Startup Lifecycle Series: Stage Three — Commercialization
Now that you (in theory) have a validated problem and minimum viable product solution, the question becomes: How does my business make money? Welcome to the third stage of the startup lifecycle: commercialization. In the latest post of our blog series, we touch on how to develop an effective Go-to-Market strategy in order to become a viable, profitable, and sustainable business.
What is a Go-To-Market Strategy?
Nate Curran, Entrepreneur-in-Residence at the Center for Entrepreneurial Innovation (CEI), defines a Go-to-Market strategy as the business model for your company. In effect, it is the pre-defined business processes a company deploys or plans to deploy in order to bring its product and/or service to the marketplace and ultimately begin making sales and generating revenue. He also notes that it is key to remember that commercialization is ongoing as market conditions change, product innovation happens, and other situations arise which all demand an evolving action plan.
What should you include in your Go-to-Market strategy?
Murray McCaig of MaRS Discovery District, as part of an Entrepreneurship 101 lecture, cites four main questions that an effective go-to-market strategy must answer:
1) What are you selling?
The real question is: What is your value proposition? This section of the strategy addresses those unique differentiators and benefits that your offering gives to your target customers. It is your power statement. Ideally, you deduce the singular reason / benefit for why a prospective consumer would choose you over your competitors.
2) To whom are you selling?
Who is/are your target customer(s)? These are the segments of the market that you have identified as being primary consumers of your product or service, NOT the market size or share. Much of this information should have come from your initial market research and testing in the idea/problem validation stage. Regardless, according to McCaig, you should first align customer segments with your value proposition and then expand your market opportunity to address auxiliary segments that possess other characteristics such as ease of selling.
3) How will you reach your target market?
This is an incredibly important component of your commercialization plan and is often the most misunderstood. Curran explains that many entrepreneurs mistake this with their marketing strategy, when in fact it is your sales channel strategy. Distributing your software app through an online e-commerce platform such as iTunes is an example of one distribution channel. Other options include: direct personal selling, retail distribution, or indirect selling. McCaig acknowledges that you need to consider various factors such as sales margin, brand credibility, and time to market when considering your channels.
4) How/where will you promote your product?
Now is the time to determine how you will ENGAGE your customers. There are inbound and outbound approaches to a marketing plan; the inbound methodology relies on converting strangers into leads and nurturing them through the buyer’s journey until you have closed the deal. It is more passive and typically less expensive but also requires significant work in the lead nurturing process. Conversely, outbound takes a more direct and interruptive approach by pushing your marketing message through paid advertisements, billboards, trade shows, direct mail, etc. It is traditionally more expensive. Both approaches have benefits and a solid marketing plan will oftentimes deploy both to generate qualified leads.
Once you have identified the marketing outlets through which you plan to engage your target market, Curran delineates that telling your story is the next step. Here is his shortcut for synthesizing the key messaging of your product or service:
Who: your target persona
What: the problem you are solving as it relates to your persona
Why: the benefits of your solution
How: the specific features that derive those benefits
Where: your engagement channel
An effective commercialization plan will adress these questions clearly and with purpose. Good luck in developing your business strategy!
Be sure to check out previous Startup Lifecycle post on product development and download the full presentation on Slideshare.