Why are new markets so difficult?

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By Kirk Averett

Selling a new product to a market you already serve is relatively easy. Taking an existing product into a new market can be slow and frustrating. Why? And is there a way to speed it up?

A few years ago, Office 365 began taking the enterprise world by storm. We were already successfully offering it to small businesses and wanted to win with enterprises, too. Thus began a painful journey of about three years until we finally found new success.

Our team expected that we'd have to make changes to marketing, sales, and support, though we didn't appreciate the degree of difficulty. And three big things slowed us down:

• Our internal discipline for creating simplicity, which wonderfully helped our small business customers, was a massive impediment for complex enterprise IT needs.

• The economic model of the new offering was not strongly related to the economic model of the old offering-- even though, on the surface, customers bought "the same thing."

• What customers said they wanted was different from what they were willing to purchase for a fee.

How did we eventually succeed? The short version is that we had to overcome the momentum of our previous successes, learn and respond with humility, and iterate until we got it right.

Based on that and other experiences, I'd recommend a different approach to someone facing a similar new market opportunity:

• Recognize that internal processes and priorities have a massive impact on new customers. Identify people on your team who are highly adaptable and dedicate them to the target market with a mission to learn, adjust, and report.

• If a new market has enough potential to be interesting, decide early to be flexible on pricing and packaging, and spend a lot of time listening. It won't always work out-- for a different product, the final economics in the market were not good enough to stay.

• I don't know a perfect solution to the problem of "the customer says X but does Y." In the end, data doesn't lie, so trust the data, especially actual customer purchasing behavior.

Theodore Levitt of the Harvard Business School once said, "Products are almost always combinations of the tangible and the intangible." That's true of what your products offer to your customers. That can even be true of what your customers bring to you. Good luck with your next market!