Starting with the premise that “if you target everybody, you target nobody” let’s talk about how you define the market segment you’re going to go after.
As a B2B tech company with some level of repeatable revenue, you’ve already made sales and you’re looking to make that transition from founder-led sales to hiring your sales leadership team/person. But, you have a limited marketing budget so where do you focus and for what reasons?
Here’s the thought process I would go through and I’ll use my previous text analytics go-to-market experience as a supporting case study.
Do your existing customers collect around a specific market segment, location, functional group (e.g. customer service or sales etc.)?
If yes, is that a good target market? Is it easy to sell to? Does it fit your product today? Are your existing customers happy (if they are, they can become good advocates for you later)?
If you can keep answering “yes” then you may be on to something. If you’ve got “no”s in there then move on, look for something else.
In my case study example there were lots of university customers, and some public sector when I took over as CEO. For a start-up expecting to ramp very quickly these sectors looked to me as either small ticket sales or a very long sales cycle, or both. They weren’t going to work.
So I sat down and created a matrix of potential sectors/functional groups/broad uses. This was excellent (but generic) text analytics software that could be used in a zillion different ways in any sector you can think of. Plus, social media was in its infancy (2007) so Twitter analysis (e.g. for customer sentiment) was an option too.
As you’re thinking BIG, you also need to think about your route to a rapid growth market. Are you going to sell direct, or OEM your technology (embed it in someone else’s solution and have them indirectly sell it), or are you going to sell through partners (either resellers or referral partners)? Which plays best to your technology? Can you already see your ideal partner out there? If so, what market are they in? Can you target that market directly and create a splash as a way of accelerating partnership discussions?
In our text analytics example, I’d honed in on customer insight as a great target area across multiple industries. Our product was excellent at extracting actionable insights from a mass of data with little to no setup effort, introduced no bias, and worked extremely quickly in multiple languages. At the time (and probably still the case today) market research firms were trying to survey their clients’ clients with pre-set responses (i.e. bias) to questions. Why do you love/hate us, is it A, B, C/X, Y, Z. Not much use when the answer is not listed. Equally, providers of Net Promoter Score (NPS) solutions had their magic score for ‘what’ customers thought but not ‘why’ – they had little capability to analyse the mass of open ended responses to “why did you score us that way?’
That defined our target market and even the partner companies who could take our SaaS solution to market through their own products/channels. We became ‘the why, not just the what’ company.
A further consideration for your target market is – does it already exist or are you going to have to create it? Are you entering a me-too market where you have some differentiators but there’s an almighty gorilla already in place? That’s tough. So is creating a totally new market, but focus helps.
Imagine you have a CRM solution that’s super easy to use and has some limited (but useful) add-on capabilities for marketing automation (or social media management, or all of it). Do you target broad CRM and run into Salesforce/Pardot? Or go after ‘small businesses’ maybe? That’s still a gigantic market segment. How are you going to address it? Niche, niche, niche down.
A few final points, somewhat inter-related.
- Treat your first target market as the lead skittle in ten-pin bowling. Knock that one down and others will follow. You’re not committing to one target market forever. If you have tech that’s broadly applicable you can go after other markets with the success of the first under your belt.
- Treat your available market as infinite. Meaning, there’s many fish in the sea. If your first discussions are not going as planned (“if only it did this, or that”) don’t throw everything up in the air and start doing dev work based on limited feedback. There will be others out there that ‘get it’, you just need to find them.
- Play to what your product is really good at. If I made one slight mistake in the go-to-market of our text analytics case, it was adapting the tool output (results reporting) to what my left-brained NPS partner wanted. The existing output was brilliant for right-brained people, but he “couldn’t read the tea-leaves”. I could, and there were millions of other right-brained people who could have too. Focus on what your product’s good at!
I think that’s enough for now. If you’d like to chat through your target market opportunities then there are lots of ways to get in touch. I look forward to chatting.