A few months back, I was talking to a founder in a growth stage product in the logistics payment space. He asked me how to tie in customers using legal contracts. My simple answer to him – the value offered by your product should tie in customers, not legal contracts!
Your product should be sticky enough that customers find it increasingly hard to replace you.
A metaphor I often use I while explaining the concept of identifying your Ideal Customer Profile and making your product sticky within that segment is that of a tree and its roots. Think of your product business like a tree. For a tree to grow, it needs to have strong roots. Think of these roots as the relationships you have with your customer segments. The roots can go deep and it can go broad. When it goes deep, it is essentially developing strong relationships within a certain customer segment. When it goes broad, it is going across multiple customer segments. If the roots are very broad and it is not deep anywhere, it is much easier to uproot it. You are spread too thin and it will be very easy for a focused competitor to replace you. Whereas if the roots are deep in a few places, it is much harder to uproot the tree. I.e. a competitor cannot easily replace you in those segments. Then the question becomes how do you go deep and develop strong relations. Let me give you an example to illustrate some possibilities. I have been advising a startup in the task management space. They had found some initial traction in the MSME segment. I asked them which customer sub segment they wanted to focus on within the MSME segment. They said they wanted to focus on a dozen sub segments including software product companies.
I felt they were trying to go too broad. So I took the segment of software product companies to illustrate the point. I asked them who some of their competitors would be in the software product space. They mentioned a few like JIRA, Asana and others. I picked up JIRA, because I have used it in the past 😅
JIRA has plug ins and integrations in place with commonly used tools in the software ecosystem such as Jenkins and Bugzilla to name a few. It would be very hard for a bootstrapped product team to replace a well-entrenched player like JIRA. 💡💡💡 Then I asked them the segments in which they were seeing traction. And they said small financial services firms and architecture firms. My next question to them was – are there tools you can integrate with for your existing customers in the financial services/ architecture firms? They had a few ready answers based on what their current customers were telling them. My suggestion to them was to focus on going deeper in these two segments before going broader into other segments. Of course, by going deeper in the segment you would also be able to sign up more customers in the segment. That is one example of how you go deep with customers segments.
If you would like to brainstorm ideas on how to go deep and broad with your product, give me a shout and I would be happy to have a conversation.