There are 3 key strategies of business that you need to get dialed in to break $1 million in revenue in a single year.
These are the focus of your entrepreneurial learning in a Stage 1 business ($100k to $1 M). Your goal should be to learn your:
1) Product/Market Fit
2) Message-To-Market Match
3) Optimal Selling Strategy
You've most likely seen these terms used as buzzwords in lean startup blog posts, but you probably haven't figured out what they really mean to you.
Something missing from the lean startup movement was direct response marketing. Lean startup adopted the language of direct response, but without the hustle (sense of urgency), nor accountability.
Lean startup also relies heavily on product/market fit often to the point of excluding the other two key strategies completely.
There is a belief in the startup world that all you need to do is build a better mousetrap. The thinking being, "If the product is a fit, then it will sell itself."
The problem is that making a better product and it sells well is sometimes true. Enough succeed with this sole tactic that it gets passed along as the best way to create a startup.
Great Message, Mediocre Product
Product isn't king in direct response marketing, though. It really helps, but a mediocre product will do if that's all there is to sell. The direct response marketing world taught me that getting the right message-to-market match will sell millions of dollars of a mediocre product.
Take Clickfunnels as an example. The software is very buggy. Sometimes crucial pieces of it don't work at all.
However, they dialed in their message-to-market match and created a multi-million dollar business in a couple of years. I believe they were at several million in recurring revenue in year one.
Clickfunnels, is a mediocre product, but their messaging is spot on for their market. They targeted Internet Marketers with language that said, "if you get your funnel right, you'll have a successful business." In other words, they tapped into the IM world's desire for a silver bullet to their business woes.
Clickfunnels also figured out their Optimal Selling Strategy (OSS). Sure, you can go on their site right now and click a button to buy just like every other SaaS company. But they acquire lots of new customers through webinars. Lots and lots of webinars to their own lists, through ads, and through super affiliates.
They realized that the story was inseparable from the OSS. They developed a way to convey the right messaging to the right market within their optimal selling strategy.
Here's the secret...
Clickfunnels, even though it was backed by the knowledge and experience of Russell Brunson and the DotCom Secrets company, they still had to figure out what the OSS was. They were testing lots of ways of selling the software.
Since they blasted right on to being a Stage 3 business, they have to have multiple Optimal Selling Strategies for the different markets they are courting. Also, an OSS stops being optimal over time. A market will get saturated and will begin to ignore both the message and the sales system.
How To Use The 3 Key Strategies For Your Stage 1 Business
Product/Market Fit: In Stage 1, we are not trying to create the "perfect" product for the market. We want to develop one that resonates with a market. There is a lot of trial-and-error here because we always have to make an educated guess as to what needs a market has and whether the product we have chosen to sell them fits that need.
We might have the right product, but the wrong market.
We could have the right market, but the wrong product.
Or worse, we could have the wrong product for the wrong market. This happens when we decide we know best for the market.
One of the best ways to enter a market is to find a need it has and it is already getting served by a large company. This means there is enough demand that to make it worth the large company's resources to go after it.
Large companies always serve their market badly in that they don't have the perfect product for a sizable segment of the market, their customer service sucks, and/or they are slow to addressing market demand.
Make your product similar to theirs and go after a segment of their market.
2) Message-to-Market Match: A lot of startups don't put much effort into their messaging. They simply claim to be a better mousetrap and if that doesn't work, they assume they don't have product/market fit.
Your message has to resonate deeply with your market. This also means you have to get your message into the correct channels for it to reach your market.
With one client, they had a good message, but it wasn't creating a flood of customers. I told them they needed to make a list of all the marketing channels at their disposal with corresponding reach and cost. Then to prioritize those channels as to their best guess of which would work.
I thought that text ads in email newsletters would work for them, but they held off for a long time because the reach was low, but the cost was high. However, when they tested their message through this channel, they were immediately swamped with leads.
The message, the medium, and the market are inseparable. You won't know what combination of the three will create mass demand.
Message-To-Market Match requires methodical testing.
That's not sexy, is it?
It's a truth that you won't hear from copywriters trying to sell their service. FB ad management services won't tell you this either.
You won't know what message through what medium the market will truly respond to without testing different messages over different media to different markets.
We start with our best educated guesses, roll up our sleeves, and get to work.
3) Optimal Selling Strategy: The OSS isn't optimal selling strategy for your lifestyle. The OSS must be optimal for your market.
How do they prefer to buy?
Do they prefer to try on clothing before buying? Then you either need to be in physical stores they shop at or you need to have a return policy like Zappos.
Zappos realized that shoes have to be tried on to make sure they fit. It was one of the main reasons people wouldn't shop online for shoes. They the process simple for their customers -- buy multiple pairs, try them on at home, and ship back for free the ones that don't fit.
One of my clients is going through the process of testing to find their optimal selling strategy. As a SaaS, they want customers who will just click a button and sign up. All SaaS people want this. It's optimal for the company.
However, in their startup stage (<$100k), they tested 1-on-1 sales demos. Not because they thought it the best selling strategy, but because they needed immediate data as to what was attractive or not about their product.
They started closing plenty of sales. So then they tested selling as a group. They put multiple prospects onto a demo at once. They acquired multiple customers at one time. Woohoo!
They still don't know if this is the optimal way to sell to their market. And it still isn't to the level of self-serve they want their prospects to go through.
The next testing phase will be to see if automated, on-demand demos will convert. This might end up the optimal selling strategy, at least for Stage 1 and early Stage 2 of the business.
But what if they get their messaging dialed in so that a demo becomes unnecessary for a large segment of their market? Maybe they get to a point where prospects show up to their site, click a button for the appropriate subscription level, and buy.
Or they may find that there is a significant enterprise market that wants their product and they will have to continue doing live, 1-on-1 demos if the enterprise market prefers buying that way.
Thankfully, the Optimal Selling Strategy doesn't require as much testing as Message-To-Market Match. But know the first thing you try is probably not the best way to sell your product.
Do You Need To Get All 3 Figured Out To Break The 7-Figure Barrier?
You need to be conscious of them. You should be improving all three strategies.
But when you get just one of them to hit, usually Message-To-Market Match, customers flood your business.
Selling 7-figures stops being a dream and becomes reality. The struggle goes away.
Technically, the struggle shifts from how to get customers to how to serve them, but that's a topic for Stage 2 Business.