Your early-stage firm is building a new product or service. Let’s assume you’re growing fast. As the CEO or CMO, it’s your job to make the call on the target market.
Go too wide, and you risk drowning the product through lack of differentiation.
Go too narrow, and you won’t have the reach to make your numbers.
What you need is a beachhead strategy: land in a smartly defined niche, expand, and conquer.
What is a beachhead market?
When I worked at a big medical technology multinational, I had to identify the addressable market for a new product. The product was designed to solve a problem with biopsies and tissue samples. A surprising number are mishandled or mislabeled, and we were developing a product line extension to cut error rates.
We dug into the market, starting with the US. A rule of thumb: there are about 5000 hospitals in the US. Within that target addressable market, we knew we needed to target hospitals that had both a surgical information system in the OR (where surgeons perform biopsies) and lab information system (where the biopsy samples are analyzed).
Just knowing this, we had segmentation data to go on.
We also knew that our sweet spot was at a certain size of hospital: a minimum of 200 beds.
Based on these factors, we dug into a well-known industry database, crunched some numbers, and come up with a list of hospitals that would be good candidates for our solution.
So there was our beachhead market.
We’d identified exactly where we needed to play into order to win in this market.
Big-company methodologies vs early-stage company needs
When you work for a big company, identifying a beachhead market is an exercise in market analysis.
But in a startup, you’re starting with an unknown product in an undefined market. How do you get to the level of de-risking to get to a comfortable launch?
That’s where the 4 elements of a beachhead strategy come in. They help you to de-risk your launch by zeroing-in on where to put your limited resources for maximum effect .
Element 1: Ideate
Brainstorm on all the potential markets your innovation could work in. If you have a horizontal technology – electro-optics, lidar, a biotech process, something based on basic scientific research – you need to get creative and open up the possibilities.
For instance, with a biotech process optimization technology, your potential markets could be breweries, dairy companies, pharmaceuticals, and so much more. Think big.
The best way to do is to get together with a mix of people – some who know the market, others who don’t. Together, they brainstorm a list. Magic happens when you bring different thinkers together.
Element 2: Get outside the building
Once you have a big list of potential markets, you need to go talk to the people in these markets.
In some accelerator programs, you’ll be funded to actually go to conferences and tradeshows. If you’re in a big city, getting outside of the building to talk to people shouldn’t be an issue.
You can also make a list of job titles. Plug these titles into LinkedIn and match them with industries and locations. You’ll have a list of 1st and 2nd degree connections to interview.
The goal of these short interviews is to understand their most pressing need at this moment. Don’t fall into the trap of explaining your idea and to get their approval. Don’t even talk about your idea. This kind of interviewing takes some practice, but the best way to get started is to jump in. Aim to talk to at least ten people in each market you’ve identified in the first step. Keep each interview short (10 minutes max).
A great book to equip you in this search is Talking To Humans by Giff Constable.
Element 3: Be curious
When you go out and talk to people in each of these markets, you need a cat’s curiosity.
What you’re looking to get from these interviews is a “surprising insight” about the need of your market, something you can’t get from statistics or a Google search. Have a Beginner’s mind. Be open to the unexpected. Go down rabbitholes; it drives some people crazy because it seems like you’re getting off focus. But unless you find something which surprises you because it is either not obvious or counter-intuitive, keep digging.
Remember, at this stage you’re not selling, you’re exploring. Don’t ask for feedback on your idea, your product or your technology. Keep the focus on them and what keeps them up at night. Keep digging until you get surprised.
If you’ve gone through ten interviews without finding something which surprises you, move onto another market.
Element 4: Pick a market
Once you’ve done the field research, you need to make a decision.
Some questions to ask yourself and your team:
- The $$$ question: does the market you’ve picked have the means to spend?
- Can you reach the market? Example: the Fortune 500 C-suite. If they are the buyers, do you have the network to reach them?
- What is the pain? Is it truly a compelling reason to buy?
- What are your adjacent markets that follow from the beachhead?
- Most important: do you care about the people in this market? Are you willing to devote the next few years of your life to serving them?
You may have other questions you need to ask. The important thing is to list these questions and use them as a decision-making grid.
Executing this process
It’s hands-on. Don’t delegate. I understand: you’re the CEO of your company and you have a lot to do. It’s still your baby. Delegate the logistical stuff like appointment setting, but not this essential customer discovery work. It will give you the ground truth you need to make a good decision.
The best process involves a guide. You need to see around your blind spots. How much should you spend on this process? Consider your marketing budget for your new product launch. The search for your beachhead should be 3% to 10% of this budget, depending on the level of risk you’re taking.
Thinking in terms of your beachhead will help you to find those people who have the problem your product can solve, who are looking right now for a solution, and who are ready to buy.
The payoff? You’ll focus your limited resources on quick wins. You’ll get your product in the hands of willing users faster. And you’ll increase your team’s chances of market success.