Deciding whether a free trial, freemium, or hybrid model will work best for your business is challenging — especially as choosing the wrong one could potentially dent your business’ performance.
In this course, you’ll learn:
Wes Bush:
So, if you haven't had a chance to read Cal Newport's book on Blue Ocean strategy, highly recommend it, it's an amazing read. But one of the pieces I loved about it was really just defining the ocean condition. And so if you're not familiar with the Blue Ocean Strategy, I'll go through it very quickly. But if you are familiar, bear with me for a minute, as I quickly explain the Blue Ocean Strategy.
Wes Bush:
So Blue Oceans are essentially a market where you are creating new demands, you're doing something different. And along the way, you usually have to educate a bunch of people about why we're doing things different, what was wrong with the old way. And so it can be expensive to do that.
Wes Bush:
If we want to look at some examples in different industries, there's a Cirque du Soleil, probably mispronounced that, apologize, I'm terrible at pronouncing words, but you can Google it, figure it out. It doesn't really matter how I pronounce it.
Wes Bush:
But most of these companies, what they're doing is in this particular instance at the circus, they actually eliminated the use of expensive animals and their shows. And in the process, they created a new experience that was far superior and far more profitable.
Wes Bush:
And so in the SAS base, when you are creating these blue oceans and new markets, it typically requires you to spend lots of time and resources educating people on why they need your solution. And so sales-led typically works best here, not in every case, but in a lot of them.
Wes Bush:
And the reason why is because your sales team is adding a ton of value. They are educating people on why they need your solution. And so if you're creating this new space, this new market and you're finding like, hey, our sales team is actually providing a ton of value. Maybe it's still the right time for you to stay sales-led.
Wes Bush:
And it will not always be the case because here's the deal, all markets eventually become red oceans. They eventually become very, very competitive. We mentioned in last week's lesson, just the growth of the MarTech landscape from 2011 - 2020, there was a 5,000, 233% growth of this one marketing landscape.
Wes Bush:
And so it just goes to show that in a red ocean, you're harvesting demands. And so it's really, there's some benefits to this as well, it's not all bad in a red ocean. People actually understand their need and how your solution can help them. When we think of live chat software, nowadays it's ubiquitous.
Wes Bush:
We know how it could help us. Sure, there's other bells and whistles and features on this. Maybe it's the automated bots, but we generally know, okay, it just helps us have conversations on our website with people.
Wes Bush:
So that's it. We understand the need. We understand how the solutions fit into it. And when you think of companies like Netflix, even other live chat softwares, we just know, how is this going to help me because it's an established market.
Wes Bush:
So if you're playing to win, I'd argue that being product-led is the only go-to market strategy that makes sense because all markets become red oceans. And so to really recap here along the oceans, I want you to think about this. Is your business currently harvesting demand or creating demand?
Wes Bush:
If you're creating demands, hey, it might mean you still need to stay sales-led for right now. Not always, because remember when you're harvesting demand, you want to have the most efficient harvester in the business. And that is the product-led model because it's the most capital efficient, it has the best dominant growth engine, period.
Wes Bush:
And so the one thing I really want you to note, as it relates to defining whether you're in a blue or red ocean, is that a market can have one segment in a red ocean while the other is in a blue ocean. And so for grow.com, I'll give you an example, when we were going through this presentation and really just having the executive team define like, are we in a blue or a red ocean?
Wes Bush:
Some people were saying, hey, we're in this blue ocean and others were arguing, we are in a red ocean. And it wasn't until the CPO, brilliant dude mentioned, hey, our enterprise market here is a bloody red ocean. There is so many people in this space, which to give you context on the space they're in, it is business intelligence. And so they basically made it easy for you to integrate a bunch of solutions and see that data on dashboards.
Wes Bush:
So he was arguing that in an enterprise market, there's so many people who are building these customized business intelligence solutions like that differentiated the strategy in this market was piping hot. There was so many people in this ocean. And then we looked at who they were targeting and realized there was a misalignment. They're going after mostly the small and medium sized businesses.
Wes Bush:
And so in that space, it was still a blue ocean. This was a new solution, most people didn't know that even this kind of tool existed. And so they had to do a ton of educating through the process. And so I want you to ask yourself, are you primarily targeting the SMB, mid-market or enterprise market.
Wes Bush:
Now, I know what you're probably thinking, hey, we're targeting more than one of these and that's okay. But I want you to think about it if every one of those markets, where do you primarily target? Where do your best customers primarily come from? Is it the SMB? Is it the mid market? Is it the enterprise market?
Wes Bush:
And then I want you to go in and ask yourself again, are we creating demands in this market or are we harvesting demand? And so does this really mean it doesn't make sense that product-led model, if you're in a blue ocean.
Wes Bush:
This is another kind of controversial piece to it as well because I know for the last, maybe three minutes, I've been mentioning if you're in a blue ocean, it might not make sense for you to have a product-led model. But there has been different cases where yes and no, like it has worked.
Wes Bush:
But if nobody really understands your product and how it can help them, a sales team might not be a bad idea. But I want to give you an example of a company in a blue ocean that made this work, to show you the other side, because I'm sure you've found a lot of companies in blue oceans that are sales-led, they're a dime a dozen.
Wes Bush:
So, Soapbox was in a blue ocean, and so they were creating a software platform that would help you do one-on-ones with your employees. And so that was one of their other main products, initially. Now they do a lot of other agendas and meetings and templates for you to basically have better meetings with your employees and your team.
Wes Bush:
And so what they realized is what a lot of people weren't really searching for this software solution. And so initially they started off with more of a sales-led approach, but then they actually transitioned more into being 10% product-led. And one of the ways they're able to do that is they realized, hey, people are searching a lot around how to do better one-on-one meetings with their team.
Wes Bush:
So they created these templates. The templates fed people into their product so they could have better one-on-ones right away with them. And they're able to bypass those because their main audience was also very tech savvy as well in the SAS space.
Wes Bush:
And part of this really comes down to well, okay, if there's this big exception of your audience, who they are and how it impacts, whether your product-led or sales-led, we need to cover it because regardless of if you're in a blue or red ocean, your audience plays a critical role in helping you decide whether you should be product-led or not now.
Wes Bush:
And so, for instance, even though Databox focused on a similar subsection of the market as grow.com, which was the business intelligence solutions space, they made it easy for you to integrate your data and see how your business was doing at a glance, instead of going into a bunch of different tools to get all that data.
Wes Bush:
So they focused on one particular niche that could easily use their product, and I would argue they nailed it. And so they actually focused on agencies and that was still in the same SMB market that grow.com was going after, but they focused on a sub-section of the market that could easily use their solution and get up to speed, get up to value and really see the full value of the product.
Wes Bush:
And so this is really just showing you that there's many, many exceptions and the list goes on, and the whole reason I'm sharing all these examples, although it might feel a bit confusing at times, is because there's always, I mean, there's never a one size fits all model for any kind of business.
