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Why Product Market Fit in B2C and B2B Are Fundamentally Different

(This post originally appeared on LinkedIn here)


Level 1 of our Disruption Selling Maturity Model requires Product Market Fit (PMF) of the Offering.


While achieving PMF in B2C is already a challenge, it becomes an even harder problem to solve in B2B sales. And here is why.


Value Chains

Opposite to B2C, customers in B2B are members of a value chain which means the challenges they face start with their own customers, not themselves. As a result, customers within the same market segment can face completely different challenges depending on the customers they serve.


We will demonstrate this using a vendor of a Connected Car solution positioning their offering with industrial truck manufacturers as an example (disclaimer: I’m not a truck market specialist and hence my example might appear over-simplified to those who are).


Offering

In our example the vendor offers a full-scale, fully-managed, white-label platform supporting more than 150 markets on top of which customers can build their own branded Connected Car solution. The offering disrupts the in-house monolithic solutions truck manufacturers build and operate themself today.


Market

Looking at the industrial truck manufacturer market we find:


  • Low-end, local truck manufacturers catering to emerging markets with basic fleet management services, e.g., the actual location of a truck, its current state, and communication with the driver,

  • High-end, global truck manufacturers catering to developed markets with complex services, e.g., routing optimization, real-time traffic data, dynamic rerouting, all the way up to high-resolution maps for autonomous driving, preventive maintenance, and Over-the-air Updates, and

  • Full-scale, global truck manufacturers catering to both of the above markets.


Customer Business

Truck manufacturers are confronted with requirements from their customers (e.g., high-availability, optimized CAPEX and OPEX, safety, ease-of-use), their competition (e.g., fuel efficiency, pricing), and their environment (e.g., sustainability, regulatory compliance) resulting in a list of customer needs.


Customer Needs

As every commercial organization operates under constraints, customer needs must be prioritized. This prioritization is impacted by


  • shareholder expectations: revenue growth, margin, profitability; and

  • corporate culture: flexibility vs. control, risk vs. security, central vs. decentral, global vs. local.

Customer Priorities

As a result, every truck manufacturer has a unique list of priorities the offering must address. For our example we'll use the following:


Low-end, local truck manufacturers: want to grow by moving either 

  • upward into developed markets or

  • horizontal into other emerging markets


High-end, global truck manufacturers: want to grow by moving

  • downward into emerging markets or

  • horizontal into other developed markets


Full-scale, global truck manufacturers: want to grow by moving

  • horizontal into other developed markets and

  • horizontal into other emerging markets


Value Propositions

So while our Offering remains the same full-scale, fully-managed, white-label platform, we must address different Economic Buyers with different Value Propositions across the three market segments depending on their respective Priority:


  • Value Proposition 1: (Economic Buyer) will increase vehicle sales by entering new developed markets as a result of leveraging localized high-end services of our Offering.

  • Value Proposition 2: (Economic Buyer) will increase vehicle sales by entering new emerging markets as a result of leveraging localized low-end services of our Offering.

As a result, we get the following table of where to probe for PMF with which value proposition:

Note that we will use the same value proposition across multiple market segments targeting different Economic Buyers!


Product Market Fit

Now let’s assume that we find PMF with Value Proposition 1 (high-end services) but not with Value Proposition 2 (low-end services) as emerging markets don’t provide a business case for our full-scale, white-label platform.

As a result, we have PMF only for

  • low-end truck manufacturers moving upward,

  • high-end manufacturers moving horizontal, and

  • full-scale manufacturers expanding into new markets.


Conclusion

In B2B we cannot proof PMF for a given Offering by market segments, but only by Value Propositions!


The bad news is: There is almost no limit to the number of Value Propositions we can define and hence we’re confronted with a long list of Working Backwards exercises we must go through to validate all potential Value Propositions.


The good news is: If we are just creative enough in inventing on behalf of our customers, we have a significant chance of achieving PMF.


Or to say it with Jeff Bezos in one of my favorite Letters to the Shareholders (2016):

“Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design. … A remarkable customer experience starts with heart, intuition, curiosity, play, guts, taste. You won’t find any of it in a survey.”

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