The common wisdom is always go BIG! Actually it’s more a hard and fast rule. But that’s not how disruptive markets are built. Think Facebook! Harvard … to Ivy League schools … to colleges and universities … and then the WORLD.
But we’re taught to always think BIG markets. In school. Every business plan. By investors.
Without BIG markets a startup couldn’t raise capital or an established company wouldn’t allocate resources to new product development.
But this is where this mantra of BIG markets should stop. Beyond this point, it’s often counterproductive and even obstructive --- particularly for disruptive technologies.
Unfortunately, this is often not the case. It – meaning BIG - continues. When we launch, the plan is BIG and FAST … and often fatal.
I was recently asked during an interview for an article, “Is a market ever too small?” My response was “rarely”. The vastly more common mistake is going BIG. A big, high-profile product launch with the associated, commensurate BIG spend. A market can be too small if there isn’t a path to a larger market … the BIG market. But this is almost never the case.
I could tell you the risks and downside of going BIG but you’ve probably already seen or even experienced them. Low quality leads leading to poor close rates. Poor traction, adoption and retention. Compromised market reputation and brand. A product launch characterized by overspend and under-deliver … and ultimately BIG missed market opportunities.
Instead I’ll focus this discussion on the many benefits of going small. Niche beachhead markets or market entry points allow for the following benefits.
A hyper-focus on specific use cases where the existing problem is most painful and benefit of the solution is greatest. This exaggerated differentiation between pain of existing problem and benefit of the solution has a multitude of benefits. Go for the high pain problem where the solution shines brightly above all competitive alternatives. The two greatest benefits are the ease of closing deals (always extremely challenging with disruptive products or services) and the adoption and retention for early customers (early churn is a company killer). For example, within three hours of our initial meeting with a surgeon when he saw and handled our product for the very first time, we found ourselves in the operating room where he was using our novel dissection device to open the tract to create a fistula for dialysis vascular access. Mind you, he was only the first surgeon to use our device outside of our clinical trial.
Marketing and developing lead gen tactics for small markets can be precision targeted leading to higher response rates and a more efficient sales process. Plus marketing and selling to small, niche markets is exponentially less expensive than going after large, broad markets.
Tailor the solution to meet a specific problem/use case and customer profile so you become the “only” solution for that market entry point (specific use case and customer profile) thus enhancing your value proposition and market desirability. Trying to be everything to everybody, an almost unavoidable consequence of going BIG, waters-down or diminishes your value proposition.
Small means stealth. We do just the opposite with big product launches; we announce ourselves to the whole world – including our competition – just as we enter the riskiest time of the product life cycle (the introduction stage from launch to scale). This is why I hate BIG flashy product launches (along with the costly, wasteful effect of premature scaling). We put the competition on notice. Small markets never get the attention of big companies, the ones who own the BIG markets you want to eventually penetrate. Small markets are off their radar and won’t attract their attention. I like being under the radar of my BIG competition as I’m discovering my repeatable sales process, perfecting how to turn happy buyers into highly satisfied customers and scheming how to outcompete the competition before their even paying attention.
Small allows the luxury to go through the learning and discovery required to reach scale. Launch plans, more so for disruptive tech, are rooted in assumptions around market demand, lead generation, the sales process and cycle, product adoption, customer satisfaction … to name few. Some assumptions are valid, some are invalid and many more that aren’t appreciated or understood. This is just the inescapable nature of disruptive tech. Small, niche markets and a controlled launch let us and our customers go through the learning and discovery need to successfully market, sell, adopt and utilize the new tech. Our companies and products are at the greatest risk during this stage. We’re going through this learning and discovery side-by-side with our customers and small markets provide two critical benefits. Since we’ve already focus on the highest pain to greatest benefit use case(s), we’re working with the most motivated customers who are most likely to go through this learning/discovery process and get to the other side where all the wonderful benefits for our new tech can be realized. If only a few or some of our first customers get to the other side, we’re likely in trouble. And second, by being small and stealth, we greatly reduce the risk of failure and if we do fail which is inevitable with some aspects of the launch and always a possible on the grand scale, we’ve contained your exposure.
We can become the expert in our market. Since no one else is paying attention, we automatically become the de facto expert … and the actual expert. We become a BIG fish in a small pond. But don’t misunderstand, this does not mean we are small in the minds of our customers - the market. Actually just the opposite – this strategy often leads to being BIG in the BIG market. Remember we’re consciously going after our customers biggest, most painful problems. While these problems are often a small segment of the market, they’re BIG in the minds of our customers. Their BIGGEST. The problems for which they will open their doors. And when we help them solve these problems, we’re now on the inside with them as a trusted partner. This creates real leverage. BIG leverage. I’ve come to call these market catalysts - small products launches or small companies that have oversized leverage in their markets.
This leads me to my BIG crescendo. This is when small markets [market entry points] lead to BIG market opportunities. Once we enter a market as a highly, trusted partner with customers, we can do things that can’t be accomplished before or even as we’re entering a market.
Once on the inside you will recognize and identify market opportunities and paths to market segments that weren’t available, obvious or even present before establishing a position in the market … even a small segment. After spending a nine-months establishing our initial market position as Director of Sales for a genomics services company, I was able to develop two unique collaborations with the FDA (in the early days of pharmaco- and toxico-genomics) that opened the big pharma and Biotech markets to my fledgling specialty-CRO startup. As an early-stage, tiny startup, this BIG market was unavailable before establishing these collaborations.
After becoming established in a market with existing relationships, it becomes much more difficult for competition, even the BIG boys, to prevent expanding your reach into the larger market segments often dominated and controlled by more established companies.
I worked with one client where we entered the market through ambulatory surgery centers, relatively off-the-radar of the large surgical supply companies as they focused their efforts on hospitals and health systems. Once we’d built strong relationships with surgeons in ASCs, partnering with them to solve a critical clinical problem, we leveraged these relationships as they became strong champions walking us into their hospitals, through their value committees and right to their operating rooms. Where it would have been easy for our competitors to throw up roadblocks if we’d entered the BIG hospital market direct at launch – trying to go through the front door, we enter through the backdoor, right on the heels of our surgeon champions who’d already experienced the benefits of using our technology with their patients.
Going small is the gift the keeps on giving --- BIG.