Preserving Trust And Demonstrating Expertise Unlocks Demanding Niche Markets
Q: We are preparing to enter a B2B market where the potential buyers are high-value but relatively few in number and close-knit. I am concerned that they will have a low tolerance for a minimum viable product (MVP) approach; much less pre-MVP research that misses the mark. How do we preserve our credibility but take a scientific approach?
We work primarily with bootstrappers who have deep domain knowledge, typically a team of 2-5 engineers, scientists, or other experts. Our focus is on demanding B2B niche markets with a hundred to a few thousand thousand firms. If you are solving a hard enough problem or just talking about a need that’s a real pain point they are more than willing to have a conversation and consider an your MVP. Here are a few rules of thumb for preserving your social capital in B2B niche markets:
- Actively Manage Expectations With Clear Communications
- Always Assume Everything You Do Will Become Public
- Listen For What Isn’t Being Said
- Predictable Behavior Inspires Trust
- Trust Doesn’t Scale, It’s Knit by Aligning Actions With Prior Commitments
One example of a product we are helping a team launch is BeamWise, a design and simulation too for biophotonic systems that may have a total market of a 250-500 organizations that might purchase it.
I like these markets because they often have an expertise barrier that makes them harder to penetrate. If you act in a trustworthy manner, are easy to do business with, and deliver value these customers tend to be loyal–they don’t treat your offering like a commodity but look at you more as a partner than a supplier.
These niche B2B markets require more discipline that consumer markets. You have to approach each customer in a way that you preserve your ability to do business with them: you cannot do anything that communicates a lack of respect or indicates you are merely using them as an experimental subject or “target practice.” People in these markets know each other, reference each other’s purchase decisions, and a poor reputation can travel faster than your ability to message.
This does not mean that your product has to be perfect, only that you are committed to acting with integrity and providing value. Seth Godin had a great blog post on “A Hierarchy of Failure” that’s relevant to your market exploration and MVP strategies. Here is his hierarchy:
- FAIL OFTEN: Ideas that challenge the status quo. Proposals. Brainstorms. Concepts that open doors.
- FAIL FREQUENTLY: Prototypes. Spreadsheets. Sample ads and copy.
- FAIL OCCASIONALLY: Working mockups. Playtesting sessions. Board meetings.
- FAIL RARELY: Interactions with small groups of actual users and customers.
- FAIL NEVER: Keeping promises to your constituents.
I think he gets it exactly correct. And I think a number of entrepreneurs, in particular in the early market, get it almost exactly backward by
- Putting up a landing page that promises a capability or extra feature that doesn’t exist.
- Focusing more on a potential solution when talking with prospects–using them to prototype– instead of ensuring that they really understand the prospect’s perspective on the problem.
- Looking for funding before they look for customers, using investor interest as validation for their business concept.
Most organizations do precisely the opposite…They rarely take the pro-active steps necessary to fail quietly, and often, in private, in advance, when there’s still time to make things better.
Better to have a difficult conversation now than a failed customer interaction later.
The foundation of a successful business is the ability to make and meet commitments to customers, partners, employees, suppliers, and other stakeholders. If you inform them in advance, “we are going to try the following experiment” they may or may not take part, but they can offer informed consent. I see too many instances where founders undervalue a relationship with a customer based on mutual trust and commitment.
Related Blog Posts
Here are some related posts on managing trust and expertise:
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