2B SaaS business. We've been talking through for the last two episodes, how to use Ansoff's matrix to map out and prioritize your growth to get alignment from your leadership team on it. So you can move forward in a unified front and really make the most of the resources you have and the time you have available.
So today we're going to talk through the, basically the right half of the quadrant. We've already gone through market penetration and market expansion. And today we're going to talk about product R&D and the, uh, the fabled pivot, which is the top right hand quadrant. So basically how can you Amplify and improve your product or service offering to better service your current customers for R& D and then a new set of customers for a pivot.
So, thank you again for being here with me, Stein. Let's start with the R&D quadrant. This is the bottom right. So you are expanding your product or service offering to fit your needs. your current customer base. Talk me through at a high level what that represents to you and some of the major things that you see when exploring this quadrant with a client.
Stijn Hendrikse: So let's assume you've reached product market fit, which means your product has established a certain level of market adoption and market acceptance and commercial success. But if that market is now getting a bit crowded and your product is maybe not the only one, Then there might be a reason for you to start increasing what your product can do.
So you, you keep your, your, your premium position. You keep differentiating yourself. Or even better, I'll go into that a little more later. You're learning so much from your market that it allows you to make your product better. Based on the customers that you're now servicing that are your real ideal customer profile.
The one thing maybe to add when we're talking about the lower right quadrant of the Ansoff matrix. R&D here doesn't stand only for product development as in coding and software development. It could be developing a new service that doesn't require technical investment, but it's a new way of doing something.
Or it could even be content. But as long as that turns into you being able to provide a new service or a new product to your clients, it fits in that lower right quadrant.
Brian Graf: Yeah, absolutely. I think it doesn't, yeah, definitely doesn't need new code. It could even be repurposing existing code. Just with a new, uh, a new set of business knowledge behind it to add more value for your current customers.
Talk me through some of the first signals that you would look for in a company that would tell you that, hey, maybe this company needs to focus on R&D to improve their growth.
Stijn Hendrikse: Yeah, when your differentiation is starting to be hard, if your category is commoditizing, as in everybody's copying everybody's capabilities, so the solutions that are out there that customers can choose from are not that different anymore.
And if you know there are opportunities for you to differentiate better by doing certain things that customers are maybe asking for that they're not yet getting, that's where this could come from. How do you then use product investments to either keep your differentiated position or maybe disrupt the category in a way that requires you to do something with your technology or with your service offer.
Brian Graf: Yeah. It does kind of seem like R&D occurs in a more mature product. Just because I guess in the more immature products you do the R&D upfront. And then you enter the market. And are able to kind of coast off of it for a while. But some of the things that I've seen, like you said, your product's getting a little bit more commoditized.
The market that you're playing in is getting more crowded. You're no longer the only player. Uh, when you go into sales deals, there are active competitors in the deal with you. Which are forcing you to either discount. In order to win a deal or just making it more difficult for you to win. It could lengthen sales cycles.
It could reduce the ACV that you can command. All those things that would be signs to me that hey My product is not as differentiated as it once was. So I might need to think about how I can make it how I can improve it, to improve my my customer satisfaction and my prospects willingness to buy On that note, actually, if your customer retention is starting to go down, that could be a sign that you need to take a look at your product and make sure that it's really satisfying your customer needs the way that it used to.
So now let's talk about it. You understand that, hey, maybe your company does need to focus on R&D, right? How would you go about, I guess, focusing on R&D? Like what, what. What things would you consider when making that decision? How would you go about implementing it the right way to set yourself up for success?
Stijn Hendrikse: Yeah, if you have an ability to invest in product, to invest in product development, service development, then the one thing you want to be careful of, Of is that you're reacting to internal friction, for example, your sales team telling you, Oh, we don't have this capability and that's why we are losing a deal.
We missed this feature. And while there are reasons for that to be true, it cannot be that the sales team is not able to sell your existing solution. Because they're not selling, and the solution that they see is that they want another thing to sell.
