Product-Market Fit is actually Product-Channel-Market Fit
Much is said about achieving Product-Market Fit (PMF). Selling a product that the market wants or needs is the first step toward becoming a successful company for many aspiring startup founders and teams.
At its core, PMF is about aligning your product’s capabilities with the needs and demands of the market, but getting there requires continuous learning from your interactions with end customers. The insights gained from these interactions are invaluable in refining your product, improving the user experience, and solidifying your market position.
When you are building a self-serve B2B SaaS company, expecting your product to lead growth and customers to see its value, Product-Market Fit is, logically, the most pivotal milestone for any company. However, the concept is often misapplied or misunderstood when it comes to other types of solutions.
Selling a solution directly to end customers, as many SaaS companies do, is already a strategic choice—one that prefers a particular sales channel over others, narrowing your route to market. As a result, it predefines certain aspects of your addressable market, defining the lens through which you can view and understand your customers.
In Cybersecurity, there’s no such thing as “the market”. There are many different types of buyers and users who have multiple options for how they prefer to procure their solutions, and that’s not always in a self-serve way.
Hence, I propose that when it comes to this industry, we should be talking about Product-Channel-Market Fit. There are other important factors in PMF, such as the Business Model, but the delivery and sales channel have an impact in cybersecurity that is not necessarily as relevant in other sectors.
The choice of channel will significantly impact what markets can be addressed and how the product can be iterated and evolved to meet customer needs.
Moreover, achieving Product-Market Fit through a self-serve SaaS motion doesn’t mean it will also be the right solution for end customers who prefer other sales channels. On the contrary, deciding to develop other delivery and sales channels can dramatically affect the assumptions made when defining the ICP (Ideal Customer Profile) for a direct motion.
This is why we should be discussing Product-Channel-Market Fit in the cybersecurity industry.
How to Consider the Channel in the Product-Market Fit Equation
When a company is starting, one of the steps they take is defining an Ideal Customer Profile (ICP) – the organizations they are going to target with their solution. The goal is to try to understand who would be the right fit for their product.
Even though the typical processes for understanding an ICP consider many aspects, what is often overlooked is the channel through which customers prefer to procure their solutions.
There are two main reasons for this:
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Many aspiring companies are already predefining their sales channel to be direct/SaaS.
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Other sales channels are complex and take time to develop, like a reseller network.
Even if, during interviews and demos with early potential customers, they provide positive feedback on a product, that doesn’t mean they will consider using it later if they can’t obtain the product—and associated services—through the channels they usually work with.
Cybersecurity buyers don’t always procure solutions directly; moreover, one end customer might select some products directly and others indirectly.
These initial interactions with end users should always include questions connected to which channels they use to procure the type of product they are being shown.
If they do so indirectly, asking which specific third parties they work with is key to understanding the type of sales channel that will most likely need to be considered and developed by the vendor in order to reach Product-Market Fit later on.
There are many aspects that will change depending on the sales channel, and we will explore some of them in this article.
Early Customer Profile and Ideal Customer Profile
The Early Customer Profile (ECP) and Ideal Customer Profile (ICP) can vary significantly depending on the sales channel you choose.
Each channel caters to different customer procurement and service practices, and aligning a product with the right channel is crucial for achieving the desired market penetration.
For example, if the ICP includes enterprises that prefer to outsource most of their security solutions to Managed Security Service Providers (MSSPs), but the product is optimized for the end customer, it will be challenging to achieve Product-Market Fit.
MSSPs have different requirements than end customers, as they look for solutions that are natively multi-tenant, provide ways to integrate with their other tools, and value ease of implementation over other aspects.
In this scenario, the end customer might value the benefits that the solution provides, but their reliance on third parties completely changes the game. The “Ideal Customer Profile” will then need to be a combination of the expected customer attributes plus the needs, pains, and expectations of the MSSPs.
Understanding these dynamics early on will allow the alignment of the product, go-to-market, and sales channels, ensuring a smoother path to Product-Channel-Market Fit.
User Experience
User experience is also shaped by the sales channel, transforming Product-Market Fit into a more complex equation.
When selling directly, there is control over the entire customer journey, from initial engagement to post-sale support and customer success. This allows for a consistent user experience that can be tailored to fit the needs of both the target market and the vendor.
In contrast, reaching end customers through indirect sales channels depends on resellers, MSPs, or system integrators for some parts of the customer journey, and those partners might prioritize different things than the vendor.
For instance, an MSP might include the solution as part of a larger bundle of services, or a reseller might not deliver the post-sales experience that creates satisfied customers.
The inclusion of indirect channels in the customer lifecycle obviously changes the user experience in ways that the vendor can’t fully control, and where every partner will execute steps in completely different ways.
On the other hand, indirect channels will consider certain aspects of the product more important than others. While the end customer might prioritize business outcomes and the overall positive impact on their security posture, a reseller might find the ease of deployment more important to minimize the effort they need to make to acquire and onboard a new customer.
The impact of indirect channels on the user experience is significant and could delay or negatively affect the path of the product developer towards Product-Market Fit if not properly considered.
Learning and Iteration
The journey to achieving Product-Market Fit requires learning and multiple iterations. Engagement with early adopters—and the feedback captured from them—will be key to creating a product that addresses their needs.
It makes sense, then, that many companies choose a more direct approach at the beginning of their journey, as the choice of sales channel could influence how much they can learn from their end customers.
