COLONY Lab ESF Due Diligence (Part 6/8): Go To Market

When the product is built and ready to be pushed to the public, projects don’t just do that on a whim, they have — should have — a well thought out Go-To-Market strategy. This is a strategic plan containing how the project intends to introduce their product or service to the market. It includes aspects such as the kind of users they are targeting, the ways in which they want to reach and attract them, as well as retain the users. In simple terms, it is like the roadmap of how they intend to introduce and grow their product in the market.

In the following document, you can find questions to evaluate a project with to help you do your due diligence. https://docs.google.com/spreadsheets/d/135AN4Pk2x-6m4Ldg-y3exbcuJPX_MkX-qqjQWk_U-ZU/edit?usp=sharing

Target audience

The first item on the list is the target audience that the team has in mind. These are the users or the customers the project will be aiming to onboard. The target audience is the exact scope of the market they want to address. Although the permissionless nature of crypto lets anyone use a product, the team does design the product to try and appeal to the target audience.

Before the team can do that, they will need to clearly understand their target audience; their needs, preferences, pain points etcetera. Only then will the team be able to build a good product for their users.

Let’s take Steadefi as an example here. They are targeting people who are looking for automated yield strategies. They have identified the biggest pain points of these users in their Docs under Value Proposition. As such, they have been able to build their product to solve for these paint points.

Aside from their current target audience, which are the initial users of the protocol, you may also contemplate potential future users that the product speaks to. Sticking to Steadefi, the isolated lending pools allow investors to manage their own risk. If Steadefi gains a track record, it could appeal to DAOs or institutions as well. These entities may want yield on their capital without active position management or wide exposure to risky projects. Such potential future users increase the potential of the project you are researching.

When evaluating a project, the target audience will be the most prominent users of a protocol. Therefore, it is crucial that the team clearly understands their target audience as the entire product and marketing will be designed to appeal to them. You want to see that every aspect of the product is aligning with its target audience.

Marketing

Marketing involves all the (strategic) activities, tactics and efforts that a project does to promote its product or service, attract users, and build awareness of its product in the market. The ideology of “if I build a good product, my users will come” is just that, an ideology. The market runs on attention, and you need to go out and get it.

Marketing is not the first step in development, so we can’t evaluate its quality or effectiveness. We do, however, want to know what the marketing plan is; the different forms of marketing, frequency, kind of message, etcetera. The message they convey as well as the way in which they do that needs to match their product and target audience. This is why they need to understand their audience. If they can’t appeal to them, they won’t come over to use the product.

Marketing is an essential part of a project’s GTM-strategy. It is the driver behind awareness, and the difference-maker between a good product, and a used one. It is a must-have if you want a project to succeed.

Key Performance Indicators (KPIs)

Out of all milestones a project can have, the milestones regarding their go-to-market strategy, or rather Key Performance Indicators (KPIs), are especially important. These are the milestones that measure the success and attention of the project. Where the roadmap and its milestones mostly focus on the development of the project, the KPIs focus on all the metrics we as investors look at. These range from weekly or monthly active users and TVL to revenue or transactions per month.

Similar to the roadmap of the project, these KPIs can also be a measure of the ambition and expectations of the project. If they set their target KPIs too high, they might be falling short in the end and disappoint the users or investors, which will negatively impact the project. Conversely, having too little ambition or expectations may also reflect badly on their potential. In either case, note these KPIs down as these will be one of the key metrics that we will look at to measure the progress and success of the project.

Community Management

The next step in going to market is the way in which the project onboards and retains its users. Community is one of the stronger drivers of a project. If people enjoy being in your community, they will keep coming back and your project will never die. Community management is crucial in fostering a community, and it is therefore also a must-have if your project can support it. You don’t want to join a cult, you do want to bet on one.

During the initial phases of building, your project won’t need a community yet. The community has no reason to stay around either. You do want to see a willingness from the team and a plan to create, engage and foster a community. This can come in many forms, but you will definitely want to see a willingness to recruit two or more moderators who take care of all day-to-day support for the community. Preferably, you would also like to see, in the future, someone appointed as head of community who will design and execute plans to build, nurture, and grow the community.

User onboarding

People will become aware of and interested in the project through the marketing efforts, the community management comes into play when they join your community on Discord or Telegram, and that’s when onboarding starts. There are many ways to go about onboarding users and we won’t list them here. You do want the team to have a sort of ‘code of conduct’ and politeness that is followed when onboarding users so there is at least some effort to welcome or onboard new members.

The worst thing that can happen to a new member is to join a community channel only to see that there is no one welcoming you to the project, nor any other activity that they can engage with, or even worse (yes even worse than the worst thing), a channel without any courtesy or friendly people where all they do is yell at each other.

At this stage, it is not necessary for the project to have a written set of guidelines yet. It does become important in the future and you might want to keep an eye on this one.

Community growth

When community members are welcomed and joined your community, that is when the hard part starts; retaining and growing your community. A community can survive on its own if it’s strong enough, but they won’t thrive without any involvement from the project itself. There always needs to be someone in the chat to engage with them when they come.

Moderators will usually be the first to engage the community. You would like to see a willingness to initiate activities or efforts to engage the community from the team. Moreover, if your team shows a willingness to welcome and reward community members that add value to your community, these people will become ambassadors for your project further boosting your community and marketing at the same time. A strong community will stick around, even through hard times, and that’s a big advantage to have in your project.

General conclusion

When evaluating the Go-To-Market strategy, disregard the quality of the team or product for now. We are solely focused on the plan to introduce the product to the market, build awareness, and gain traction. If a project does not put itself out there and promote itself to the world, no one will know about it, and no one will use it. Therefore, the Go-To-Market strategy is crucial in making the project a success.

Reverting back to the example of a cruise-ship. You can have the best crew and most beautiful ship in the world. If no one knows about it, no one will come on the trip.

And if you are curious to the previous two parts; Team, and Product, you can find these here;

[embed]Colony Lab ESF Due Diligence Helpkit (1/8): Team When evaluating a new project, the team is by the most important aspect. They are what makes or breaks a project; they…medium.com

[embed]ColonyLab ESF Due Diligence Helpkit (Part 2/8): Product The product that a team promises to deliver is a close second in your assessment of an investment. The product is what…medium.com

[embed]Colony Lab ESF Due Diligence Helpkit (Part 3/8): Roadmap So far, we have looked at the team and what they are able to do, as well as at the product and what they promise to do…medium.com

[embed]COLONY Lab ESF Due Diligence Helpkit (Part 4/8): Competition Even if you have a good team and product, people may still choose not to use the product. If the user thinks another…medium.com

[embed]COLONY Lab ESF Due Diligence Helpkit (Part 5/8): Tokenomics/Business Model This part of your due diligence is all about how the project intends to capture value and may return a profit to you —…medium.com