Imagine this, you are the CEO of an organization that has been realizing exponential growth, I mean 200% + growth year over year in both revenue and customer acquisition. Life is good and as the CEO you are ecstatic. You have established a great beach head to work from and have a bunch of successful customers and great partnerships you are leveraging.
Then it happens, the killer of men, the destroyer of businesses, the downfall of many, the emotion of "Pride" and the feeling of invincibility become part of your daily routine. We can do better, our product is amazing, we just need to expand our market and drive harder.
The next step you take becomes the largest stumbling block in your organizations history; you decide to reinvent yourself into a much larger market. The first step, decide a new category that you feel you can own, change your marketing message to fit the market, update the website to reflect your change, and train your sales personnel how to sell in this new market.
You are excited to see the shift happen so quickly, people are excited, the message seems to be resonating with a new market, sales are increasing and you think "man, why didn't we do this sooner". Then it happens, your new target market customers start complaining or even cancelling, you think to yourself what is going on here, our existing customers are happy, why aren't these people?
Next step you start doing is throwing people at the problem, hire more people to help our new customers, they just don't get it, and we need to help them understand. You start to see adoption rise a bit so you throw more people at the problem thinking that is the cure. However as time goes on your cancellation rate levels out at levels that are 8 times as high as they used to be, however sales are only 1.5 times higher.
Now you are losing lots of sleep at night thinking what is it these people want? Why is this new market so difficult? They need what we have, why aren't they adopting it?
By embarking in on this new market you have introduced a product that was built for a different subset of buyers, you changed your marketing message and go to market strategy, and your sales personnel are selling what your new market wants, but does your product live up to the what is being messaged and sold?
Think back when you created your original product, it wasn't created with an inside out point of view, it was created by talking to your perspective buyers and you found out what they needed. You created a product they would use and be proud to tell others about.
The answer to this lies in the "Market Divide", and it has escaped you. The "Market Divide" is delivering a product to a market that the expectations in the market are different from the product you deliver.
The critical mistake too many software CEO's make is missing the Market Divide, the key to not falling into the divide is the understanding that embarking in on a new market starts with market research, then evolving your product to deliver on the new market expectations, market testing for true adoption, then marketing message and positioning along with sales training.
Don’t lose sight of what made you successful in the first place, go ahead and embark into new markets, just mind the “Divide” and don’t let your aspirations get ahead of what your organization or product can deliver.