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The Importance of Product Distribution

Ryan Frederick | July 30th, 2020

One of the challenges a company creating a new digital product has to confront is how to drive awareness and visibility for the product. “If we build it, they will come”, is a great message as part of the fictitious story but not very dependable as part of commercializing a product.

Creating a great digital product that is well architected, designed, and engineered is a significant accomplishment, but if not enough potential users become aware of the product, the product’s existence becomes significantly less valuable. Creating a great product is no longer enough. In fact, a case can be made that product distribution is now more important than building a great product. The ideal scenario is, of course, to be great at both to increase the odds of success.

Why is product distribution so important? There’s a lot of noise competing for our attention. To cut through the noise and to have any resonance with potential users, a product has to become known and valued by users. A product having robust and effective distribution helps achieve the needed visibility and value.

Debates have started on whether distribution could be even more important to a product’s success than the actual product itself. While the debate has merit, it is still a stretch to think that distribution can make up for a substantially lacking product. Distribution might not be able to make up for a bad product, but it’s clear that great distribution can help average products have great commercial success. Let’s take Microsoft for example. Microsoft depends more on its tremendous distribution network to succeed than the company’s ability to create undeniably great products. When you think about the current great product companies, Microsoft doesn’t typically come to mind as part of the upper echelon of companies, but Microsoft has success with new products in spite of this because they have powerful distribution capabilities. Microsoft remains a major player in many categories because of the company’s distribution prowess, not its product prowess.

Some digital product purists turn their nose up at the power and importance of distribution and a company like Microsoft’s ability to leverage a massive distribution advantage. It’s like saying I want to start a new beverage company, but I don’t have any retailers willing to give me any shelf space in their stores. I might have the best beverage anyone has ever tasted, but without the retail distribution, it doesn’t matter. Digital products need the same access to shelf space, it just comes in different forms.

Many of our clients at AWH find themselves confronted with the challenge of distribution. It’s tough to transition from being in product creation mode to being in distribution mode. Ideally, distribution strategy and tactics are being figured out during a product’s creation. When a startup is building a digital product they typically have team, financial, and operational constraints resulting in the distribution not being given the consideration and work needed while the startup is doing things like problem understanding, establishing customer product fit, and iterating with customers on the early version of a product. This is all understandable, but as soon as a startup has the initial foundation of customer product fit, the startup needs to be thinking about broader distribution.

Slack is a good example of a new product and company that grew through an effective distribution strategy. Slack grew organically by targeting high-growth companies, primarily in Silicon Valley, to initially use their product. People in and around Slack were well connected with large networks of high-growth companies that they could make aware of the product and to get them to try using it. The high-growth companies adopted Slack and began to share it with others outside of the company. Sometimes this happened company to company, but often it was person to person. Slack is also inherently a very distributable product because it is a communication and collaboration tool. Inviting someone to use Slack, because you or your company does, is one of the easiest ways to drive awareness and distribute a product. New users could also use Slack for free to start which lowers the validation value threshold.

The network and relationships of the people involved in Slack in the early days were paramount to their ability to get into the high-growth companies they targeted as key to their initial and long-term distribution efforts. Every team bringing a new digital product to market has to assess their own distribution strengths and weaknesses. What relationships and sphere of influence can the team leverage? How will the team build on and leverage these? Who are the target users and how can the team capture the attention of the target users?

Distribution is not a panacea, however. Large companies often have the distribution piece nailed through their existing distribution infrastructure, but large companies often lack the capability to create great, new digital products that are high-value and low-friction that users actually need and want to use. Large companies often try to shove mediocre digital products through the company’s existing distribution only for the new products to be poorly received by users and then for the product to be retracted and shut down as a result.

Anyone creating a new product has to identify their target users and how to get in front of the users as cost and time effectively as possible. This is the essence of great distribution. Slack identified their initial target users as people at high-growth companies. These target users aligned nicely with the Slack team’s network and when this happens it is much easier and faster to get distribution for your product. When there is no personal network to tap into early, many new product creators’ resort to competing among many other products and companies to distribute through the App stores, social media, and online marketing. These highly competitive platforms are, for most new digital products, the channels of distribution now. But these channels are just as, if not more, crowded than the channels that existed before. Putting an app in the App stores and thinking that is an adequate distribution strategy is naive. Digital marketing is a moving, shifting, and complex space. What worked for a product company two years ago may not work at all today and what will work two years from now is anyone’s guess.

Great distribution for a product requires a multi-faceted and multi-dimensional strategy for any product. The product might even aid distribution if it has the right target users. Product-Led Growth is a term that has come of age in the past few years that represents a way for a product to help drive adoption, use, and retention by users based on how easy it is for users to start using the product, receiving value, and sharing the product with other potential users. Every product being created now should be evaluated for the product’s ability to facilitate product-led growth as part of an overall distribution strategy.

What do you do if you don’t have an extensive network of target users or you don’t have an existing user base to leverage for your product’s distribution? As a starting point, I would suggest understanding where your product’s target users spend their time and what they pay attention to. Once you know who your target users are, where they spend their time, and what they pay attention to, you can begin to put a distribution strategy together that meets them where they are. You must reach and meet your product’s users where they are to have effective distribution. You can’t assume or expect that users will seek your product out and find it. They won’t. We must always remember that it is easier for users to do nothing than to use our product.

After defining who a product’s target users are and where they are, (literally and figuratively), you have to figure out how you will get their attention and motivate them to use your product. You might do so through direct selling and a sales team who has the responsibility to drive awareness and desire for the product. A direct sales approach is most applicable in a B2B setting and can still be very effective in meeting the needs of a company for product distribution. B2B products can be distributed and sold through partners who add some value to the equation for users, often around implementation, configuration, and training. The more complex and high-friction a product is, the more a partner channel is likely to be involved as part of a product’s distribution. B2C products are typically much more direct to users with direct sales teams and sales partners being less relevant and appropriate. B2C products depend much more on tactics like digital and influencer marketing. B2C products and companies are also much more dependent on a strong brand presence and resonance than B2B products are as part of the distribution. Not that brand doesn’t matter with B2B products, it does, but it matters more with B2C products. Users are making a very personal choice to use, acknowledge their use, and recommend others to use a B2C product.

To increase the odds of a product’s success a product has to be a great product with great distribution. It isn’t an either-or now. Many great products aren’t successful because of a lack of great distribution and some mediocre products become successful because of great distribution. If you are about to start working on a new digital product or are in the process of creating one, and you haven’t given much thought to distribution, you need to start. Our team at AWH can help you think through and evaluate the best distribution options and put them in place in addition to our product creation capabilities. Reach out if we can be of assistance.