Happy Mapping Monday! Today’s #mappingmondays video covers how to keep from being eaten from below when deciding which customers to focus on. As always, a full transcript is included below the video. And If you’re interested in finding out how to apply this to your organization, don’t hesitate to reach out via Twitter or email hello at coryfoy dot com!
Happy Monday! Welcome to another edition of Mapping Monday. I’m Cory Foy, and in today’s video I want to talk about a common problem startups can run into – figuring out which customers to pay attention to and how choosing wrong can cause you to be eaten from below or cornered into a – possibly lucrative – niche.
It all begins – as maps should – with user needs. We find a shared set of user needs – low hanging fruit – and execute on it well. Our market starts to grow and we find a couple of things true: We have a good spread of customers at different levels, and their needs are starting to diverge.
At the enterprise side, we have requirements such as single / integrated sign on, enhanced billing options, differing pricing and payment plans, increased capacity and scaling, customized support, and tighter management of people, not to mention a host of certifications customers would like us to have. These aren’t in the core product, but they are customer needs.
But a large chunk of our customers are early stage or even individual users, perhaps on free plans or smaller payment plans. They have differing needs such as the ability to rapidly integrate new functionality, clear pricing plans, best practices from how other people operate, and basically staying out of their way to get stuff done.
Comparing these needs leads to different maps of components in different stages with one problem – the capacity all comes from the same place. So we make a decision to focus on the larger customers because that’s where the most money is.
Implicitly that leaves a gap in our defenses. Looking at a map for an early-stage customer, there are several gameplays available inside of these value chains, and even more the more we map other user needs. Ideally if we’re going to ignore customers then we’ve built a moat around their needs which prohibits others from making plays into them.
But let’s say we just cede that market entirely. A competitor comes in and because they can’t compete on entire functionality they solve specific needs and provide an API for customers to be able to custom build solutions. As customers leverage the API to build their solutions, the company commoditizes these solutions into their product.
Of course, eventually these customers become successful and they start asking for some of the other things we originally focused on for our larger customers. But in this case the competitor still has an API and can rapidly respond to early stage needs, watching for innovation happening while also potentially meeting the larger customer needs – or simply being happy with a large portion of the market which doesn’t need those things.
This leaves us in a bad position. Now our pipeline of customers slows because our product has become more complex, but we’re also in a highly defensible, niche situation – getting where we are is hard, but hopefully it’s a profitable position because growth from there is going to be challenging.
By ceding a portion of the market to focus on lucrative opportunities we’ve allowed our pipeline – and therefore our growth strategy – to be eaten from below.
Countering this isn’t just “have more people”. It’s about making smart decisions of investment, as well as understanding what problems customers can solve on their own with a series of API calls versus what they need supported and where our strengths in supporting them are. This requires digging into our doctrine and maturity, as well as our business capabilities which we’ll have to save for another video.
Hope you’ve enjoyed this video! If you’re interested in learning more about applying mapping and strategy within your organization feel free to reach out on Twitter at @cory_foy or via email at hello at coryfoy dot com. And be sure to check out all of the Mapping Monday blogs posts on my site. Have a great week!