Discovering Product Market Fit

Discovering Product Market Fit

Tim Fitzpatrick
Welcome to the Rialto Marketing podcast. Today's episode is a revenue acceleration series interview where we talk to seven figure B2B professional service firm owners that are actively trying to grow their business and get to the next level. We talk about the good, the bad and the ugly so that you can learn from their experience. Hi, I am Tim Fitzpatrick with Rialto Marketing, where we believe you must remove your revenue roadblocks if you want to accelerate growth. And marketing shouldn't be difficult. I want to thank you so much for taking the time to check us out today. I am really excited to have Doug Miller from Brightworks Group with me. Doug, thanks for taking the time and I appreciate you being here with me.

Doug Miller
Tim, thanks for having me on and I appreciate being here.

Tim Fitzpatrick
Yes. Before we jump into the heart of our conversation, I'm going to ask you a few rapid fire questions if you're ready to jump in with both feet.

Doug Miller
Absolutely.

Tim Fitzpatrick
Okay. Very quickly, what do you do and how long have you been doing it?

Doug Miller
We are a technology and security operations consulting company. I personally have been involved in this industry for over 30 years. The company is 12 years old.

Tim Fitzpatrick
What's the most important lesson you've learned in that 12 years?

Doug Miller
To stay focused and disciplined. If you've got the right discipline and you execute the right things repeatedly, it all works.

Tim Fitzpatrick
Easier said than done. Yes. I totally agree with you. If we can stay focused and eliminate all those distractions that are out there, huge difference. We all know growing a business can be challenging at times. If it was easy, everybody'd be doing it, right?

Doug Miller
Right.

Tim Fitzpatrick
In your 12 years, do you have any mantra or motivational saying that you share with people or just tell to yourself to help push through those challenging times?

Doug Miller
We've got a set of core values, really four core values that particularly when things get tough, I like to both remind myself of and our team. Those in very short form, really seem to do the trick of keeping people, again, focused and eliminate the distractions. If we can remember that we're supposed to do certain things and remember those core values, it really makes all the difference to us. We use smart tools. We are right. And by that, I mean, we don't do things before we've made sure that they're correct, not that our opinion is always right.

Tim Fitzpatrick
Got it.

Doug Miller
We hire smart people. The number one that I repeat to myself and I repeat to the team more than anything else is no drama.

Tim Fitzpatrick
Love that one.

Doug Miller
It's huge, man.

Tim Fitzpatrick
I love that. So smart tools, we're right. Hire smart people and no drama.

Doug Miller
Right.

The Importance of Hiring the Right People

Tim Fitzpatrick
I love it. Doug, one of the things that we talked about in the pre interview, you said, if there was a mistake to be made, I made it. What are the top two that come to mind for you?

Doug Miller
Really the top two. The top number one, and we're still sorting this one out, is that we never put together the right sales team. I've hired a lot of bad salespeople in 12 years, and it's always been easier when they don't work out to just revert to me doing the sales. And the end result of that is that we've never really had a 100 % pedal for the metal and completely reliable sales effort.

Tim Fitzpatrick
Got it.

Doug Miller
I, as the owner, can't give 100 % of my time to it. When I hire bad salespeople and turn it over to them, they don't give 100 % to it. Understanding where we screwed up on the sales front and hopefully, knock on wood, we've got that figured out now and we're in the hiring process right now. That is number one. It really stemmed from when I first started the business, I said, I'm not going to hire sales people. We're going to do it all just with our technical team, and we don't need sales people to get in the way. Our customers don't want to talk to them anyway. They want to talk to us, so we're not going to do it. That's not going to work. We can't scale the business that way. We need those people, sales professionals, good sales professionals are worth their weight in gold. Unfortunately, particularly in my industry, there are a lot of people in sales roles who probably shouldn't be. I hired a bunch of them because I didn't really know how to hire good ones. So that's probably the number one and largest mistake that I made. I think the second mistake goes right along with this and probably applies mostly to the salespeople that I hired, though there have been other people in the organization this applied to. I kept people around too long who didn't really fit the company. Everybody's going to make a bad hire, but it's important to understand when people aren't a fit and ease that process of separating them from the organization. I don't mean harshly or in a mean manner. It's always turned out, when we finally realized that, that it was better for the people that we let go for them to not be part of our organization because they weren't happy here. And we weren't happy with what was going on. And so it made more sense for them to part ways. But we've invested a lot in people. We'll spend a lot of time trying to coach them and develop them, which, again, I'm not saying you shouldn't coach and develop. You should absolutely. But there's a big difference between, Wow, this person has the raw talent and ability and is a great fit for this position. They just lack some polish, or maybe they lack the right technical skills. That's one thing. It's a completely different thing that they're not a good fit for your culture, and they really aren't interested in what you do. You can't coach them out of that. So don't let them hang around. And out of a sense of, Well, I want to be fair, understand and get to that quickly. So firing quickly, hire slow, fire fast.

