The best product in the world can fail if you select the wrong routes to market. You need to drive your team to consider this early in the product development process.

Has your company got a new product in development?  Is it working its through your organization, from R&D, to Product, getting feedback from Marketing and Sales and gaining fans and momentum as it travels? Perhaps it’s been described, prototyped, or even demo-ed for some key customer and prospects, creating even more enthusiasm. Are your sales leaders already penciling in robust contributions from this product into their revenue numbers for next year? Is the band tuned up and the parade marching to your desk for the ceremonial CEO approval?

 

Download the Sample Buyer Interview Guide to achieve a deep understanding of your new product buyers, knowing how they buy, and knowing where and from whom they learn.

 

When it arrives, you need to be prepared to spray cold water all over the proceedings.  You need to ask often overlooked question: “Are you certain you have the right routes to market for this product?”

 

 

“What are the best routes to market for this product?’ you ask sagely.  They glance nervously to each other, hesitate, and finally say, without conviction, “Through our usual channel…..?”  You proceed to ask them all the smart questions they need to be asked (see below), and, bit by bit, their triumph turns to despair, their shoulders sag and their mustaches droop, and they slowly edge out of your shag-carpeted office. Funding withheld. Launch delayed. Outlook uncertain.

 

Shame on them, not being ready with those answers, right?

 

No. Shame on YOU.

 

If you never set the expectation that the product development process includes a clear understanding of the optimal routes to market AT THE EARLIEST STAGES, the waste of all that time, money, and brilliance is on you. Ouch.

 

Does this example seem extreme? Perhaps. But if you’ve been in business for any length of time, you’ve seen examples of the routes to market question being asked too late in the process – AND you’ve seen the failure resulting from the wrong answer. So it’s not so extreme after all.

 

Let’s back up. Why is this question so important? 

 

It’s important because all of the money, thought, and time invested in developing the product are about to go to waste without the right answer.  The best product in the world can fail and fade into oblivion when launched on the wrong route. Selling a complicated product through a high-velocity distribution channel means your product will rarely see the light of day.  Building a specialized sales force to market a low lifetime value (LTV) product means starting out upside down with little hope of breaking even – you’ll have to kill it out of self-defense. Or it might be that the route/product fit is viable, but it won’t return the necessary EBITDA in the timeframe required by your corporate strategy. All of these scenarios and many more spell failure – no matter how excited everyone is about the product.

 

The Smart Route to Market Questions

 

In the above story, you peppered the eager would-be product launchers with some very smart questions. Are you ready to ask those? Just in case you’d like a refresher, here are some key questions to ask, and some homework for them to do if the answers are less than impressive.

 

Who Exactly Is the Buyer?

 

NOTHING starts well without a deep understanding of the best buyer or buyers of the product. Simply put, if you don’t know who will buy and how, no one will.

 

Your team should be able to tell you:

  • What is the role of primary person who will buy this product?
  • What are their key goals and priorities, and how is their progress measured (metrics)?
  • What are their means for achieving these goals?
  • What other people in what other roles will need to weigh in on the purchase
  • For each of those, what are their goals, priorities, means, and metrics (GPMM)?
  • Is this the same buyer in all potential markets and segments, or are they different?
  • Where do each of these buyers learn about issues and solutions related to this product (websites, blogs, conference, vendors, peers)?

     

If your team doesn’t have solid, well-documented answers to these questions, you can share this tool to help get them started.

 

What Results Will This Product Need to Produce to Be Aligned with the Corporate Strategy?

 

Everyone in your company should be looking at the corporate strategy each time they think about the variables of money, talent, and time.  Often product teams think about the corporate strategy only on core product development questions, but fail to ask the “not only” questions about how the product will get in the hands of the buyer. 

 

To help with new product routing decisions, they should look at:

 

  1. Money:
    • Not only how much money will it take to build the product, but how much will it cost to sell it through the different route options (see below)?
    • For each route option, how much money will it cost to launch, and how much to maintain the sales motion?

       

  2. Talent:
    • Not only do have the right talent to build the product, but what are the skills and competencies necessary to sell it through the means the buyers want to buy?
    • How closely do you need to control these talent levels for your direct and indirect channel options to succeed?

       

  3. Time:
    • Not only how long will it take to develop the product, but how long do you have before competitors swamp the market, increasing costs and decreasing price?
    • According to the Corporate Strategy, how much time do you have to make the necessary return on the company’s investment?

       

Now you’re ready ask the smart questions about which routes to market are the best.