When the relationship with the users of the earlier versions of a product is direct, there are logically more opportunities for gathering detailed feedback on product performance, user experience, and customer needs.
This doesn’t mean, though, that a direct channel is the best way to achieve Product-Market Fit. It’s possible to learn and iterate when serving customers indirectly, through partners, as well. It just requires a different approach.
Moreover, channel partners might be the way the particular product will be procured by end customers, as we said before, so there might not be a possibility to bring the solution to market in any other way.
When the relationship is left completely up to a partner, the connection with users becomes more distant. Companies looking to achieve Product-Market Fit when a third party is involved (i.e., a system integrator or MSP) need to establish different types of feedback loops.
The first step will be to establish trust, as the indirect channels required to reach and maintain the customers might be protective of their customers’ contact information. At the end of the day, they consider them their clients, not the vendor’s.
At the same time, partners will need to be involved in the learning and iteration, as they will also have valuable feedback to achieve the required Product-Channel-Market Fit.
The process for learning and iterating an early product in a market where end customers are served through third parties requires a strong relationship between vendor and partner, based on trust, where the feedback from everyone involved is heard.
Product Positioning, Messaging, and Differentiators
The way a product is positioned and its value proposition communicated also varies across different sales channels.
When selling directly, there is the advantage of tailoring the messaging to resonate with the specific pain points of the target customers, emphasizing the unique differentiators of the product.
In contrast, when going through indirect channels like MSSPs (Managed Security Service Providers), a product becomes part of a broader service offering. In these cases, the MSSP, rather than the end customer, becomes the primary audience for the messaging.
It’s crucial to communicate the product’s differentiators clearly to the MSSP, as they will be the ones integrating and positioning the solution within their service packages.
If the differentiators are not effectively communicated and understood by the MSSP, they may not be highlighted to the end customer, potentially hindering the product’s ability to stand out in the market.
Moreover, there’s a need to have two sets of differentiators: those that are relevant to the end customers and those that are key to achieving fit with the channel.
Pricing Strategy and Market Sensitivity
Pricing is another area where the choice of sales channel can significantly impact Product-Market Fit.
In a direct sales model, there is more control over the pricing strategy, and it can be adjusted based on direct feedback from customers, allowing for a more dynamic response to market sensitivity.
However, when selling through indirect channels, such as resellers or MSPs, the pricing strategy becomes more complex, depending on the chosen approach and partner program.
Partners often take a cut of the revenue, potentially reducing the vendor’s profit margins. In other cases, the vendor sells to the channel partners at a certain price, and then they add their expected profit on top of that, something the vendor can’t fully control.
This could potentially lead to higher end-user prices, which could affect market adoption, but also to a lack of control and understanding of market sensitivity.
This lack of control over how pricing is communicated—and perceived—by the end customer, if not addressed properly, can complicate the path to achieving a perfect Product-Channel-Market Fit.
This will require an understanding of the pricing dynamics in the relationship between vendor, partner, and customer, and how to structure them appropriately.
The Myth of Universal Product-Market Fit Across Channels
A common pitfall in the go-to-market strategy for cybersecurity products is the assumption that achieving Product-Market Fit in one sales channel guarantees the same success across others.
This assumption can lead to strategic missteps, as different channels demand different strengths and priorities from your product, as we have discussed above.
For example, achieving Product-Market Fit through MSSPs does not automatically mean that your solution will thrive in a direct sales model, and vice versa.
MSSPs might appreciate—and be able to manage—a more complex implementation process, given their expertise and infrastructure. However, when moving to a direct approach, the vendor might not be ready to manage the onboarding of new customers with the same quality, finding new obstacles to address in their search for the new Product-Channel-Market Fit.
Direct customers will require a simpler, more user-friendly product that is easy to deploy and manage without extensive technical support. Alternatively, the vendor will need to have resources to handle the implementation for them, which might not be operationally efficient or scalable.
Therefore, when transitioning between sales channels, it’s essential to revisit and possibly adapt the product’s features, user experience, and overall go-to-market strategy to ensure it aligns with the expectations and capabilities of the new target audience.
Ignoring these differences can lead to frustration, lower adoption rates, and ultimately, failure to achieve an overall Product-Market Fit.
The Case for Product-Channel-Market Fit in Cybersecurity
Achieving Product-Market Fit in the cybersecurity industry is not just about understanding the product and the “market”; it also requires a deep understanding of the sales channels that are selected by the vendor and those that are preferred by the end customers.
The above is a comprehensive list – yet incomplete, as there are more – of the challenges of introducing a new product into the cybersecurity market, but it does show the high impact that the delivery and sales channel have.
Cybersecurity is a complex market served by many companies with customers who have different needs, pains, and expectations. The journey to Product-Market Fit (or Product-Channel-Market Fit, as I propose) requires a comprehensive understanding of how sales channels shape end-customer behavior.
The choice between direct sales, resellers, MSPs, or marketplaces will shape customer relationships, user experience, and ultimately, success in the market.
By considering the dynamics between Product, Channel, and Customers, and avoiding assumptions that success in one channel translates across all others, go-to-market strategies and customer needs can be better aligned, ensuring cybersecurity solutions reach their full potential in the marketplace.
*** This is a Security Bloggers Network syndicated blog from Cybersecurity & Business authored by Ignacio Sbampato. Read the original post at: https://cybersecandbiz.substack.com/p/product-channel-market-fit