Tim Fitzpatrick
Yeah, we've heard that one, right? Do you feel like It sounds like with your sales efforts, you hired a lot of the wrong salespeople. And it sounds like through your work on this, you got to the place where you're like, Gosh, the biggest challenge we've had with this and why it hasn't worked is because we were hiring the wrong people. And now it sounds like you've actually put a process in place to help ensure that you're hiring the best people there.

Doug Miller
Yeah. We've done two things. One is exactly that, is that we brought in some external experts to help us, to give us some advice around what those people ought to look like. We've also hired some external experts as we're doing the hiring this time to help us vet those people. One thing that we noticed, that I noticed in our hiring process, and I helped our recruiters and consultants understand this, is we're very proud of our company. We're very excited about our company. When we get a likely candidate or who we think is a likely candidate, we check to make sure that they can fog a mirror, they're actually breathing, and then we go into trying to sell them on our organization. We want to talk about our organization. And we don't spend enough time actually listening to them. We go way too quickly into, Well, let us tell you how cool we are. And I think that's a problem that a lot of business owners have. It's your baby. It's your baby you've invested so much into it. And your long term employees have too. So even if you're interviewing as a group, you want to tell everybody how cool you are. And so we were really bad at that. We were not really getting into making sure this person we were talking to was the right person. We were busy convincing them they wanted to become part of our team. So that was a real big part of this.

Discovering Product Market Fit

Doug Miller

The other thing was that we needed to take a look at... 12 years is a long time. And so a lot of what we offered when we started the company, our services, how we described our services, changed. The market changed over the course of 12 years. And things that were actually pretty easy to sell 12 years ago are not that easy to sell today. The marketplace in our industry has become very crowded. There are a lot of organizations who have started up or added different kinds of IT services to their portfolio, so there's a lot more competition out there. One of the problems we had with hiring the right salespeople was, what we were selling was not really the right thing anymore. It was tough to differentiate it. We had the same problem on the marketing front, quite frankly, that we were spending a lot on marketing and getting no results from it. Both of those stemmed from the fact that we really no longer had good product market fit. You can hire the best outsource marketing team in the world or internal marketing team, for that matter. But if what you're selling doesn't resonate in the marketplace, if it's not the right thing, then it doesn't matter how good your marketing is. You're never going to get the traction that you want. It doesn't matter how good the salespeople are, because if nobody wants to buy it, they can't sell it. So step one was really stepping back and going, So what is it that we really do here? Our message, the services we're offering, let's take a good, hard look at that. And so we spent about a year doing that and really revising what our offering was. Then that put us in a position where we said, Okay, now we can actually come up with some marketing strategies that make some sense, and we can hire the right salesperson because now we know what we're selling and we know it's something that the market wants.

Tim Fitzpatrick
I want to break a few things out here, Doug, because you just shared a ton of really good information that I think people can learn a ton from. First off, product market fit, as you've discovered, huge fundamental that must be in place. One of the things that we look at when we first work on strategy for clients is there's three things we look at. Target market and who your ideal clients are within that market. Then we look at your message to the market, and then we look at your products and services. All of those need to be in alignment. If they're not in alignment, as you found, Gosh, we can have great marketing tactics, but it doesn't have the fuel that it needs to work.

Doug Miller
It'll never go anywhere.

