New products face enormous challenges when they are introduced to mid-market and enterprise level companies. Far too often a product is developed that, at the surface, addresses critical pain points and solves problems that were identified, yet still fails to find traction in the marketplace. This happens even when extensive and proper validation of the solution is conducted, and extremely positive signals are received.
We’ve identified three categories of blockers that can ruin your chances of getting into the middle market size companies and larger. In this series we’ll talk about how weaknesses in these areas can block your chances, but also what you can do to address them. They include:
- Your Product
- Your Company
- Your Go-to-Market Strategy
This first blog will focus on your product, and let’s dive in, because it’s where we think the biggest problems occur, and they are in some ways the hardest to fix.
Going to Market with an MVP-Level Product
In the startup world the MVP is usually part of a product roadmap, and for good reason - a successful MVP is an important and strategic step in your product journey. The origin of the MVP concept came from Eric Ries in his book, The Lean Startup, and he popularized the MVP with this idea: “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
This MVP concept was born from the observation that far too many new products were being built as full, complete products with long timelines and a much higher cost, and that discovering that you were on the wrong track was determined once the product was launched and, usually, failed. The MVP can circumvent that product failure by determining viability and learning about your customers – their needs, problems, pain points – and if you are on the right track.
Pressure to generate revenue and demonstrate traction is paramount, so often products are released too early, with the result being almost no traction. And here is why: Companies don’t buy incomplete platforms for key processes. Startups and new products that don’t provide a complete solution, that are not polished and stable, are just not going to be attractive to your customers.
This even a bigger problem when it comes to mid-market and enterprise clients. These companies have workflows and processes that have been built with the products that they have chosen to run their companies with. Companies are not going to adopt incomplete and rough products that might disrupt their business operations, period.
Key Insight
You Must Offer a Complete Solution
In order to sell to larger companies, your product must be complete enough, mature enough, with enough features that will allow them to adopt your solution without barriers. That’s very easy to say, but of course it’s not easy to do especially if your budget and team are small.
Your product roadmap needs to have a clear picture of what the minimum features you need in order to be usable. Then you must find a way to build it to those specifications before you have any chance of success with your target customers. This starts on day one of your product journey. It’s not enough to solve a big problem, only to be shot down because basic critical features are missing.
Product Isn’t Stable
New digital products are usually not stable. I don’t mean that they are buggy or unreliable (though sometimes that’s true too), I’m talking about how new products are often in a state of continual flux. With a new product that has just hit the market, the expectation is that the product will change frequently. That, in some ways, is a very good thing. We love iteration as part of the innovative process, and products should evolve and become better over time.
New product releases can be messy and problematic, with lots of rough spots and incomplete feature sets. That won’t sit well with enterprise companies who expect and demand a stable, mature product that they can rely on. If your product is changing every month, or every week, rolling out new features and functions, tweaking UX/UI, you have an unstable environment. And, for an enterprise-level company that is looking at maybe hundreds or thousands of users that need support, that’s not acceptable.
Evolving past the scrappy startup phase where you are going fast, and breaking stuff is essential. You still want to innovate and evolve, but it should be done methodically, purposefully, and controlled with the right processes and communications around new releases. As your customers get bigger, a lack of stability will create pain points and friction with your biggest sources of revenue. Don’t make that mistake.
How to Improve Stability
Make sure you do new releases the right way, with schedules, good support, communications, testing, and training. Get out of that scrappy startup mode where everything is in flux all the time. Don’t be chaotic!
If you do get traction with your larger customers, treat them like partners. Create product roadmaps in conjunction with your customer’s stakeholders to align new features with what they want. Develop in conjunction with their teams so they know what you are doing in advance, and so that you don’t break something that they use extensively.
Weak Security
All companies are concerned about security, and it presents a formidable blocker when selling to larger customers. Your security might not get much scrutiny with a small customer of 20 people (though it should), but for larger customers your security will be examined extremely carefully. It’s not uncommon for a large company to drop a security audit on a new vendor that might have hundreds of questions and review points that you will have to not only address, but to stand behind.
Keep in mind that if you do have a breach, your company will be liable for that breach. You might think that your million-dollar cyber policy is all you need, and that’s fine for small companies where a breach might not be that expensive. But for a large company a serious breach could go into the tens or hundreds of millions of dollars, and your policy won’t come close to covering the losses. And, if your insurance company finds you stretched the truth in your application, they can, and probably should, deny your claim.
Key Insight
Have a Security Plan & Execute It
Don’t backburner your security because it will haunt you in the long run. Of course, expedience can mean that you might cut corners with your product’s security. If so, you won’t survive contact with your customer’s security audit. Understand early on what security measures are required for your industry and specifically, your target customers, and execute it before approaching them.
Again, these requirements are all knowable and usually explicitly stated by the firms you want to sell to. This should be part of your discovery process when evaluating your market, and it should not be a surprise when you try to sell to them, and then you find out you don’t meet their security standards. That’s too late!
Architecture Won’t Scale
It's not uncommon for small software companies to cut c0o orners during development by using a technical debt strategy. Technical debt is the practice of building for expedience instead of for scaling. In other words, you cut corners to accomplish tasks and get into the market faster, test concepts more quickly, and reduce costs. Startups and product teams do it all the time, and when it’s mindful and strategic, there is nothing wrong with this approach.
And it makes total sense when you are testing a market to determine if you can get traction before committing the resources, time, and money to building extensive features for millions of concurrent users.
But the problem arises when new products are sold to larger companies before they are ready to handle the load. Too often the plan is to upgrade the server and hope for the best and stress test your platform with the best client you ever got. Not a good strategy.
Key Insight
Build for small, plan for big
Having the right infrastructure and team in place for tackling large clients right out of the gate is expensive and time-consuming. But you do need to plan ahead and not create so much technical debt that everything has to be rebuilt from the ground up. This is where early strategic decisions on your tech can pay off bigtime later when you are ready to scale.
Summary
Products that are incomplete and rough cannot be successful when selling to middle market and larger companies. Having a strategic plan to create a mature, stable, and solid product from day one is important, and if you can’t find a way to make that happen, don’t start.
