I sometimes send out a short summary of a meeting to all attendees to facilitate follow on conversations. Here are my notes on go-to-market challenges we discussed at our first Bootstrapper Breakfast in downtown San Jose on Fri-Dec-3-2021.
Notes on Go-To-Market from Fri-Dec-3-2021 Bootstrapper Breakfast
- You can normally capture 10-40% of the distinct value that you offer. The risk-free money to money ROI (e.g., the bad debt recovery model) is normally between 10-40%. You usually have to offer proof (or delay your payment) such that you are capturing between 10 and 40% of the hard dollar savings or profit contribution your product makes to a business. Risk/error reduction and cycle time reductions may need to offer some well-thought rationales for the value. Always remember, if you are having trouble determining how much profit you are contributing, think about how much harder it is for your customers.
- Until retention hits 90% don’t start to worry about growth. An excellent rule of thumb is to focus on and invest in retention over growth until your retention hits at least 90% year over year. Your mileage may vary but trying to fill a leaky bucket can give you gray hair and ulcers. Lower retention rates usually indicate challenges with your onboarding, feature deficits, or serious problems for at least subpopulations of customers.
- Immediate high demand is unlikely, plan for multiple iterations before significant demand. Before entrepreneurs launch a new product or service, they may worry about very high demand and the challenges they will face in meeting it. But it’s a high-value problem that they can manage in several ways. It’s normally safer to assume that nothing new ever works. In which case, it’s going to take you three to five iterations (with tinkering and intelligent experimentation) before you get a glimpse of a working lead generation or sales model. Assuming demand will be strong and ramp fast can also lead you to delay important go-to-market efforts.
- Make sure a lead or revenue generation tactic works for your product in your target market before making a large investment in one. Another pre-launch mistake is committing to a significant investment in a particular set of sales and marketing strategies before you validate them for your target market offering.
- Getting strangers to pay is the true start of product-market fit. There is a tremendous difference between an idea for a product, a working product (or debugged service), and even a handful of paying customers. Providing your customers are not all relatives or friends–there was an “arm’s length” consideration of the value proposition and results delivered–it’s a substantial accomplishment to have even a few paying customers. It’s not proof you are ready to scale, but it is proof that you have value to offer at least a niche market.
Related Blog Posts
- Product Market Fit Metrics
- Product-Market Fit is a Fraction Not a Bit
- What to Do When You Are Asking Yourself, “Is My Product Meh?”
- Q: What Makes a Product Attract Early Adopters?
Image Credit DarkDay for Sparktacular Luminosity