Tim Fitzpatrick
I'm so glad that you brought this up because it's easy to go down this path. When you realized, Hey, we got a product market fit issue here, do you remember some of the things that you did to try and figure out what needed to be done to correct that?

Doug Miller
Yeah, absolutely. One of the very first things that we did is we looked at... It wasn't that we were without customers. We were already a seven figure business. It wasn't a matter of, Oh, gosh, we're going to lose our existing business. It was a matter of how do we grow this? How do we scale this? And so we looked at our existing customers and we really asked two questions. Of those existing customers, particularly the ones that we really enjoy working with and that are our best customers, what do they buy from us and what do they like about us? Now, part of that was there was an assumption there that the customers that we liked working with and were our best customers were that way because they met the definition of who our ideal customer was. And that was really another piece of this was to step back and go, Okay, so we have these customers. Which ones really are our ideal customers? And pretty much universally, right? It's really interesting. You get a gut feel. You go, Look, we really like working with those people. We like working with that company. They like working with us. We're continually growing the relationship. They say good things about us. They refer other customers to us. Hey, it turns out that's probably a good picture of what an ideal customer looks like for us. There are other customers where, Yeah, we got a relationship with them, but it's often contentious. We don't make the money out of them that we do from some of our other customers. They're not as profitable. It constantly feels like we're having to pull them along. Well, that turns out there's a good picture there that they're not our ideal customer. They're generating some revenue, but you have to get to that point where you say, Look, is our definition of ideal customer? They'll pay us something. And that's not a good place to live. That's a bad place to live. You have to not do that. And you have to say, What are the customer relationships that work really well? We want more of those. What are we doing with them? What are they asking us for? What do they want from us? And once we answer that, we also have to answer the question, are those things that those good customers, the things they're asking for, the things they want, are those the things we really want to do? There's a surprising amount of... You can go all analytical and data driven with all this stuff. And boy, don't get me wrong, we're a bunch of engineers, so we look at data all the time. But there's also a really big gut check piece of this, where you go, You know what? That customer over there, they're generating a fairly large chunk of top line revenue. But god, we hate doing what we do for them. It's not even that we dislike them. Maybe they're fine. They're good people. They're nice. We don't mind working with them. But the thing they want us to do...

Tim Fitzpatrick
It's not it.

Doug Miller
It's not it. We don't feel it. And so we maybe don't do our best work for them. And they probably know that. They probably get the feel of that. We try hard, but the passion is not there. So you can't ignore that piece of it. Yes, you can and should analyze a lot of data. Now, it often turned out that those customers that we identified that looked like that, also were not producing the same margin for us. We're often requiring a lot more hours from us that we're using a lot more of our time. In the worst cases, yes, often the relationship had some level of contention in it. I could look around, I could look at our team, and I could see that anytime this particular customer wanted to interact with us, the team was like, Well, not looking forward to that.

Tim Fitzpatrick
How much did you have to tweak your offer?

Doug Miller
It wasn't that much. Some of it was in packaging and pricing.

Tim Fitzpatrick
Got it.

Doug Miller
There were things about the way that we were doing stuff that, again, we're cutting edge 12 years ago. Nobody was doing that now everybody was doing, and it was no longer a differentiator. And furthermore, we found that in many cases, it was detrimental to us. An example of that is we provide managed IT support to customers. And 12 years ago, the idea of a managed services provider was very new to the industry. Everybody was doing hourly, what we call reactive support. Something's broken, you pick up the phone, you call, the thing is broken, and then you build them hourly. And people wanted to move out of that world. So the subscription based recurring revenue management services approach was born. You get a flat fee, you get all you can eat support, and then you're going to get other things, Office 365, a few of those things with it. Well, one thing that we found when we looked at our product market fit was, number 1, everybody that's ever built a gaming PC is now a managed services provider. Everybody that ever sold a copier is now a managed services provider. There's nothing unique about that model. There's a gazillion people doing it, and you can't go, Well, hey, you should work with us because, hey, you're going to pay a flat fee. And they're like, So what? I get 50 emails a day from companies doing this. But what we found was really interesting, that companies are increasingly dealing with subscription fatigue. It's not just us that are selling subscriptions. It's freaking everything is a subscription now. And even in their personal lives. You used to sign up for cable TV and you'd get 500 channels. Now every one of those channels is a separate subscription. Everything you do is a subscription.