They always talk about when you, let's say you're running a car dealership and you hire salespeople.You don't want your salespeople to constantly tell you, well, I can't sell the cars that we have on the lot. We need to go get a whole bunch of other cars. I want to sell a Ford instead of Chevrolet, and I'm working at the Chevrolet dealer.
Brian Graf: It'd be a whole lot easier to sell a Ferrari.
Stijn Hendrikse: Exactly.
It's a great, great example. So that should not be what leads you to then say, Oh, let's go build these, let's build like a 12, V12 engine. Because that's what my salespeople think they can sell. So as long as you stay away from that, then the first thing you do is listen to your customers, through your sales people, through your customer success team, etc.
For signals that customers that are fitting your ICP, that are in the segment that you like to service, are giving you hints of what is the next capability that would be very valuable for them. Assuming that your product is going to get commoditized over time, your competitors will copy what you do.
You have an unique opportunity to listen to your customers and say, Hey! If you would build this and this and that, or you would change this, if you would add this to the product, we would be getting more value out of your solution. And that then means, of course, that these customers might be able to pay you more, or they will stay with you longer, they will have higher retention rates, etc.
So that, I think, is really the, The reason to invest in the lower right quadrant, I call this like doubling down on your niche on your ICP niche so that you can then actually broaden, widen the differentiation, the modes that you have in the category, the defensible part of the market that you now own. On or we have a premium position that you can constantly make wider that mode because you know, these customers better than anyone else.
Brian Graf: Yeah, couldn't agree more. I think everyone talks about their brand and how important differentiation is. I think R&D is a fantastic kind of. A place to put your money where your mouth is. You should never, as an executive or an owner, you should never really be satisfied with where you are and your ability to service the client.
There's always more that you can do, right? And there's always, you should always be looking forward into how can I solve their problems more. And become kind of customer obsessed because that is what will really lead to long term growth and success. And retention with your, with your company.
The one thing that I would, caution against, and hopefully this is common knowledge, but maybe not, is that as important as product and service R& D is, right? It can't really come at the expense of going after your current market, right? Or, or penetrating the current market, right? You can't, you can't stop all go to market activities.
For just so that you can have time to develop your product, right? Because you need money to continue coming in the door You need to keep your burn rate in check, right? And it can be it can be difficult to Have that stop start motion that it would be required to do that successfully also just with the way that you know product timelines can be in product roadmaps with delays and everything it's It can be, uh, quite stressful, I guess, to put all of your eggs in, in a basket of, of an on time product launch.
Right. And then also just not waiting for the product to be ready before you really start any go to market efforts or audience building. I would just caution against that. Let's think about a little bit more tactically now. So. So we've decided that R&D is the answer, right? And we've, we've kind of understand that it can't really come at the R&D won't solve a sales problem, right?
But also at the same time, right, we need to balance our current go to market with our R&D efforts. So now that we're committed to R&D, let's talk about some more tactical initiatives that might fall under R&D. So what are some of the things that you've seen?
Stijn Hendrikse: I'll let you talk a little bit about capability development, etc.
I think, Brian, you have some good examples on that. I'll, there's one thing that we, we, we, by the way, we call a lot of things matrixes. So we have another podcast episode on this, I'm sure. It's called the Feature Matrix. It's something that I learned to use at Microsoft and then sort of continued to develop it a little bit so it worked for smaller software companies.
I call it the Feature Matrix. It's kind of a framework that allows you to plan your content development, your marketing messaging, but also your R& D, your product roadmap, based on what capabilities are going to be available to you. meaningful for the most amount of clients. And then which of those things are going to help you with your unique positioning, which are differentiation.
And in that model, there's also four quadrants, but there's one quadrant that's kind of the things that are asked for by a small amount of customers, but that are super differentiated, that are really special, really unique. Nobody else does these. And that's the quadrant in that kind of product roadmap that also allows you to.
Do the up, the lower right quadrant in the Ansys matrix. And because you're assuming that some clients might need this today, and hopefully many might need it tomorrow, right? And especially if you build something that you kind of want to test, at least having a couple of clients who tell you this is important for them is a great way to not build something that nobody is, is looking for.
