B2B Tech is now a distribution first market
Launching and scaling a B2B technology business is now a distribution-first market. The trend started before lockdown but WFH gave us an unexpected sales boost as businesses were forced to digitise. Post-COVID saw the beginnings of platform fatigue and declining attention spans. AI created a hype market, accelerating distraction and increasing the sense of overwhelm. Enthusiastic adoption of AI sales and marketing automation tools by outbound practitioners turned the flood of useless and distracting information into a deluge. AI coding tools became more effective and the low code market matured commoditising the build side and lowering the barriers to entry. Customers started entering buying cycles later and were more educated while their buying processes started decentralising.
All these factors have led us to the sales on-demand market, where customers are harder to engage and they buy the way they want to buy. We have shifted from an 'outside in' sales market to an 'inside out' buyers market.
The customer and sector you serve determine your distribution model. Your distribution model sets your strategy. Here are seven reasons why a distribution-first approach gets you to market faster and should drive the strategy of your business.
Willingness to Pay
The main barrier to high growth is finding enough customers with a high willingness to pay. The size of the customer's business, the value you offer and how easy you make it determine the willingness to pay. Willingness to pay fixes your price, pricing model, business model, customer acquisition strategy and product roadmap. Starting with distribution leads you to customers with a high willingness to pay faster.
Building Trust
To build trust you may offer freemium, a fixed trial, an onsite POC or a paid pilot. These require significant investment in time, energy and resources to get working in a way that allows you to grow your business. You can't build and serve them all. Your distribution model dictates what you need to do to create trust. Sell the way the customer buys.
We can serve many sectors
B2B products often launch with a product that can serve many sectors, they do not want to focus as they believe this limits the upside opportunity. The problem is they all can. Sales will not get easier until you can collapse time to value for a particular customer in a chosen sector. Build a narrow end-to-end process that serves a single distribution model for a single sector. This will allow you to get data quickly, experiment faster and discover where to be or not. Trying to serve multiple distribution models means your business never learns to go fast. Once you have one distribution process working it's faster to add other models. Your business starts to scale when your customers look alike.
Two Sales Cycles
There are two sales cycles to serve. The first is when the customer investigates and seeks information "Why should I talk to you". The second sale is when the customer seeks value. "What value do I get, what do I have to do". Most teams build for the second sale first which leads to an explosion of product features and multiple value journeys. The first sale is where the market constraint now is, permission for first contact is increasingly elusive. Your distribution model leads you to which first sale to serve. Build to solve for the first sales cycle first.
Platform Fatigue
No customers are seeking 'another' tool to log into. Narrow the focus of your product roadmap to make it easy to buy. Your product build journey;
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B2B businesses used to build in sequence to serve many sectors and could often launch after the first step. Sales are harder and customers are now expecting you to get to the last step before they buy. The cost to build and enter is not decreasing, it is shifting towards modularisation and integration. Your distribution model will guide you to which bundles to offer and how and where to integrate them to trigger a decision to purchase. Your product has to be built to sell.
Product Roadmap
The success of your business is based on how quickly you can lift the income statement. The 'old' way of building for B2B was to identify the problem and build a solution to solve it. This meant building over 85% of the product before the customer could see value and buy. Sales, Onboarding and Time to Value are now the main currencies for success. The buying market has shifted to inside out, the build process has to follow the market. Build to serve the customer buying journey followed by the customer value journey. Build less and follow customer value journeys. Your distribution model sets how you sell which sets your product roadmap. How you sell is now more important than what you sell.
Different distribution models are different businesses
Enterprises value services and place a lower currency on products. They seek security, integration, stability and flexibility. Small businesses value products and won't pay for services. They seek self-service, easy onboarding, low support needs, and high ease of use. Channel sales are slow, hard to activate and require great support and a stable product that integrates into their business. Different distribution models are not sales channels, they are different businesses. The distribution model sets the skills you need and the team you build. If you spend your life trying to be good at everything you will never be great at anything. Focus on one distribution model first and build the team and skills to serve this. Create a fire hose, not a sprinkler.
Brevity is the new Gold
"Sorry I did not have time to write a long letter so I wrote a long one instead" Mark Twain. Everyone is seeking simplicity; in communication, the message, the engagement process and in your product. You can only simplify the message, the value and the journey by focusing on a particular customer using one distribution model. Customers don't want a Swiss army knife, they want the most beautiful steak knife in the world. Confused customers don't buy
We are now in the customer buying lead markets where your distribution model sets your strategy.
Co-Founder DOKKA.com / Prev. Co-Founder Clicks2Customers & incuBeta / Angel Investor / Crypto Enthusiast / Love the Startup Space
6 个月Daniel Silberman you should have a coffee with Keith Jones - great down the road from you and this resonates with me. Cc Luka Petkovic
CEO @ Fluid | PMO, Project & Portfolio Management Software
6 个月Some great insights here Keith Jones the B2B has changed. In no small part because of the cost of capital and the difficult economic climate. buyers are buying differently … adapt or become obsolete
All this is 100% true in B2B software. I have seen all of this. One thing you may want to add Keith Jones is that there are platforms opening themselves to developers (e.g. Salesforce, Dynamics) that further simplify implementation but have a strong impact on distribution. Again, distribution is becoming a key strategic factor in product strategy and GTM strategy. It has become the first strategic question you must answer.