Case Study: PromoRepublic's Product-Market Fit Comes From Focusing On Serving A Niche Set Of Customers

Learn how Max Pecherskyi's PromoRepublic found product-market fit by serving a niche set of customers.

Jan 04, 2021

Author’s Note: Happy New Year to all my F2F Subscribers. I hope you all have a great 2021 ahead of yourselves. F2F is back on its regular schedule after a hectic end to 2020. I will be publishing bi-weekly on Mondays as promised from here on out. A big thank you to all of my Feedback Group participants: your comments and critiques are helping me rapidly improve the quality of the newsletter. I’ll have more to share in the upcoming weeks, but I’m extremely happy that I now have the time and energy to take F2F to its full potential this year.

Introduction:

Max Pecherskyi is an experienced marketing & brand strategist and social media marketing pro. As a co-founder of the NSG digital marketing agency, Pecherskyi crafted external marketing & communications projects for Kimberly Clark, Danone, Philips, Ferrero, Johnson & Johnson, and Henkel, Huggies. He is a former lecturer at the Bavarian Academy for Advertising and Marketing in Munich, where he shared his knowledge of branding strategy and the value of branded online communities.

In 2015, Pecherskyi transitioned to the SaaS world and co-founded PromoRepublic, a distributed marketing platform for franchise and direct selling brands. In this Case Study, Pecherskyi describes how PromoRepublic arrived at product-market fit by targeting a niche set of customers.

Executive Summary:

Problem: Shifting From One Type Of Customer To Another

PromoRepublic struggled to migrate from serving SMBs to franchise and direct sales businesses due to lacking the expertise to meet their needs.
Market: Evolving Your Product Based On New Customers

Franchise and direct sales businesses have greater market opportunities compared to SMBs.
Solution: Tight Feedback Loops For New Product Features

A combination of leveraging experts in the franchise and direct sales business and tight product feedback loops helped PromoRepublic find PMF.
Team: Leverage Domain Experts To Ensure PMF

PromoRepublic’s successful push into enterprise businesses was a result of their targeted hiring of experts in key niches relevant to the market.
Takeaway: Focusing On A Niche Increases PMF Success

PromoRepublic’s diligent focus on a customer niche helped them find PMF among franchise and direct sales businesses.

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PromoRepublic cofounder and CEO Max Pecherskyi.

Problem: Shifting From One Type Of Customer To Another

What are the key problems you’ve had to solve on your journey to product-market fit?

Our fundamental task was to move from a small business market to an entrepreneurial one. Our tailored social media marketing solution perfectly suited small businesses’ needs but was not targeted enough for franchise and direct sales businesses. After re-engineering and a steady shift process, we obtained two significant types of clients: head offices with their particular needs and franchisees/partners/field networks with their specific pain points too.

PromoRepublic’s 5-year history and deep understanding of small businesses’ marketing philosophy helped us to realize that franchisees, partners who leverage vendor content, messaging, branding, and demand generation initiatives in their local markets drive a winning customer experience. Since franchise and direct selling companies’ marketing flow is not limited to social media, it was essential to diversify our way to product-market fit with additional channels. Therefore, we had to get to know our new clients and adapt to their unique requirements and necessities.

This challenge served as an opportunity to develop and expand our product’s functionality. For example, we discovered that franchise businesses needed a comprehensive local marketing platform. In addition to an asset manager, a social media calendar, and content posting, we had to incorporate listing & review management. We also had to include enterprise features important for direct selling companies, so we implemented a dashboard with analytics and brand compliance tools.

Why are these problems essential to solve for creating the best solution for your customer?

The key to the acquisition of long-term customers is meeting their demands at the highest level, which is possible only through deep understanding and research of unique needs. Franchise and direct selling are two different niches, and each of these verticals is very specific. Although PromoRepublic is a single platform for both, the target markets are diverse from a marketing and sales perspective.

We aimed to bring our product to a new market and began working closely with potential clients. Customer engagement started with conferences where we learned how these particular business models work, interact with prospects, and pitched our product. A focus on verticals, strengthened by our in-depth research and an appreciation of individual needs, has helped us gain significant market players’ attention and attract customers of other large market SaaS players.

