Why don't we hear enough about distribution?
Who cares if the product is awesome.
Too much time is spent thinking about coming up with, and building 'great ideas'.
Too little time is spent thinking how to get the product in front of customers faces.
It seems to be the often overlooked aspect of creating a successful, sustainable business that can get traction and flourish.
Perhaps if we did spend more time thinking about distribution earlier, everything would be far easier- from insight gathering, to validation, launch and... a steady stream of new customers.
So firstly, a little more about 'distribution'
The advertising space is becoming a darn right 300-the-movie-bloodbath. When I do a google search now, I'm seeing ads galore, google shopping tiles, and retargeting banners on every other webpage I visit for that nose hair trimmer I regrettably clicked on.
It’s becoming harder than ever to stand out. Ads prices are increasing, tracking with iOS changes are making things challenging, and customer trust is harder than ever to establish.
When looking at new businesses or adjacencies for existing ones, we're not thinking about how we distribute the product- or get it in front of the right audience in a cost effective, and viable way.
Businesses or brands with a distribution strategy are able to test faster and generate revenue quicker, than those without.
No matter how good your product is, if no one knows about it, it’s not going to be successful.
On the contrary, an average product with amazing distribution is far more likely to succeed.
How can we think about distribution earlier, so we're fishing in a pond we can actually reach?
A case study- distribution woes
I came across a micro/ small business finance product recently in its infancy. It had a compelling proposition that was well validated in the market by 1000+ users. With the product now built out with rich features the team were gearing up to go hard with marketing it.
Paid advertising was unviable for a small cash strapped startup with $18+ CPC, and fierce competition amongst the most cashed up Aussie businesses (think MYOB, Xero, and the big four).
The team took a stab with attending small business fairs, but walking around to speak to stall owners quickly proved tiring as they struggled to find the specific small/ micro customers.
Partnerships with niche audiences was another avenue, but inherently risky with big spend to access without any evidence as to if it would work.
Although the addressable market is large, they are an audience that is extremely hard or expensive to find. Here, they've hit a fundamental distribution challenge.
Of course this business may work it out and have success- all the best to them- but it goes to show the importance of having a strong distribution strategy thoroughly considered in the earliest of phases of the business, so when you launch you have those ponds of fish (customers) waiting to bite.
How to think about distribution
Customers hang out in all sorts of different places. Digital, physical, maybe even the Metaverse(?) It doesn't matter.
What's important is to know where they are, and have plans to reach them.
Some businesses are fortunate to have existing mail lists, customer bases or audiences. New businesses, or businesses venturing into adjacencies might need to use creative thinking and research to market their new product or service.
Here’s just a couple of ways in which businesses can promote their products and services today.
• Distributing to existing customers is a no brainer. Apple and Amazon, the kings of stacking business models to create trillion dollar companies. Purchased an iPad? Perhaps you also an iCloud subscription to store your 3 million toddler photos? Or an Apple TV to push these pics to the big screen and scroll through every one while your extended family watches on politely.
• Building in public, but ensure that doing so makes sense for the group you’re sharing the information with. (Eg. Building in public on Twitter when you have a startup, specifically serving other startups, is a good example). For a thorough insight into this concept, check out this super insightful book by Arvid Kahl.
• Brand audiences are becoming increasingly necessary. If an individual or brand is trusted by sharing valuable information for many months (often on social platforms), eventually their brand will be in a position to ask for emails and, ultimately for followers to purchase their products.
• Partners- with audiences that actually want your product. Hint- test with them early on to get an understanding of the economics of this channel. Partners are risky and your teetering on the edge of ensure your proposition aligns (or compliments), while not being too similar to the partner that it’s competitive.
• A viable paid advertising channel is another. A way to understand viability is to look at search intent, competition across paid and organic (SEO). AHREFS is a great product to help you with your research here.
Justin Mares, The founder of Kettle & Fire (a tasty bone broth eCommerce business) used this strategy years ago that’s still very relevant today.
He noticed bone broth was starting to trend through google trends. By looking at the search results, there were a number of poor quality competitors, and when researching paid advertising costs, he found a gap with low CPC's that he could exploit if executing a better brand.
What started out as a hobby, soon became a large business as the product grew from strength to strength using a cost effective paid adverting distribution channel to establish the foothold in the space.
Summary
Although I’ve only touched on a few examples here, distribution is one of the fundamental killers or winners when it comes to the success of a new business, yet it often seems to be an afterthought.
Without an established customer base or warm audience to tap into for your new idea, it’s critical to understand where your audience is lurking and how you can market to them in an efficient, cost effective and scalable way.
Focusing on this early in the business model creation process gives you the best shot of not only ‘building something users want’, but ' 'building something users can find' in the first place.