Tim Fitzpatrick
So you found that your ideal clients don't necessarily want to buy that way?

Doug Miller
Bingo. They don't want to buy that way. They're not interested necessarily in subscriptions. And we were actually having customers come to us or prospects come to us and go, You guys don't do that subscription thing, do you? Because we don't want that. And instead of going, No, that's how we do it. And if you want to work with us, we went, Well, actually, you don't have to do that. But we ended up tying it to something else because recurring revenue is a great thing to have. So we actually looked at the offering and we said, The reality is there are two parts to this. There's the support where they have a problem and they need a guy, they need somebody to help. But there's also the day to day stuff of security and monitoring and phishing protection and security, productivity, all that stuff. And if you have the right set of stuff, the right tools in that space, a whole bunch of the reactive stuff goes away. If you put the right tools in place so it's almost impossible for a customer to get a business email compromise, then they never put in a ticket about a business email compromise. Well, all those tools today are subscription based SaaS tools. So we could say, look, we'll sell you a basket of curated tools. And then if you need support, well, that's our way. Well, that was huge. That made all the difference in the world. I get what I'm buying. I'm buying phishing protection. I'm buying software. And so I get that I'm paying for that on an ongoing basis. The support piece, if I can only pay you when I really need it, cool. We went through that. Then another thing emerged out of that, which was, hey, a lot of these customers that really aren't our ideal customers, they're taking advantage of our all you can eat model. They're actually asking us to do a bunch of crap that they really could do themselves. But because it costs the same one way or the other, they're dumping it on our plate. Well, now, if every time you pick up the phone or you send us an email, it's going to cost you. Suddenly, a lot of the piddly crap goes away. They don't do it anymore. That made a big difference.

Tim Fitzpatrick
Doug, this is fascinating. I want to pull a few more things out here because, again, you dropped a ton of value here because it's one you talked about when to really start honing in on product market fit, we started to look at who our ideal clients are. You explained that process. When we do this for clients, I focus on the three power questions. Who do you love working with, which you touched on? Why work with people that make you want to bang your head against the wall? When you work with people that you love working with, in most cases, they love working with you. There's reciprocity there. Then who are our most profitable clients? We need to make money if we're going to stay in business and serve people at a high level. Then the third is who are we getting great results for? If we work with people that we're getting great results for, they're going to refer us, they're going to want to do more business with us. You basically said that. I'm just adding on top of that, those are the three power questions that really help you hone in on that. But once you did that, then you're able to... The next thing we do is we interview those people. When you interview those people, you find out exactly what you just talked about, like why they love working with you, but where are their opportunities? You've been buying this way, but do you really like to buy that way? Or are there other things that we could do to better serve you? And as you went through this process, you found, hey, they don't want to buy it the way we've been selling or the way that most people are selling. Let's shift it. And now what's happened is, because you touched on this too, you're in a really crowded space. Most MSPs have a really hard time differentiating. Because you have now shifted how your products are packaged in service, how they're packaged, how they're priced. And it's different than most MSPs, you've now created a differentiator.

Doug Miller
That's right.

Tim Fitzpatrick
So cool. And thank you. You're just serving me these softballs. So I appreciate that. But I think there's a ton that people can learn because it's one thing for me to share this information with people, but it's totally different when they can hear it from somebody else. That's not biased. I'm biased, I'm a marketer. I love that. It sounds like it took you guys a little bit of time to work through this process. But now you're at a place where you're starting to reap the benefits from it?