To identify particular pain points that needed to be addressed, we started by researching internal clients and moved to external clients only after confirming the revealed hypotheses. The framework consisted of the following stages:

Revealing leads among existing clients. Everything started from inbound prospects — we were actively developing brand awareness, and eventually generated a direct selling lead, identified franchise businesses among our agency clients.
Hosting customer development calls. We invited these prospective enterprise customers to talk about and share what their most significant challenges in social media marketing were. They told us about the critical tasks they needed to deal with every day and the functionality they wanted to have, so we understood even more about how our product could suit the needs of our target customers.
Designing hypotheses based on obtained insights. It was time to decide what segment could benefit from the product most and what approaches and features to get smoothly. We came up with hypotheses about how to offer our product to the franchise and direct selling markets.
Crafting a segmented value proposition. We noticed that small and mid-size franchises practice posting across franchisees but lacked a systematic approach to social media marketing, with no brand consistency across locations. We based our proposition on our findings and offered value for different segments in franchise & direct selling businesses at the early stage of their social media marketing strategy.
Validating the proposition before the outbound campaign. Our existing customers have helped us confirm our hypotheses, allowing us to expand our outreach to new customers. We started an outbound campaign to further check our hypotheses and often modified a hypothesis until it was the best fit.

It was essential to diversify our way to product-market fit with additional channels. Therefore, we had to get to know our new clients and adapt to their unique requirements and necessities.

Market: Evolving Your Product Based On New Customers

Once you identified the critical problems to solve, what led you to realize there was a huge market opportunity to be unlocked by doing so?

From 2018 to 2019, we were actively building the brand of a social media marketing vendor and attracted some clients from the franchise and direct selling markets. Their first requests were like, “Okay, we have X thousands of representatives, and we need brand compliance in social media” or “We want to accelerate product awareness with the help of our partners and need a tool to support them.”

This feedback made it clear that we could reveal a tremendous market opportunity if we moved in this direction in an exact and well-coordinated way. The need for preliminary information encouraged us to do in-depth market research as a part of our customer development strategy. We asked detailed questions to find out what else our customers might need and started to research the market deeply on our own.

There are most likely several segments of the market you could choose to attack first. What section of the total customer base did you focus on first to establish product-market fit, and why?

There is a niche of multi-location businesses (MLB) like Zara. This niche is a large market with different marketing tasks based on centralized marketing resource management. We decided not to extend our efforts to all multi-location brands which target this niche immediately.

Instead, we specifically attacked franchise and direct sales brands, as they work particularly via partners and networks, and that’s where our product-market fit was created. So our distributed marketing product is tailored to these two niches for now, with a slow expansion to service providers (financial services who sell via partners, e.g., New American Funding).

In the future, we would certainly anticipate the possibility of working with the automobile market, where corporations distribute their product via local dealers. Undoubtedly, this sector will require profound market research, which we always do.

Our strategy was to find out in which particular area our solution was most needed and relevant and to put our efforts precisely there. We did market segmentation first to know where our services fit best. Our audience was divided into direct selling companies, both product (e.g., Oriflame) and service providers (e.g., New American Funding). We then examined each segment's current business performance, considering industry indicators, revenue streams, new customer sources, and the impact of the pandemic on sales and marketing.

The research and matching requests with capabilities showed that our social media marketing expertise was an excellent fit for product companies. Social media was their key promo channel, primarily due to the recent lockdown. This area became our priority at that time. However, the second segment is still strategically important: service direct selling companies use social media for lead generation and service value education, and we are in the process of crafting a product set for them, too.

We asked detailed questions to find out what else our customers might need and started to research the market deeply on our own.

Solution: Tight Feedback Loops For New Product Features

How did you build your solution to maximize its relevance to the customer and ensure product-market fit?

We aimed to ensure maximum product relevance through precise planning, process structuring, and ongoing control at four fundamental points:

1) Potential customers. We talked to business owners about their needs and already knew what they were looking for at the presale level.
2) Competitors. We researched the existing offers on the market and identified where our strong points of difference were.
3) Partners. Using the network, we gained additional offer reinforcement. We worked on a Facebook partnership so that we could use the platform at maximum capacity.
4) Execution. Adhering to an iterative approach, when we received preliminary feedback on new features, we incorporated it for additional customer value. Thus, every feature we developed would be tailored to market needs. For example, we determined that franchise businesses need a review management tool. We immediately asked what social media they needed to integrate with, if they needed support system integration, and what else we should consider to make their workflow even more efficient. Remember that clients are the source of all these details.

What are the things you did that don’t scale to better shape your product development?