Partly because you can, when, when it's a fringe capability that not many clients need, in the feature matrix. Podcast, we talk about, for example, the example of a cell phone and the features on a cell phone that are very commoditized, like making a phone call. All the way to things that would fall into this category, like having certified encryption on your cell phone. That is, of course, only needed by very few, like, military grade clients. But they will pay a huge premium for this, right? And it's fine. But that could help you input or inform this kind of this R&D roadmap. But, but maybe Brian, I know you have a lot of other more mainstream examples.
Why don't you talk a little bit about that?
Brian Graf: Yeah, just to list out a few. You can start with dev work. What features can we improve? What bugs can we fix to make the current client experience as good as possible? Those are pretty standard and short term fixes, I would say.
But it also could be improving the product through partnerships and integration. It could be improving the product through acquisition, right? Which is a much larger corporate decision and strategy that needs to be undertaken. It could be a very popular one today is adding AI to the product.Which everyone seems to like to do right now.
Stijn Hendrikse: Which is a feature, basically.
Brian Graf: Yep, exactly. It could be outside of programming and development work, it could just be to add better. Setup and configuration services. It could be adding white glove concierge services. It could be adding better customer success services alongside the product.
Stijn Hendrikse:What's nice about that example, Brian, is that it allows you to charge more for the customers who had, I call this the hero, Plus package. It's the same software, same technical product – but you get a little more service. You get a little more handling. Maybe you get access to some premium content.
Brian Graf: Yep. And maybe you're willing to pay 10 percent more for. We're straying from our matrix a little bit, but it could very well open you up for a larger market and could allow you to go up market. It could definitely be something around compliance.
You could be obtaining SOC 2 compliance. It could be creating a mobile or a tablet version of your product. You can think about all the different ways that the software could be improved. I also wanted to at least provide a few examples of real world companies doing the same thing.
So you can kind of visualize what it is and what it looks like. Some of these will be B2B SaaS, some won't. But hopefully they help you visualize the quadrant and why it's important.
HubSpot is a fantastic example of a company that's constantly improving their product. You can think about where HubSpot was even three to five years ago.The suite of features that they are constantly bringing about for their current user base. They're constantly improving, constantly adding features and capabilities. You could also think about something as simple as Google Meet adding transcriptions and recordings to its capabilities.
It adds value for its users, but doesn't necessarily require a full go to market push to be able to implement. Then you can also think about something like a Slack and some of their more enterprise features like workflow buildings or integrations and security. They really help to deepen their moat, as we were talking about earlier, right? And establish them as the kind of standard workplace, internal communications tool.
Stijn Hendrikse: Another example that I think you touched on when you mentioned AI. If you're selling the data that your customers provide you by using the product, and of course not in a way that identifies customers, not data that the customers would own themselves, all these interesting insights that you get from the way people use the technology, et cetera.
You can sell that in itself. That becomes a new part of your product value proposition or your services. Then one last other thing that I always want to talk about the value of a SaaS company, of course, ultimately comes down to: is it a profitable business?
If you have product capability, that's not necessarily giving you more customers or giving you a customer that pays you more. But it allows you to service them at a lower cost, or you can acquire them at a lower cost. That's very valuable too, right? So I call this cost to service and cost of acquisition, a CAC, a very common term, of course. So if you have product capability that helps you lower the CAC, it's usually related to things like product led growth.
Are there things that you can do in the product that allow you to make the marketing and sales funnel faster, easier, smaller, shorter, quicker, and not exist anymore if people really, you know, just expand, you expand the number of customers by a very clear product only dynamic. The cost to service is all about what you can do in the product that makes it actually easier to do customer success and service and onboarding and technical support without having to put people to that problem.
Brian Graf: Yeah. I think that's a fantastic topic. Have you done a podcast episode on that?
Stijn Hendrikse: No, I don't think so. We should do it.
Brian Graf: Definitely add that one to the list.
