Once your start-up has been established, business is humming and the primary offering you launched with has become a success, the challenge is to find the next big thing.
While you’ve been successful and found what works for you so far, you can’t rely on that to carry your business forward forever.
All businesses and markets grow and evolve. You can’t afford to stay still, or you’ll risk some other new entrant encroaching on what you’ve built and achieved so far.
After all, what’s to stop someone doing exactly what you did when you launched your start-up business?
How will you protect your customers and prevent them from being distracted by your hungry new competitors, bold claims and a brand spanking new offer?
It may not even be a new entrant, but an existing competitor determined to recapture some of the market that you claimed when you arrived on the scene.
You need to counter and protect against their efforts by looking out for new opportunities to grow.
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These opportunities can come in many forms. They could be introducing new or complementary product or services, or taking your existing products and services to a new market segment.
Either way, it’s important that you don’t rely too heavily on prior history or assume what work worked in the past will deliver the same result, second time around.
Here are my top five tips for a successful sequel:
1. Understand your target market
The most important thing is to think externally and know your market. We know not all customers are the same. However, you can categorise your customers in order to understand their profile and develop a strategy and tailored marketing approach.
The Innovation Adoption Curve is one useful tool to understand your target market.
The curve can be used as a method to understand customer segments and how they adopt new product or service offerings over time, based on their characteristics and preferences. There are five adopter categories:
- Innovators: are the first 2.5% of customers to adopt new innovations. They appreciate technical developments; are willing to take risks on new offerings that may fail and have the financial resources to absorb these failures in order to be one of the first to own or experience the new offering.
- Early adopters: are the second fastest category of customers to adopt a new offering, with the highest influence over other customer categories. While they are still relatively quick to invest in new offerings, they have more discretion in making their purchase decisions and greater financial resources then innovators. They are the opinion leaders and are valuable to capture given they make up 13.5% of all consumers and provide a powerful word-of-mouth benefit.
- Early majority: are slower to adopt but will follow the advice of early adopters. They make up 34% of customers.
- Late majority: also make up 34% of customers, but are harder work. They are skeptical, have less financial means and will only be convinced to purchase once the majority have already done so.
- Laggards: This category is the last to adopt a new offering, are resistant to change and very traditional in their outlook.
Understanding this curve is important in terms of knowing what market segment will be attracted to your new offering and which features are most important to each category.
With this information you can devise a strategy to capture your share of the 81.5% of the market that matter the most.
2. Treat your second offering like a start-up
Don’t let prior experience blind you to changes or greater opportunities that deserve proper consideration.
It might seem hard to go back to the grind and start with a clean slate, especially when your historical approach has been successful.
It’s tempting to apply a legacy model and just repeat what’s worked in the past. However the circumstances aren’t exactly the same this time around.
Your offering is different, the market will have evolved and you might be targeting a different customer segment.
Even if you’re pursuing the same customers, their opinions and knowledge may have developed and strategies that might not have stacked up when you first launched, may now be more appropriate second time round.
You would much rather invest your time in proper consideration and analysis, than spend your money learning costly lessons.
3. Test, monitor and refine before launch
The best way to discover where to focus your efforts is to dip a toe in the water if possible and test your assumptions, just like you would with a start up business.
If you’re bringing a new offering to your existing customers, take it to a small selection of your customer base who you know will give you thorough and honest feedback.
You might want to test the uptake with customers that have different buying preferences, values or needs to be fulfilled, to see how their perspectives vary.
You may find one segment is more responsive than others and can focus your efforts accordingly. Think about how you would test your offer with a new market segment to gather similar information.
When you’ve found what works, then work out how to launch it en masse.
4. Leverage your intellectual property
While you don’t want to be blinded by history, you will have knowledge, experience, customers and a brand that you can put to good use.
Leverage off this and use it to your advantage to support your tested strategy.
Customers in the early adopter and early majority categories will be looking for information and evidence of reliable, established businesses that support the new products or services, as part of their decision-making process.
Properties and features that weren’t core to your value proposition previously, may be key selling points now and should be evaluated as such.
You might want to capture and utilise the knowledge and experience of your staff and existing customers to develop the strategy for your new offering.
5. Get your staff and existing customers on board
Involving your staff and customers is one way to engage and make them supporters of new offering. They are stakeholders too, who may be resistant to change.
They can also fall into the trap of sticking with what they know and feel comfortable with repeating, especially if they don’t see the new offering brings any benefit to them. This can be counter-productive to your strategy.
With staff, you may need to provide information and training to ensure they are appropriately armed with the knowledge to sell, deliver and service the new offering.
Tell them why you’re launching it, explain the differences or complementary features and ask for their thoughts and contribution to the development and deployment.
Consider ways you can incentivise them for supporting the new offering, without damaging your existing business.
Your existing customers also need to continue to feel they are being supported and valued, whether or not they buy your new product or service.
How will you position the new offering in a way that is relevant or reassuring to them?
Always assume they will hear about your new endeavors and take care not to make claims that are contradictory to the messages already delivered.
Be on the front foot with servicing your existing customer needs to ensure they don’t have reason to jump to any negative conclusions.
While you’ve already taken the hardest step in establishing a new start-up, giving the same care and consideration to your subsequent endeavors will result in carefully executed strategies, that deliver better returns and reduce the potential risk not just for the new offering, but the rest of your business as well.
Marc Peskett is a director of MPR Group a Melbourne based firm that provides business advisory services as well as tax, outsourced accounting, grants support and financial services to fast growing small to medium enterprises. MPR Group is a member of the Proactive Accountants Network. You can follow Marc on Twitter @mpeskett