Innovating Your Product Distribution Is As Important As Innovating Your Marketing
Discovering a new distribution channel can do wonders for you. Imagine if you'd been one of the first apps in the Apple Store!
Great! You've just spent months (or years) figuring out a fantastic product in a new category, but now comes your next big challenge: getting that product into the hands of users who don’t yet know it exists.
In other words, you need to innovate in the distribution process the same way you innovated in the product-development stage.
Developing a winning product and creating a viable distribution framework are more ideologically similar than you'd think. When you develop a product, you look for gaps in the market and perform experiments to solve those problems. As you do that, you build confidence in your product, because your experiments are drawing feedback from early adopters.
Creating a distribution framework is no different: With marketing, you can't rely just on existing techniques or assume you know the right niche for your product -- unless you experiment. With product distribution, you're again testing out-of-the-box ideas to find the the very best one.
Apply the lessons learned from your marketing strategy to your distribution strategy.
If you relied on traditional channels to market a new invention, you most likely found them expensive and ineffective. Why? Because you were competing with established products that already had your customers' attention. “Who is the person suffering from the problem that my product addresses?” you had to ask yourself.
Hopefully, you discovered who that person was, and the pain of the problem he or she was experiencing. What was the precise point where your product became a priority for this person? How were your would-be customers finding existing solutions? At least initially, you probably avoided the marketing channels that established products already used.
A case study: AirBnB
One of the hosting company's most famous growth hacks was its controversial “integration” with Craigslist. Another AirbBnB strategy that I found interesting, and applicable for any startup, was that the company looked for untapped demand: For instance, it launched during the Democratic Convention of 2008, when its founders knew that hotels would sell out and their company could capture the excess demand.
Now, how about applying these same marketing lessons to finding the right distribution solution for your own product/service? Consider these steps:
1. Determine if your product is a primary or complementary product.
In order to hone in on an appropriate distribution plan, first determine if your product is a primary or complementary solution. Is it a primary thing people want? For instance, a movie ticket fulfills someone's desire to see a film, while a steakhouse satisfies a person’s craving for a steak. So, both the movie ticket and the steak are primary products.
Complementary products, on the other hand, are those that a customer purchases only after signing on to the primary product. Nobody goes to a movie theater just to eat popcorn and drink soda, but plenty of people buy those snacks once they’ve purchased a movie ticket. You have to think about where your product fits in, because that affects your distribution.
Case study: Zapier
Zapier is a great example of a complementary product for the modern era. It helps connect common business apps (i.e., Dropbox, Trello, Hubspot) to one other so that information can flow automatically between them.
Zapier further automates and simplifies your workflow with no coding required. However, initially it was challenging to market because its service focused on other companies’ apps. In response, Zapier came up with a very powerful SEO strategy to raise awareness of its product.
It created content so that when potential customers Googled for ways to integrate two apps, a page explaining how to connect the two with Zapier appeared. The company created thousands of these pages. This distribution strategy helped it reach $35 million in ARR in 2017.
2. Determine your customer triggers: When do they need your product most?
With my own SEO software company, RankSense, our main triggers are big website changes that can result in the loss of SEO traffic. These are typically website migrations and redesigns.
We research sites that recently migrated and lost traffic, and offer them free SEO monitoring and reports that can help them recover quickly. Curious that we have pinpointed their painful problem, these sites then often reach out to learn more about our product.
3. Determine if you’re in the (nonscalable) product-validation phase or (scalable) product- distribution phase.
A mistake many businesses make is assuming that they're ready to scale their product when they are not. If you're in this position, determine whether you’re still validating your product or if it's ready for massive distribution.
During the validation phase, it is unwise to scale because your product might not be the ideal solution for your customers.
Moreover, when you’re scaling, big distribution channels will want some evidence of success before they take your product on. You have to bring value to potential partners. If it is only your company that benefits from the partnership, you'll find it harder to build lasting distribution opportunities.
4. Pinpoint the optimal SaaS and app partnerships in your marketplace.
If you are in the SaaS business, integrating with complementary apps can be an effective distribution strategy. Take the example of Paypal. Paypal owes most of its early growth to piggybacking off of eBay. In the early days of eBay, buyers had to mail a physical check to a seller. The seller would wait for the check to clear, then ship the item.
With this system credit card companies had difficulty dealing with fraudulent orders. Paypal was able to streamline the process for payment and find ways to minimize the risk of fraud. This led to Paypal's growth into the household name it is today.
Determining which app or SaaS is most complementary to your product allows you to scale quickly. Nevertheless, SaaS partnering in app distribution must solve real problems in order for it to work.
LeadsBridge is a SaaS startup that takes this tactic to the extreme with great success. LeadsBridge transfers leads from Facebook campaigns to hundreds of content-management systems. It even offers to build new custom integrations for free.
5. Nail the timing of distribution.
Timing is critical for distribution. Being among the first to discover a new distribution channel can improve your scalability. For instance, consider the value you would have realized had you been one of the first apps in the Apple Store after the iPhone came out: You would have been on the cutting edge of a new distribution channel!
For a more recent example, take Cloudflare. Cloudflare is a content delivery network which powers more than 12 million sites, speeding them up and making them more secure.
Cloudflare includes built-in apps to protect you from malicious attacks. The company recently announced an app marketplace that opens the doors to a new generation of third-party business apps that can add complementary value to the millions of domains in the platform. This provides an opportunity for third-party companies to get in on the ground floor and “piggyback” on Cloudflare’s distribution.
With your own company, don't assume that a distribution channel that worked in the past or worked for another company will be the best one for your product. You need to investigate and you especially need to innovate, to seize upon the optimal timing -- and run with it.