Especially because the situation that we're describing really applies to companies that may be a little bit more mature.They've been in the market for a little little while and the market itself is more mature. There is the point: where you get to where your typical Marketing led growth strategy just doesn't quite work anymore. The economics become harder and harder to sustain.
You have to make this decision of going up market or down market, but by either making your going up market, by making your services all the way in the bottom right of your feature matrix, but all the way towards enterprises– full value for a subset of users and companies. Or going into a pure product led growth where it's, your cost of service declines drastically. It gets very hard to compete with you on the value combination of value and price.
We love marketing here and love to tie everything back to marketing. Once a company has decided to pursue an R& D strategy, what would be some of the best ways that marketing can support that strategy and really make the most of it?
Stijn Hendrikse: When you interact with customers through content, through campaigns, when you do a customer testimonial interview, there's always an opportunity to ask.
We love to use the why/how ladder to ask, why is this important for you? Why are you using this capability, not that? Why did you buy this product? How is it that we do something that's really helping you achieve your goals? Because those things will usually give you a ton of insights into what's valuable for them today. But also the things that they would love to do more of.
Especially the why ladder. If you step up that ladder, you get to these things that are their ultimate goals that they achieved today by using your software. When you know what the why really is behind the usage, you could come up with new ways of achieving that goal that are even easier–where the software today might not even be doing that great of a job.
If you tell your R& D team, “Hey, the reason that our clients would love this extra button is because they're trying to do X, Y, Z.” The people building the product might say, “Well, if they, If they want to do XYZ, there's actually a much smarter way to do that, not adding a button. We can actually delete three other buttons and get to the same result actually in a better way.”
Having that type of insight available for you to share with your R&D team is really powerful.
Brian Graf: I think this is where R&D is really where product marketing is really critical.If you don't do it, it's really easy to end up on a wild goose chase where you're just building features that your customer may or may not really care about.
I do think that the voice of customer, customer testimonials and interviews are really critical. It's important to use the why and how ladder and ask the right questions. There's a saying that goes “If you would have asked somebody before cars came along what they needed they would have just said a faster horse.”
Customers don't necessarily know exactly what they need, but they do know the problems that need to be solved.
Stijn Hendrikse: When you ask why I want to get something exactly quicker and you say well, there's a plane that we can call.
Brian Graf: Your job as the product marketer or as the product builder, needs to be really understanding the problems and the jobs to be done of your customer and prospect, and then combining that with your product and industry expertise to come up with the right solution.
Stijn Hendrikse: Be careful not to jump into solving mode. Marketers are not the best equipped to design the product. They can really articulate what customers are looking for and what they're trying to achieve. Then, we need to not filter that too much, share that with the people who are really architecting the solution.
Without saying, oh, because our customers say these five things, we think we need to have this button.
Brian Graf: Mm hmm. Yeah, absolutely. I do think also what's sometimes slightly less comfortable is to interview prospects that said no to your solution. They actually ended up choosing another solution. It can be a little bit of an awkward outreach. But if you can get them on the phone, that's really where the brutal honesty will come in in terms of why your product wasn't good enough and where it needs to improve to really be successful with your core ICP.
Product marketing really stands out quite a bit with R&D. Not just building messaging and everything around the features that are being built. But really being involved early on in the process before the development work even begins. It's really critical and sometimes gets missed by by B2B SaaS companies just because there's so much other activities and initiatives going on.
Another thing that you can come up with and utilize if you are a company that does consistently build out your product and, and go after R&D is to come up with some sort of a customer board, right? A customer advisory board of people within your ICP that you trust, people that you've built a good relationship with and can help you to build the product the right way.
Once you have decided on a direction for R&D, it's really good for marketing to proactively build messaging and content around the direction that you're going so that when the feature is ready, or the product has been updated so that you're not starting from zero.
You've already kind of primed the market for where you're headed and why they need this feature, right? When it's finally ready to launch, hopefully you have a captive audience that's ready and waiting for this new capability and knows how to use it well. Let's see. Are there any ways to round out this quadrant? Are there any risks that you think are worth talking about with R&D for that quadrant in particular?
