Prior posts in this series include:
1. Introduction to the series and general overview of the goals for the series.
2. Addressed the question “What is Competitive Advantage?”
3. Addressed the question “What are Business Growth Strategies?”
4. Addressed the question, “What are Company Development Strategies?”
5. Introduced the idea of mapping your strategy using Openview Lenses.
In this post, I will describe the first OpenView lens, Market Participants, in more detail.
Deeply understanding your market participants is one of the most important things that expansion stage technology companies can do. Understanding your market participants can lead to unique insights that help you to form your product-market strategy and are highly useful to understanding how well you are executing against your strategy.
The OpenView Lens framework is shown above, with market participants in green. If we zoom in on the green market Participant box, the detail illustrates the key market targets for your company. A simple example of this is below:
The basic idea of the detailed view is that you can use it to better understand your market participants. In this simple example I illustrated your target market segment, your target customers in that segment, and the simplest set of market participants that surround the target customer (I left off competitors to further simplify the diagram, but will get to that later).
I find this diagram really helpful when I have strategy conversations with companies. The first questions I generally ask are centered on the target segment the company is aiming to penetrate. Then I ask about the customers in that segment. Finally, I ask questions about who influences those specific customers, where those customers go for information (the marketing channels), and how they like to purchase products similar to the products the company offers (the sales channels). I delve into more detail on these later. While every company has somewhat different market participants, they can generally be viewed from a perspective similar to this.
Simple diagrams like the one above really help the simple case where the customer is both the user and the buyer. For example, purchasing a book on Amazon or signing up for Netflix.
That said, the diagram below, which breaks the customer into user roles and buyer roles, is much more valuable. The user side of the lens helps to set up and execute a really good whole product strategy and the right hand side of the lens helps to set up and execute a really good go-to-market strategy.
This diagram has 12 focal points:
1. Target Customer Segment: Most companies poorly define their target customer segment (or segments), but my view is that it’s really, really difficult to design an expansion stage strategy without a clear view on your target customer segment. Larger companies could try to penetrate several segments, but my recommendation is that you look through the market participant lens for each segment separately, as this is the clearest way to deeply understand your market participants.
2. Users: Users represent all of the roles who interact with your whole product (your core product plus all of the ancillary professional services, training, and issue resolution services that surround your product) throughout the lifecycle of your product and those who are in your target market segment. Users include people who install, configure, administer, and also those who interact with your product and services on a regular basis.
3. Buyers: Buyers represent all of the roles involved in the buying process of your product and those who are in your target market segment. They could include users acting in buying roles, the economic buyer, decision makers, buying committees, and legal and purchasing departments.
4. Influencers: Influencers represent the people who influence your buyers during their buying process to help them be more efficient/effective (for example, help them become aware of your product, help them decide to try your product, etc.). They could include people who previously purchased your product, important writers, industry analysts or any other people who influence your buyers (to help make them aware of your products and/or help them understand and/or prioritize products like yours). It is really important to understand the influencers from the perspective of the buyers in your target market segment, as influencers for buyers in one segment may not be the same influencers for buyers in another segment.
5. Indirect Marketing Channels: Indirect Marketing Channels are the “places” that influence buyers during their buying process. There are a significant number of marketing channel possibilities and they include periodicals, content sites, events, online forums, blogs, search engines, and more traditional advertising media such as radio, TV, print, and billboards.
6. Direct Sales and Marketing Channels: You can use Direct Sales and Marketing Channels to directly influence the buyers during the buying process. These include channels like your website and other sites of which you have control (Facebook, Twitter, LinkedIn, etc.), e-mail, sms messaging, and other forms of electronic messaging, telephone conversations, in-person meetings, and retail locations (if you control your own stores).
7. Indirect Sales Channels: Indirect Sales Channels represent the channels or the places your buyers can purchase your product when they don’t purchase directly from you. This includes e-commerce sites run by others, stores, VARS, Distributors, OEM relationships, 3rd party salesforces, etc.
The basic idea is that understanding your buyer more can also help you understand the related market participants in items 4-7.
8. Complimentary Products and Services: Your users (in your target customer segment) are working within a particular context, including products and s ervices. The more you understand the complimentary products and services and the companies that create them, the better you will understand the context of your users (and the more ideas you will generate for improving your whole product and, perhaps, partnering with providers of complimentary products and services).
9. Delivery Channels: Delivery Channels represent the Channels you can use to deliver your whole product (and its updates) to your users. These range from direct channels such as Internet, phone, and physical delivery to indirect channels such as having a channel partner deliver your product or delivering your product as part of a broader product someone else is offering (for example, shipping your software with Dell computers).
10. Influencers: These are people who influence the users of your product and help them to understand the product better, resolve issues, and better use the product over time. If you want a third party to help with your users (to help them resolve issues and/or use the product more and better), these influencers are helpful to understand.
11. Indirect Communication Channels: These are “places” that influence your users during the usage lifecycle. These include online forums, blogs, and other social network sites as well as periodicals and other sources your users read.
12. Direct Communication Channels: These are channels that allow you to communicate directly to your users and include the user interface of your product, your website and other sites of which you have control, e-mail, sms messaging, and other forms of electronic messaging, telephone conversations, in-person meetings, and retail locations (if you control your own stores). The key is to understand the channels that are best suited for your users.
Note that reality is much more complex than the arrows in the diagram and all of the market participants influence every other market participant. That said, this diagram is extremely valuable in trying to parse your market participants to help you get unique insights, set product strategy and go-to-market strategy, and to help you understand the effects of your execution on your market participants.
In the diagram above I added a 13th item to the prior diagram, Key Competitors. I added it last for two reasons. First, it complicates the diagram and I wanted as simple a diagram as possible. Second, and more importantly, it is vital to consider your key competitors in the context of the other market participants rather than independently.
The key opportunity for you with this lens is to really get clarity on who your market participants are and to better understand them. If you can get this clarity and gain some unique insights, it will lead to a much better understanding of what you need to do to maximize your market penetration.
In my next post in this series, I will describe the second OpenView Lens, Market Touch Points.