Doug Miller
We definitely are. That's really created the situation where I've got to address the sales thing. Because now we're getting enough opportunity and we have enough idea of how to sell to generate even more opportunity that we really need a full-time team that's doing nothing but that. Now we're going after that piece of it. If we can fill that piece of it, I think that's really one of the other important parts of this is you'll understand what the functions are in your business. Take the time to really learn. We're really good at operations. We're really good at service delivery. And we focused a lot on it, and we built the right mechanisms and processes, and we examined it a lot. But we really didn't do that as much with sales. We have recently, as we just talked about with marketing, but the sales piece, it was always a dirty word. And it was always a, Well, you know what? I can go do it. That's great. But I'm 58 now. I don't want to do this for another 20 years. And if the organization is going to have value for me to be able to exit it, it has to stand on its own and do its own thing. And it can't be dependent on me. So I can't be the sales resource. I can't be the Rainmaker. And just going, Well, just go hire a Doug, that doesn't work either because you can't find a Doug to drop in. They didn't grow the company. They don't understand it the way I do. They don't understand the offerings the way that I do. So they can't just intuitively sell. They have to sell because they're a good sales professional and they're good at their craft. And that means hiring the right person. But if you don't understand, if you don't have the introspection and the tools and the processes and the metrics to look at the different parts of your business and be able to say, Okay, well, the reason it's not working is this part of the business isn't working. Well, then you just start throwing crap against the wall, hoping that you randomly fix it. And that's, again, very painful.

Conclusion

Tim Fitzpatrick
Doug, this has been a great conversation. It actually went in a direction I didn't see it going, but I think there's so much value in what we talked about because product market fit is something that a lot of people struggle with. And you've worked your way through that and you shared just a ton of value with that. So I really do appreciate that and I think it's going to help a lot of people. So close things out, knowing what you know now. Anything you do differently?

Doug Miller
Yeah, definitely. There's no question. I would spend more time upfront understanding what we just talked about on the product market fit side and value that piece of it, as well as the sales piece, a lot more than we did initially. We saw those as ancillary things that we could just... You could just go hire an outside company to do that stuff. They'll just do it for you and everything will be cool. What's really important is our technical ability in our engineering. And it is. You got to have that stuff. You have to be good at the thing that you do. But that's not enough. You have to have internally a good understanding of the things that you talked about, your ideal customer, product market fit, what your sales processes are, how you're going to do all those things, because otherwise, you'll spend a lot of time going, God, we're really good at what we do, but nobody's buying it and nobody knows us.

Tim Fitzpatrick
Strategy and planning, I think, can be nebulous to people sometimes, but it's when you take the time to do the strategy and the planning up front, you are taking a little bit of time to do it, but it's helping you go faster in the long run.

Doug Miller
It is. It absolutely is. Now, the challenge that I think that a lot of business owners face is, particularly when it comes to sales strategy, marketing strategy, they know a lot about their area of expertise. Business owners were really good at a thing, and they decided they were going to turn that thing into a company. That's 99 % of us out there. They don't know about what they don't know about. One of the things that we had problems with was we hired people to help us with this stuff. Okay, marketing, what am I going to do? I'm going to go hire a digital marketing agency. Well, digital marketing agencies are often very good at implementation, but they suck at strategy. A lot of them are no good at strategy at all. In fact, they don't have a strategic bone in their body. They'll make you a great looking logo, but they're waiting for you to tell them what the strategy is. So you got two groups sitting here, and neither one of them know anything about the strategy, and you're just making web pages and logos and writing articles. And again, you're throwing a bunch of stuff against the wall, hoping that it'll do something. If there isn't the introspection and analysis there to inform strategic decision making, you're just spinning your wheels.

Tim Fitzpatrick
Yeah. This has been great, Doug. I really appreciate you taking the time. Where can people learn more about you?

Doug Miller
Best thing is to go to our website, which is brightworksgroup.net. Talks about who we are and what we do and shows how to get a hold of us. Always available on LinkedIn as well, both me individually and the company as a whole. Feel free to reach out either way.

Tim Fitzpatrick
I love it. Doug, thank you so much. We will make sure that that link is in the show notes. Again, it's brightworksgroup.net. Doug, appreciate you taking the time. Those of you that are watching, listening, and I appreciate you taking the time as well. Doug and I spent a lot of time today talking about product market fit in your services and your offers, which is one of the nine revenue roadblocks we help clients remove so they can accelerate growth. If you want to know which roadblocks are slowing down your growth, you can figure that out over revenueroadblockscorecard.com, or you can always connect with us over at rialtomarketing.com, which is Rialtomarketing.com. Thank you again. Until next time. Take care.