Stijn Hendrikse: Building something and then shipping it in a way that adheres to your quality standards and your customers will actually adopt. It's not easy, right? So don't make too many kind of attempts at things that you're not convinced will be worth it.
Brian Graf: Yep.
Stijn Hendrikse: That doesn't mean you shouldn't do quick iterative testing cycles of ideas and especially how you solve for a certain problem.
But pick a couple that you feel really convicted about, ones that customers will derive value from. It's hard to. Even if people just have one or two week kind of development cycles or sprints or whatever you want to call them. It's not easy. It's costly, right? Especially getting it to the point where customers can use it.
Yep. So just be careful what you pick.
Brian Graf: Yeah, I think that’s absolutely right. I have lots of feelings about how something like an agile methodology is applied to marketing. Sometimes it can be applied in not the best way, but even with product development too, it's the same way.
Agile methodology and sprints should be utilized in accordance with a larger strategy that helps to kind of focus the testing and the balancing of priorities. If you don't have that, then it's very easy to get randomized and to spend a lot of effort not going very far.
Everything in moderation. Dev teams can be quite expensive. I have seen companies that have wanted to do a big product push. Which is great, right? But that means that that money has to come from somewhere. Often that can come at the expense of your go to market push.
That just needs to be a strategic decision. You can't take that lightly. You need to plan for the lack of revenue that will come while you're building out that capability. It's much easier to kind of balance the two. To constantly be thinking about your customer's needs and building for the future, while executing against the features that you have.
Stijn Hendrikse: There’s another thing that's really tricky. I was part of a journey about a year ago that had an amazing amount of R&D creativity. I think that the cost of the company, half of it was in the R&D team.They had a ton of capacity to do things that they were not being asked to do.
They were constantly asking for access to customers. Then you would bring them along and they would meet with a customer – the customer did not ask for that meeting.
Then, the R&D team would come up with things that they would dangle in front of the customer and say, “Oh, would you like this?”And customers usually would say, sure. Then that suddenly made it to the product roadmap without any kind of economical validation.
And then of course, what happened is that the R D team starts to build those things.They have a lot of them. When it doesn't sell, like a half year later, people get frustrated.
They say, “we thought our customers needed this.” You can get into a lot of internal friction, which is not very useful. As the marketing team, the first line of kind of customer contact, it's your job to help set the roadmap. As in, what are the things that our customers really need and value and would pay for.
I think it's totally fine for the leadership of the company to make a trade off where only maybe half of the actual product investment is driven by that, and the other half maybe super creative, new innovation that customers could not even imagine that was possible. Totally fine. But be careful that if you don't load up the product team with enough things that are customer driven.
Brian Graf: They'll start building themselves. No, that's a great point. I do think that you as the marketer, especially as the product marketer, you need to make it your job to be the voice of the customer and really get to know them. On a deep, deep level, always be talking with them, always be interviewing them.
When product initiatives come up, when the dev team is thinking about what they can build – you can be there to help them help focus their energy in the right areas.
Okay. So let's, let's go to pivot. This is the top right of the Ansoff quadrant, and our final quadrant of this series. This is basically building a brand new solution for a brand new market. So, new on both counts.
This is by far the most ambitious of the quadrants that we have.
It should probably be thought of the farthest out. This definitely isn't a knee jerk reaction quadrant. This is something that requires a lot of planning and a lot of execution to do right. It shouldn't be taken lightly. Really, it's just diversification.
One example, just I guess to prime your thought process around this is that thinking back to COVID in the US.
Liquor distilleries who made gin and whiskey pivoted to create hand sanitizer. New market, new application and a new solution from their development teams. In my experience, it has been kind of the least used.
Although you could argue that entering the market for the first time is kind of a pivot in that quadrant. Brand new companies or companies that are really making a big change in their go to market strategy. So let's start with, what initiatives would you say typically fall under a pivot? Is there anything that would be useful just to kind of round out the analogy for the audience?
