“We’re pivoting!”
I’ve worked with thousands of startups who after they achieve ‘product market fit’ they realize they need to pivot. And quickly.
That’s because many people build the product and bring people to the product. Rather than building the product and bringing it to the people.
The pivot usually comes when you’d set your sites on, let’s say, “selling to companies with 1000 people”. You do all this work, you’ve built your product, but it turns out, they are not buying it.
So what naturally happens is, you look at the size of the market potential and try to sell it to another unsuspecting customer group.
You’re misguided by the size of the market – usually driven by TAM.
TAM, short for total addressable market, is the first step of market sizing whereby we look for the total demand for a product – assuming things like price, geography, implementation etc are no issue.
You’ll have a quick research, you’ll come up with this insane number that you think sounds impressive to investors or whoever.
You’ll say something like, “there are 18 million businesses in this field that do this and this and this” – let’s target them! It creates this false sense of opportunity.
My issue with this is, how many are struggling? If they are not struggling they cannot see you.
All of a sudden, your numbers don’t stack up.
This is where I have a big problem with TAM.
In this instance, this is where positioning comes into play.
Using positioning to get closer to those struggling
Positioning takes into account not only what your product is, but what it does for them in a very specific context. It’s about helping people and guiding them to buy. Or, more obviously: Why buy from us and not the other guy? Learn more about positioning and Jobs to be Done with my interview with April Dunford.
Somewhere along the way of us creating and growing our businesses, we were told to develop products and talk about features… irrelevant of the context.
We say our products can solve anything and do anything.
It’s crazy. We become nothing to no-one.
What’s the unlock then?
Context creates value and contrast creates meaning.
We know that context creates as much value as the product.
Think about it. Ask yourself, do you like steak or do you like pizza?
Personally, I like both but it depends on what context or what occasion. Would I choose pizza for a special night out with my wife? Probably not. Would I chose a big steak meal when I’m looking for something quick to eat? I don’t think so.
It’s all about understanding how to pick the right context to attract people who then pull things into their life. You can dig deeper into this with my interview for JTBD.org.
This is where marketing comes in.
I see marketing as the radar system; to help people know they are having a struggling moment.
It’s all about getting to those people who are problem aware, rather than attract solution aware people and then having to go back and educate them.
So if you consider attracting potential customers to your product through this perspective and you revisit the TAM number you’re using – you realize pretty quickly there’s much more work that needs to be done.
Further thoughts to consider:
- Think about the ‘thing’ that activates people. Also known as disruption theory.
- Look at the most recent figure you provided for your TAM number and really question it.