Entering and penetrating new markets to bridge the gap from early sales success to sustainable growth is a challenge every business faces. As your contracts with your early market begin to dry up, you face a challenge - finding new customers that not only want, but believe in what you have to offer.  This is a classic market penetration issue.

How do you continue to generate demand for a product with stagnated growth?

There’s only one real answer: you have to explore new markets or segments.

Most businesses go about this one way. They adopt a sales-driven strategy, taking money from anyone who offers it. They go after their entire market, when in actual fact they should be adopting a completely different strategy, known as market-driven penetration. I’ve witnessed and deployed both strategies on many occasions. The latter has always had the greatest impact.

An Act Of Aggression

Entering a new market is an act of aggression.

Companies who have already established themselves in these markets will view it as an intrusion onto their hallowed turf. They will do everything to close your efforts to enter their market down.

Loyal customers of your new competitors won’t be too welcoming either. They’ll be suspicious of your motives as a new and untrusted player that’s now vying for their attention, which will only be agitated by your competitors’ kill campaigns.

Nobody wants you - you’re invading their space. But this isn’t a time to win friends - it’s potentially life or death.

What Is A Sales-Driven Market Penetration Strategy?

Investors and executives often think about the total addressable market (or TAM) and market share. When looking at the long-term view, this is the right approach to take. But this strategy does not work in the short term. In adopting this a sales-driven approach, you’re focused on achieving the greatest market penetration in the shortest amount of time. While this might appear to be a sound strategy, it usually ends in catastrophe.

Why?

You don’t have unlimited resources at this time, so by focusing on attracting anybody you can, you’re depleting what limited resources you have. Your sales and marketing teams are targeting many different types of prospect, who all have different use cases and needs. Product has to deliver a product that caters for all of these needs, while customer success and support are struggling to become experts in every possible use case.

You’re making easy money through the path of least resistance. But you’re making your business work harder for that money than it should. You’re trying to become a whale in an ocean with the resources of a goldfish.

What Can The D-Day Landings Teach Us About Market Penetration?

Had Allied forces adopted a sales-driven market penetration strategy during the D-Day invasion of Normandy, we would likely be in a different world than we are today. Instead, they adopted a market-driven strategy.

When the Allies plotted to re-take Western Europe, it was dominated by Axis forces. Allied forces most certainly weren’t welcome. In order to regain control of Western Europe, the Allies first had to establish a strategic stronghold on the mainland (the beaches of Normandy) from which it could then launch future attacks.

Before the Allies could build their strategic stronghold, they had to overwhelm entrenched defending forces. To be successful, this had to be a highly targeted and focused attack on a single point. After driving the Axis from their position on the beachhead, the Allies could then take over adjacent districts in France on the way to the end goal: liberating Western Europe.

Why Is That Relevant To Market Penetration?

When the allies chose their strategic stronghold, they were effectively selecting a very targeted niche market where they could dominate from day one. This is domination that forces competitors out of the market niche. It’s known as identifying your Minimum Viable Segment.

Establishing a small, but dominant stronghold in the market gives you a platform to launch future market penetration activities from. It allows your business to focus an overabundance of support and expertise into a confined niche. You can build a solid base of use cases, case studies, sales and marketing collateral, internal procedures, processes and documentation that enable you to build a repetitive business.

It also allows you to build a repeatable process for acquiring, nurturing and supporting a very specific group of customers. You build a customer experience that delights your ideal customer. It literally wins business organically. This is because you’ve limited a key variable in your business: the type of customer you want to work with. This artificial limitation may sound backward, but please hear me out. The tighter you focus, the easier it becomes to develop and deploy marketing messages that travel by word of mouth.

This is the essence of a market-driven penetration strategy.

Not adopting this strategy leads to diluted marketing messages that don’t travel, which means your sales team is selling cold. They receive mixed feedback from prospects, which only confuses the messaging even further. It is a classic symptom and consequence of trying to expand market reach too quickly with a generic message for a loosely defined market.

 

 

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