Stijn Hendrikse: Pivot means you have basically found a new market with a new service offering that you can offer because of certain capabilities that you have. But you don't have an established ICP, you don't have an ideal customer profile, and you definitely don't have a value proposition that's been tested. So you have not reached product market fit.
But maybe you have a capability that is just so strong and so unique that it’s worth it to go into this new market with a completely new and proven solution.
To be clear, Brian, this usually happens when companies are out of options. It's more of a defensive move if their existing market and business is really under a lot of pressure or it's getting commoditized to a point where it's hard to make the same profit margins.
It could still be healthy business, but it's just not the place where growth will come from. We'll use a couple of examples where this worked, but there's also many examples where it didn't. Like Kodak could have pivoted, right? And they didn't.
Then there is the more offensive move where you see this opportunity and your company is doing fine.
But you see, this opportunity is so much bigger based on something that you happened to have done and it seems to get traction.
The example that I always go to for that is Slack. Slack was a startup. I don't even know what solution they were working on, but they were working on a software product. I don't think it failed, but it was also not getting the traction that they had hoped for.
Maybe they did kind of get to a point where they had to raise capital again. And that might've been hard. But they had built this internal tool that seemed to be really working well. And there were other people saying, oh, we love this, can we use this, et cetera. And that became the Slack collaboration platform.
Brian Graf: Yep.
Stijn Hendrikse: So that's an example where I think they chose to go on offense in an area that seemed to get traction. Without that maybe being more of a defensive move. Then I think you're going to talk about Netflix later, so I'm not going into much detail. But that was a clear defensive move, right?
Where they basically said, well, there's no way people are going to keep doing this. Paying for physical DVDs that we send them, what else can we find.
Brian Graf: Yeah, exactly. How else can we continue to make money? I think with the pivot quadrant, there's a very clear differentiation between it being used as a defensive maneuver, which is not really an ideal place to be as a company.
But if you have enough foresight and a willingness to commit, to the pivot. it can be really successful.
To use Netflix as an example: they used to be the DVD shipping company. But they were still trying to compete with things like Blockbuster and Amazon, who were very established competitors.
That’s not a fun place to be, but they were willing to make the jump to streaming and clearly hit it out of the park. Now, they’re the standard in that space.
But then there's also things like,Nvidia. You could almost argue that that's a market expansion versus a pivot.
Stijn Hendrikse: I don't know product. Maybe the technology didn't change that much, but the application, the product, the service – that definitely changed. Completely different use case.
Brian Graf: Now you see NVIDIA as a place where it's stock rises and falls by, you know, the GDP of a small nation within a day or a week.
The willingness to jump in and really do something. Place that big bet on a market trend or on an ICP that's being underserviced. That is the way that you can execute a pivot.
But again, if you wait too long and decide to, to try and pivot when you're really out of options and don't have enough time to do it successfully – that can be a really dangerous move for your company.
Let's see. Any other examples that you think are worth highlighting to illustrate the pivot?
Stijn Hendrikse: It's really an all or nothing move. There's a horse analogy that we sometimes use. If the horse is dead, get off the horse. But there's the other one: you can only ride one horse at a time, you know?
So maybe it's more like switching horses. But you got to commit to it. There's no way you can do that pivot without abandoning or choosing not to focus anymore on the business that maybe brought you where you are today.
Brian Graf: Absolutely. Unless you're a company like a Google or a Microsoft that has almost endless capital to deploy if you're a normal company.
Stijn Hendrikse: But it's not really a pivot. It's more of an expansion.
Brian Graf: That's fair. If you are kind of a mortal company that has a normal amount of capital – it is kind of an all or nothing thing.
It's something that you shouldn't go into lightly, but you should really know what is involved or what is needed to be successful. A full new product build and go to market push will take a long time to be able to implement. So you need to be ready and have the capital ready to give yourself runway to be able to do the right market research as we were talking about on the product marketing side. To know your customer and that you're building the right thing.
