Hugh Morgan

Structuring Your Product For the Market

· · 2 Comments

In this two minute video I describe how to structure your product for the market you are going after.

Structuring Your Product For the Market

A transcript of my comments follows.

You have to look at the market you’re going after, how they’re going to make the purchase, and how streamlined you make the product to do that. So for example, if you’re going low into the SMB market, it’s going to be sales service. Somebody’s going to buy it off your website with a credit card. Then it’s got to be simple, it’s pretty much got to be all you can eat. It might have a basic in advance, or basic standard advance, but it’s not going to have a lot more than that.

If you’re going after the bigger market, basically the bigger you go, the more likely it is you are going to have a lot of customization, a lot of configuration, probably a lot of services supporting what you sell. So, it’s pretty easy as you look at the market you’re selling into, to figure out natural break points and how you structure your product, and pricing to map to each of those markets. And I’d say again, don’t reinvent the wheel. Look at how folks in the market, they may not be your direct competitors. You’ve got a much better offer than what they do, but look at how they structured things. So, if they’ve been in the market a number of years, they’ve learned how the market accepts product, and what it expects to see in it.

I think you’ll have pressures from the market, to price based on price. Here’s what I can afford. You need to think through what your value is, and what the value is you’re offering in price off value. And the reality is, the answer is somewhere in between. So, you may feel that you offer a value proceed of $10,000, and the market thinks it’s $4,000. Well, you’d probably be happy with $7,500. But you need to do the stance with the market, where they’re just going to price based on what they already know and what they’ve seen on the shelf in the grocery store. But if you’re offering has added vitamins and fiber and enriched goodness and all those things, and you know that it offers greater value, then you’ve got to hang in there and charge for that.

Determining Your Pricing

· · Leave a Comment

In this two minute video I describe how to determine your pricing.

Determining Your Pricing

A transcript of my comments follows.

Pricing is typically a work in progress with an early-stage company. But I’d say a couple of things about it.

One is don’t reinvent the wheel. You’re likely selling into a market that thinks about pricing a particular way and so your pricing should be relevant to the industry you’re selling to, you know, by container, by square foot, by transaction, by seat, by ton. And they may not have bought your product before, but they bought things they think are like your product. So you don’t want to lengthen the sales cycle by educating the whole new method of pricing what you sell.

The second thing I think you want to do is tiered pricing. So you want to think about, “Gee, I’m going after this piece of the market, but even within that, say, the SMB or the SME market, there’s a pretty broad range of people, and I want to make sure I can meet their needs by offering a basic, a standard, and advanced package with various features and bundles.

And then, the third thing I’d say is be flexible. Test your pricing up and if it’s not working, tweak it.

Actually, there’s a fourth thing. I’ll often talk with start-ups that are eager to get logos on their website and they want to get customers, and so they’ll say, “Oh yeah, we’ll offer it for free. We’ll do a free trial. It’s not a problem.” And that’s nice. It’s often counter-productive.

Number one, if someone’s not willing to write you even a small check, you should wonder what their commitment to what you’re doing is. And the only thing worse than not having a sale, is to have a sale that you’ve made that’s failing that you’re spending time on.

So number one, I’d say you almost always want to charge for what you do. And related to that, I’d say free isn’t usually the biggest issue for if you’re selling to someone in business. Because the issues are much more about, “Does this take up my time? Am I putting my own personal capital at risk within the organization? Is this going to screw up the way I do things?” So those are usually much bigger considerations for the individual you’re selling to.

And those are just part of what makes the sales cycle the length it is.

Defining Your Target Verticals

· · Leave a Comment

In this 1.6 minute video I describe how to define your target verticals.

A transcript of the video follows.

One of the biggest challenges as a start-up or an early-stage company you have is being focused, and you just can’t sell to everyone. So, you need to whittle down your market by vertical, by company size, by location. Verticals can be defined by NEIC codes, and you’ll be pretty nimble. You’ll change these as you have success or not and grow.

Size of the company, very important, so you’ve got to really think hard as a start-up if you’re going to sell to GE because you’ve got to think through what the sales process is with a Fortune 100 company, and the individual you’re selling to in the organization. You need to be realistic about this. I hear a lot of people telling me they sell to the C-level. We’d all love to be selling to the C-level, but I rarely have the C-level answer my calls. It’s much more realistic to start at a level where you can make an operational difference.

The other thing I’d say is when you’ve done that, you can then use that information to do a market sizing, understand what your addressable market is and what piece of that market you’ve got. You can do that top-down, so, “Here’s the sales in mining, or shipping or logistics. I think I can get this piece of it”, and bottoms-up. You can actually estimate the number of companies and size and whatever. You can get this data from the Census Bureau and the Bureau of Labor Statistics.

Developing Your Buyer Persona

· · Leave a Comment

In this two minute video I describe how to develop your buyer persona.

A transcript of my comments follows.

Buyer persona is an actual description of an imaginary individual that you’re selling to, with as much kind of detail as you can develop. Bob’s mid-western, went to Ohio State, has worked in business for 15 years, is a middle manager with these kinds of concerns, he coaches little league and he thinks a lot about the way he can make his team more efficient. Those kinds of things, it’s funny. I think it’s our nature as humans is we gravitate to that which is personal, and so it helps both your sales and marketing folks really visualize who they’re selling to.

At one level, the buyer persona sounds like something big companies do that are out of touch with their customers. But I found that defining buyer persona, and there’s probably more than one, is a great way, a really important way of connecting your marketing and sales teams so that they share a common vision. By writing down on paper the person you’re selling to, it helps you understand what is important and what is not important about what you’re selling and who you’re selling to. It’ll help you align your team and ultimately drive sales.

So, the sales guys will come back in and say, “Oh no, man. Look. When I’m calling on these calls, first of all, here’s the level of person I’m
getting through to. Here’s what they’re like. Here’s where they’re focused. Here’s what their worries and concerns are.” Those aren’t things that necessarily are going to percolate up through a market study or an analysis of, needs analysis.

 

Developing Your Message

· · Leave a Comment

In this two minute video I describe how to develop your message.

A transcript of my comments follows.

Transcript

Developing a message is really important, and it’s important for a whole number of reasons. With an early-stage company, a lot of it’s about getting your team on the same page. You want to align the team around a common understanding of where you’re going and  what the benefits are of what you’re selling. It’s deceptive; it can be quite hard to come to a common agreement and describe it in a way that’s simple and memorable when you’re selling.

Things to keep in mind about your message: One is what is really important, and it’s important because you want to communicate benefits to your perspective customers, but also because you want to unite your team has a common vision. What I find when I work with early-stage companies is that usually is part of the process. The second thing to say about the message is that it just takes work to get there. The simpler it is, the harder you work to make it sound the way it does.

The third thing about the message is most startups that I work with are really focused on the product they’ve delivered, or are delivering, so tend to think in terms of features rather than benefits. You typically think of business benefits being return on investment, increase revenue, or spend level, but they can be psychic too, they can be about the individual you’re selling to; what it does to his job security or how it promotes his profile in the organization. Being aware of those things and embedding those in the
message is really important.