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About This Episode
Once you have about 20% market penetration, year-over-year growth starts to taper off.
That’s why you should expand into new markets before you reach those points. For a lot of companies, the honeypot starts to run dry and they have to look into new areas.
In the latest episode of The Sales Engagement Podcast we interviewed Jake Young, Director of New Market Sales at Weave HQ, about how Weave is expanding from a focused base of only selling to healthcare companies to much, much more.
Here are some of the highlights from the interview.
How to begin expanding into new markets
It can be daunting if you try to tackle every new market at once.
At Weave, they sell into healthcare: dentists and optometrists. For a long time, they were hyper-focused (to their benefit), and only recently have they been expanding because they believe they have a product that can be sticky for all SMBs.
The first question to ask yourself when considering a new market is, “Are people coming to us organically?” If they are, it may be time to do some testing.
How to measure lead sources for new markets
First, understand the new market academically.
There is a total adjustable market, and there’s the format of the business. In Weave’s case, the format of the business gives them a lot of direction:
- Do they have phone systems?
- Are they communicating with customers on a daily basis?
- Do these customers wish there was a better way to communicate?
- Are they wanting to text naturally?
- Are they calling in and getting voicemail?
- Are they providing a service or a product?
Once they understand these things academically, they can start forming a hypothesis. For example, they are moving into financial services. Accountants and bookkeepers have a similar format to a dentist’s office.
If the format is similar enough to your current customers, test it:
- Are people coming inbound to us from that market? If the answer is yes, you can invest a little money into one or two resources. For Weave, this is usually in the form of attending an event. They have a very short sales cycle and can close up to 100 deals in the course of a single weekend.
It’s important to note that at this point, Jake and his team have yet to ask for dedicated marketing, onboarding, and support resources for this vertical. They’re just testing and experimenting with the market. They’re lucky enough to have enough capital coming in from customers that they can fail at times.
If you’re looking to expand similarly, ask yourself, “What is the position I’m in?” If you invest $100,000 into two reps’ base salaries, and that’s going to cause your cash burn to go too high, then don’t do it. But if you have the cushion to fail and fail quickly, then experiment accordingly.
How to know if your reps are masking a good/bad market
If you give this new market to one or two reps, what if those reps just aren’t good? What if you get a false negative? Or you put your two best reps on it and get a false positive?
It’s a great question, and one Weave is still battling with internally. They have two verticals they’ve started with over the last two months. Interestingly, they both have stories like the ones mentioned above. One came out very strong, and one came out of the gates . . . just OK.
It’s a chicken/egg situation: “Which is it? Is it the product/market fit or is it the sales rep?” The truth is that it’s a matter of whether or not you can keep going and scale. Beyond the first couple of reps, can you scale at the same rate?
“It has to scale,” Jake said. “We can’t have it be top-heavy, where 1, 2, 3 people get it and then the remaining 4-5 hired after can’t do it.”
From the sales side, can you sell this and do it repeatedly? Or when you bring on new reps, are they outpacing their leaders?
Then, while there may be a sales/market fit, you also have to measure the onboarding stage.
How many people are making it through onboarding? Is the product easy enough for them to onboard into their office or format? Can they get through the first 90 days? If so, then it’s an implementation fit.
There is also a final very important question to answer: Are the customers renewing with you? Are they using the product day in and day out?
When you have a strong return on a new market, you may be tempted to go gangbusters and dedicate dozens and dozens of reps to it, but you don’t know what you don’t know. You have to give some restraints and follow your testing through to the end.
You’ve probably heard the phrase: All models are wrong, but some models are useful. One area models are very useful is around customer retention/churn. You have to be cognizant of this as you experiment.
“We don’t want to create a death spiral from a vertical that we thought was going to be phenomenal and doesn’t turn out to be so,” Jake said.
One piece of advice to somebody looking to open up a new market.
What got you here won’t get you there.
But, the heartbeat, the fundamentals, the foundation of your company that you were built on . . . it will typically replicate. It doesn’t have to be a completely new faucet.
If the market is totally different than what you’ve done in the past, there will be so many new roadblocks, it’ll be like starting the company all over again—with even more complexity, since you have competing interests internally.
Stick to the fundamentals.