Just to make sure that you're entering a market that knows that a solution is coming? Or is that you can educate that market and get it ready for the product entrance, right? There's tons and tons and tons of initiatives that you'll have to undertake to really make it a success.
Of course, it can be successful. We've seen that, we just gave you a few examples, but it's a really dangerous move if you don't take that seriously.
We have worked with a few companies who have jumped in a little too fast to the pivot right and have regretted it because they didn't commit all the way. They got torn between two go to market strategies and ended up having both of them be ineffective. So, something to take quite seriously, right?
It can absolutely be the right move, but the market needs to be right, the prep needs to be right, and you really do need to jump in with both feet.
Stijn Hendrikse: And you need to realize you have to product market fit. You cannot say: I'm going to go after a new audience, a new market that I really don't know, and where I don't have established customers. YAnd I'm going to do it with a new product that hasn't been tested, validated, etc. And then expect that to lead to a full pipeline in a couple of months, right?
Or because we already have an existing business, an existing list of customers that they're suddenly going to buy this new thing. No, they're not going to buy this new thing because the customers you're really trying to convince are not the same people. They might work in the same category, industry, et cetera, but they're different people with a different buying behavior, with a different persona.
That's the other thing that went wrong in the company that I hinted at. R&D was building a lot of things that customers did not really ask for. That they also kind of assumed that the customers were already paying us for A, that they should pay us for B. Even if they never asked for B.
That's just a fool's errand.
Brian Graf: To your point, it's easy for people in general, but for companies to think that people will buy my products because I'm, for lack of a better word, “special.” Because I am differentiated because of X, Y, Z. And you might be right. You might be even in the market that you're coming from, where you do have product market fit. But in a new market, you're not really until you can convince a prospect that you are.
It takes a lot of time and effort to be able to do that right. Even with the right product that is perfectly positioned for the right needs, you still have to get out in front of the prospect and convince them to change. You got to convince them to change now and you have to convince them to change with you.
That's just something to keep in mind – especially with the pivot. It is something that you can absolutely do, but, don't take it lightly and prep right. Then you'll be fine
Just to wrap up in terms of marketing, how marketing can best support the pivot. I would actually combine kind of the R&D marketing support that we've already talked about. How important product marketing is to knowing your customer is the right prospect. To make sure that you can build the right product for that market. And then, just really focusing on similar to a market expansion.?
But building your brand and building that captive audience so that when you do launch, you can make the most of it.
Well, let's wrap this up.
I think the right half of the Ansoff matrix is a critical piece as you are growing your company. The R&D side in particular is just something that requires constant feeding, right? If you can do it well and look that far into the future, you'll be set up for long term success.
If you don't facilitate that R&D enough, it almost pushes you into a position where you might have to take that risky pivot jump. Because you start to get squeezed on deals, things get more competitive, your product becomes less and less differentiated. Then you may actually have to make that pivot jump in a place that you don't really want to.
Stijn Hendrikse: As the marketing leader, this goes to the T2D3 book framework with the three bases before you can get to home plate. First base being MVP, then product market fit, on second and then third base being T2D3 growth.
You have to travel those bases again. You have to get the product market fit You cannot assume you're already there because you happen to have a business
Brian Graf: Go back to square one. If you can feed the R&D,and flywheel, then maybe you can avoid a pivot or at least it makes it so that it's an offensive move instead of a defensive maneuver.
Thank you.
Thank you to Adriano Valerio for producing this episode and the Kalungi team for helping us make this whole thing work. And of course you for choosing to spend your time with us. As a reminder, all the links we mentioned in this episode can be found in the show notes.
And if you want to submit or vote on a question, you'd like us to answer, you can do that at Kalungi.com/podcast. Every time we record, we take one of the top three topics and jam on it.
Thanks again.
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The secrets to faster market expansion for your software company can be found in the upper left quadrant of the famous Ansoff Matrix.
The secrets to greater market penetration for your software company can be found in the lower left quadrant of the famous Ansoff Matrix.
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