Some time ago, to test a hypothesis concerning the e-commerce market, we officially integrated with Shopify. We evaluated the potential of launching a “social commerce” product for them and eventually realized e-commerce didn’t need it. The integration did not work out because not enough research had been done to understand the priority of needs. The direct selling companies actively use digital technologies for their sales because of the lockdown, so we believe that the experience wasn’t in vain.

Our approach was to prioritize the primary information we had gathered about our product's needs and our clients in the current economic environment. We consulted a lot with industry experts, both potential clients, and independent consultants, to establish our expert vision on social media marketing in this industry. One of our first communication tactics grew out of our accumulated expertise: we aimed to be the first company on the market to provide high-quality industry-specific educational content with a useful new approach to social media marketing with a simple tool for that. Today, our strategy is still based on the value of information and insights, so we continue growing our expertise through different internal and external channels.

Adhering to an iterative approach, when we received preliminary feedback on new features, we incorporated it for additional customer value. Thus, every feature we developed would be tailored to market needs.

Team: Leverage Domain Experts To Ensure PMF

How did you handle conflicts between you and your cofounder when making product decisions at critical junctures to arrive at product-market fit?

Any product decision should always be based on facts, data, and hypotheses, rather than on particular subjective assumptions. The person responsible for testing the hypothesis uses all available resources, briefcases, and networks to verify whether it will work out in the given circumstances. If it turns out that the idea fails, we gain knowledge and experience as a result. Therefore, we rely solely on facts, which eliminates potential sources of conflict. But the intellectual debate is what we practice daily to make the best decisions.

What key qualities did you look for in key early hires to increase your chances of discovering product-market fit, and how did you prioritize what types of hires you needed to make first?

We used the experience of our expert team to achieve an enterprise product-market fit. They successfully built the same processes of product-market fit and go-to-market strategy for the SMB market. We hired people with experience in enterprise marketing and sales first to accelerate enterprise market expansion.

For the go-to-market strategy, we hired people from different niches: industry consultants/experts in sales, business development, and marketing. We believe that a motivated team with specific market knowledge and a shared vision is the fastest way to grow. In addition, we are constantly expanding - available positions are listed here.

For the founder of a startup, self-scaling from a personal and professional perspective becomes a fundamental lifestyle factor. For a team member who is involved in the startup, every milestone of the company makes a highly positive contribution to the individual's achievement pipeline. Nowadays, everyone who wants to stand out has to learn very quickly and work very hard to keep up with the speed of digitization and new generations of strong professionals.

A few management principles help us to maintain a highly growth-supportive environment for our employees:

— Our recruitment process is planned and tested: we hire people from enterprise sales, marketing, and HR who contribute knowledge and experience to our team, as this is the best fuel for both the steady growth of the startup and the progress of each team member in particular.

— Every employee on our team is in a win-win situation: the company provides the necessary resources and support. The founders encourage the team to network and learn from the pros within the enterprise SaaS world and the industry we provide our services to. With this approach, our team members are very excited to dive in and contribute to our growth.

— The company vision is not limited to only the founders: all three founders are honest enough to admit that we don't know everything and still have a scope of areas to grow personally and professionally. We always listen to our team first and have built a mighty advisory board that helps us overall company strategy and growth.

— We set ambitious objectives for quarterly results that motivate each team member to contribute with their skills and expertise. Our HR department encourages achievements – our office parties are enjoyable and inspiring, aimed to celebrate small and big wins on the way to our growth.

We believe that a motivated team with specific market knowledge and a shared vision is the fastest way to grow.

Takeaway: Focusing On A Niche Increases PMF Success

What are the key lessons you have learned so far from your journey to achieve product-market fit?

Focus on a niche - learn as much as you can about how the model works, ask questions, define pain points, research competitors, and the media landscape.
Consult with external industry experts from the market, not just with customers.
Ensure that you have the people with the right skills at the stages of product development, go-to-market, and product-market fit. Make sure you have the resources to hire people beforehand.

What’s the hardest problem you’re facing now after solving the prior one(s)?

We entered the enterprise market right before the quarantine started. Before that, the offline communication channel had been a great source for us as a B2B SaaS provider: we used to attend niche conferences, visited clients` offices, and conducted face-to-face negotiations. The lockdown slowed customer communication, but we are certain that empathy and solutions can be delivered online, especially with the digitization boom we are all experiencing.

Focus on a niche - learn as much as you can about how the model works, ask questions, define pain points, research competitors, and the media landscape.

Click the button below for PromoRepublic’s Founder File!

PromoRepublic's Founder File

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