 

Which routes will get the product to market fast enough, cost-effectively enough, and in the ways your buyers will or need to buy?

 

For each potential route to market, you need to understand the minimum and maximum initial cost, ongoing cost, residual value, complexity, geographic reach, and sales cycle length. What did your team determine for each of the following?

 

  • Direct routes, for each: existing customer or new logos
    • Current or new outside sales teams
    • Current or new inside sales teams
    • Dedicated outsourced inside sales
    • Online sales

       

  • Indirect sales
    • Partner
    • Rep
    • VAR
    • Distributors
    • Franchisees

       

Once you are confident your team has good answers to these questions, you can begin to believe they know what they are talking about in pairing the product to buyers and channels.

 

Want to learn how a master thinks through routes to market?  Watch this interview with Walt Megura, Vice President of Emerging Industry Segments and Channels for Ericcson.

 

For a few examples:

 

  • Situation 1: If the buyer needs to buy a low cost product, many indirect channels will drop out of consideration.  Some people think that a simple, low-cost product is great for a channel partner that is already in with the buyer, because the low price should make it easy and fast to sell – quick extra money for the channel. However, if a channel can’t make substantial money on each sale (i.e., if the price isn’t high enough), the channel won’t spend the time and attention to put it in front of their customers.

     

  • Situation 2: The complexity of the product requires the technical savvy of your existing sales force. However, the sales cycle is so out of whack with the core product that that it breaks the core sales cadence. No one is willing to sacrifice the core for the new, so the fit isn’t there. 

     

  • Situation 3: The complexity and price are low enough that the online route is suitable. However, your buyers don’t buy that way.  You could attempt to change their preference through a huge awareness investment, but your corporate strategy dictates that products need to begin paying for themselves much earlier than that approach would allow.

     

Multiple Routes

 

When less-experienced teams think through routes to market, they often limit themselves to finding the one best route. That’s a simpler analysis, but it could be unnecessarily limiting. There are two ways to combine routes that can get your product to market and maximize your coverage: sequenced and simultaneous.

 

  • Sequenced:

     

    When solving for a product route fit, it may be best to begin with one route, then move to another. The classic example is the current-customer test.  You may have a product that has little current demand because of the high degree of innovation. No one is clamoring for it yet, and your buyers are prove-it-to-me types. And the cost of demand creation doesn’t fit your corporate strategy constraints. In that case, mine your existing customer base for those friendly innovators that are willing to try it out. Let them try the product, get tremendous value from it, and capture case study or 10. Those will help soften the market and win over skeptics.  If you pick your beta customers well, they are not only innovative, they love the limelight.  Put them on at the podium at the next big industry conference and win over the next wave of innovators – from your customer base or not.  Then you’ve got demand – and more channel options.

     

  • Simultaneous:

     

    It could be that your inside sales approach can effectively close deals for your new product in North America, but your EMEA distributors are more effective in that market. No reason not to do both, especially if your corporate strategy dictates that the higher volume is necessary to get a faster return.

     

  • Conflict Avoidance Avoidance [note – not a typo]

     

    One reason less-seasoned product teams focus on a single route is they were once preached “Thou shalt avoid channel conflict.”  This is not holy writ. In fact, if you have zero channel conflict, it shows that you are leaving sales on the table through inadequate coverage. Managed well (through clear communication, rules of engagement, and enough volume to support everyone), some channel conflict proves your coverage and can help accelerate market penetration.

     

To further explore how your routes to market can evolve, see When to Pivot from an Indirect to Direct Sales Model.

 

Strike up the Band Again

 

Now that you’ve sagely (or savagely) taught the team a lesson, pick them up, dry them off, and point them down the field again.  The next time the parade appears at your office door, you’ll be cheering.

 

Download the Sample Buyer Interview Guide to achieve a deep understanding of your new product buyers, knowing how they buy, and knowing where and from whom they learn.

 


 

Additional Resources

 

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ABOUT THE AUTHOR

Doug Bain

Delivers transformative strategy, insights, and practices to help clients crush their number.

Doug is a revenue-driving executive operator and consultant with experience that ranges from Fortune 100 companies to startups. He is passionate about bringing emerging best practices to companies to unleash their growth and performance potential.

 

Prior to joining SBI, Doug has been both an enterprise level executive and serial entrepreneur. His experience enables him to quickly identify where improvements and efficiency can be developed in sales and marketing practices to make organizations more effective. He has a special affinity for helping companies achieve impact, whether through innovative consulting approaches or enabling broad-scale adoption of his clients’ new and improved products and services.

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