How do you approach validating potential new market directions? And multiple market directions your product could take?

Understanding the market landscape and how it breaks down is a good first step. For example, within the broader category of "customer engagement" there are sub categories like marketing and advertising tech, support/enagement channels, call analytics and contact centers and CRM. And then there are even more categories or sub jobs under each (read about the jobs to be done framework if you havent). To help create this 'market map' you can look to industry analysts or the Forrester / Gartner Magic Quadrants but I encourage you to not take these as boilerplate as it's really individual to your company and the way you uniquely view the world.

Once you have the market map, I would identify where you play today and where there are potentially underserved markets. Are there few competitors, sub-jobs not well served, markets that would add value to your current offering, it could even be certain markets in certain geos.

I would use this market map to connect with other teams likely already thinking about these questions like bizops and Product. The market map alone can be a good conversation starter. Ask questions like which of these areas do you think is underserved, where do you think our company is well positioned to play, how might we differentiate in these areas. I would then work with your bizops teams to size the TAM of your top list of 4-5 new markets and make some assumptions about how much share/revenue you could make in the next 2-5 years.

I have an answer to this, but also a caution!

Caution:

Everyone likes to have a slide in their analyst briefing decks that shows all the adjacent markets you’ll eventually conquer. (We have one too so no shade).

But I would caution that there’s a difference between building a narrative that gives prospects (and partners and investors) faith that you have a vision—and focusing too quickly on “could be” use cases too early. It takes a really, really mature sales and marketing motion to start solution selling. Too soon and you’ll completely dilute your message on your website, in sales convos, in campaigns, etc. Your most viable prospect will have trouble sorting what you do, and might even think you do “too much” for them.

Answer:

If you think you’ve nailed not only product-market fit but go-to-market fit (apologies to the person I’m stealing this concept from! It’s not mine and I can’t remember who coined it but I love it)—in that your marketing and sales machine is dialed in, it’s time to consider new markets and use cases.

Where I think you’re likely to see this organically (customers asking rather than your founders asking whether this is something customers could want) is when companies in your ICP that do truly understand your product, start evaluating you against a “simpler” solution. It’s easy to quickly dismiss these—“oh they do a fraction of what we do”—but these are the solutions that are worth a second look. If your customer is comparing you to something simpler it’s probably because they have a short-term use case that they want help on right now. And they’ve decided you can’t help. That’s a great place to consider expanding your product or marketing motion. But you’ll need critical mass of interest. Interview those customers, and create a new market survey asking about the pains that those solutions solve and how they solve them today.

Importantly: Make sure what you’re considering accelerates deals rather than slows them. Sounds obvious, but for example, if your buyer is the VP of Marketing and you’re considering adding something they thought would make the product more attractive to their Sales counterpart, you need to ensure adding that feature or marketing motion doesn’t just introduce one more stakeholder into your buying process. If you’re comfortable with that, for certain segments, great. Otherwise it could overcomplicate things.