Yes, my title is a nod to the late, great Leonard Nimoy. I admit it. I’m a big fan of his and a full-fledged trekky… and if that makes me a nerd, I wear that title proudly.
Today’s lesson on finding your target market is a critical one for venture leaders. I kid you not – the success of your venture is singularly based on your market success. Full stop. The clearest evidence of market success is a long and strong roster of customers. The first step in building this long list of clients is to identify your target market and pursue it relentlessly.
Let’s peal back the layers of this challenge so that you can clearly understand and identify your target market. Then I encourage you to pursue the heck out of it with all the vim, vigor and firepower you have at your disposal.
1. Understanding Your Target Customer
I’m assuming you have already identified what product you are bringing to market. If not, my blog entitled How to Decide What Product to Bring to Market will help.
You’ll want to begin by identifying key customers that you are developing this product or service for and the market(s) they are in. Focus your venture on products where you can easily and readily identify a viable market – one that you believe in strongly and preferably have experience with. Next, articulate who your product is targeting and what use case or problem it solves for your customers.
Once you believe you have identified that product and customer, take a sample set of 10-20 users from this target market to review your business plan, product plan, or even a prototype, if you have one. This is the most efficient way to ensure that you are actually building something that the market needs, wants and is willing to pay for. Once you have completed this exercise, you will have a better idea of who your target customer is and what the market is for your product. Next, ask yourself the following things:
- What are the commonalities of this group?
- What vertical industry are they all a part of or affiliated with?
- What business processes do these customers share?
- How does your product enable them to be more successful with this business process?
- What are the pain points of this business process and how does your product help them?
- What makes your product better than the competition at resolving customer problems with this business process?
The key is to identify what your focus group “customers” do and don’t have in common. Once you know both, you will be able to craft a preliminary view of your target market. With that information, create a short list of verticals or industries that your customer is in and the roles and responsibilities of the target buyer that you can focus on as you prepare to go to market with your product(s).
Here’s an idea from social media influencer Dominic Sanchez – “One of the best ways to know your target audience is to utilize social media to get your customers engaged with your product. Social media will help your company and its marketing teams better understand what is and is not important to your target audience through trial and error of posting content.”
2. Focusing Your GTM Activities
Next you need to refine your target market down to a smaller subset of customers because it’s unlikely that you will have the resources to go after all of the companies in an industry or vertical. For example, if you identify travel and hospitality as your vertical and independent owner/operators as your target buyer, your venture will not be able to successfully target that whole market as its literally 100,000+ companies geographically dispersed all over the socioeconomic spectrum (and planet).
Narrow the list to a smaller subset that you can effectively target. One approach is to look at the market leaders in your vertical. In any market, a typical bell curve divides the market into those that are leaders, mainstream providers and laggards.
You want to focus on the leaders in the market you’ve chosen because these companies got to the top of their competitive heap by being forward thinking, innovative or through just plain better execution than their competitors. These are exactly the types of organizations who would recognize the value of the shiny new widget you’ve built and how it can help them succeed even more than they already have to date. Or it may help them break into a new market or realize some greater efficiency or benefit to make them more profitable and successful.
Keep in mind that these market leaders you’re chasing are being chased by many, many other venture leaders, so getting your foot in the door may be difficult or at times impossible. A word to the wise – be persistent and creative in your approach to break through the noise and get in to see these leaders. There may also be a certain amount of hubris that these organizations exhibit as a result of their market leading success, but with persistence and by smartly engaging the customer, you can break through the obstacles to demonstrate the benefits of your product or service and subsequently land these clients.
Advice: Be humble, patient, and relentless; imagine that you are teaching an elephant a new dance and, while it IS capable, it may take some time for the new steps to sink in and become part of its repertoire.
3. Expand Your Target Customer Base
It may seem counterintuitive, but you should also take a hard look at the laggards in the market. I can hear what you are thinking, “Jit! What are you talking about?!?”
Hold on! Wait! This is good stuff here! Sometimes laggards are only in that position because they missed some important market shift, have fallen down on their execution or made a misstep in the market. Sometimes struggling companies are desperately seeking a new approach that will allow them to regain market momentum and turn things around.
They may be more willing to roll the dice because they have nothing to lose by trying something new and perhaps have a lower pain threshold for failure which may open them up to considering your product. As you examine the market laggards, the key is to find the executives, groups, divisions or organizations within the larger company which are leading its turnaround efforts. These folks will likely be the most daring, innovative, and open to trying your product/service.
These leaders will want the benefit of your product if it will effectively change the rules of business operations to make them more successful than their competition. Often companies end up as a laggard, through no specific fault or lack of execution, but rather through normal market dynamics, which may be completely or largely out of their control.
So be a wise venture leader and consider the laggards in the market as potential target customers. You may have a much easier time getting a meeting and find an organization more willing to consider an alternative, because the future isn’t so bright from where they sit today.
“It is important to ensure that you are dividing your time up appropriately by continuing to nurture and support your current client base while searching for new ways to expand your business to a broader audience,” adds social media influencer Dominic Sanchez.
4. Target M&A Activity
Next consider companies in your vertical market that have recently undergone, are undergoing, or rumored to be undergoing mergers and acquisitions activity. Almost every industry has a number of players operating in it, some have an incredible number of Davids but no Goliaths. There can be a constant churn in companies involved in M&A. In fact, some organizations like Cisco in high-tech have specifically made their mark through a rapid and voracious acquisition strategy.
Each time companies undergo an M&A activity, whether it is the acquirer or the company being acquired, there is a certain amount of change. In this moment of change, your venture can take the opportunity to introduce and successfully sell your products. One of the biggest challenges of acquiring a company is how to manage the new volume of work – the dreaded “doing more with less” – and that, my friend, is your opportunity to shine.
The acquiring company is looking to solve this thorny problem and, if your product or service can bring them relief from this demand with a high degree of success, then you have an open door and invitation to get into this newly formed organization. On the flip side, the company being acquired can be in a state of flux, indecision or paralysis as it looks to its new “parent” for guidance on how to proceed and where it fits into its new world order. If this is the case, go to great lengths to help them understand what is unique, different or better about how and what they do, versus the parent company.
The desire to distinguish themselves in the eyes of their acquiring parent is a key opportunity for a venture leader to introduce themselves to the acquired company and to show how they can help them make a good impression on their new parent organization. This market approach targets disruption –whether going through M&A or some other phenomenon, disrupted markets are a ripe target for your venture. Remember that a drowning man will grab any rope for survival – your product could very well be the rope they are looking for.
5. Investigate What’s Happening Upstream and Downstream
Expand your target customer base by looking at upstream and downstream process adjacency. Here’s what I mean. Consider the business process your product is designed to affect and focus on the upstream processes (those process in the value chain that come before your process). Pay close attention to how your process is affected by those upstream processes. In particular, focus on how your process can streamline, positively affect, or somehow make those upstream processes more efficient, better or more successful.
If you can identify what those upstream processes are that your product or service enhances, then you can expand your target customer market to include those companies who are experiencing challenges with that part of their business process. This may be distinctly different from the target market that you’ve focused on to date. Alternatively, these upstream processes may also represent opportunities for you to expand your presence in your existing customer base.
Now perform this same exercise with downstream processes (those processes that come after your product or service.) Examine the downstream processes to see how you can improve them or bring more value to your customers. This could also have the effect of dramatically increasing your target customer base, as it may significantly expand your addressable market.
Finally, it may be the case that you can improve both upstream and downstream processes and, by combining both, your product can now own the end-to-end process and subsequently provide your current and potential customers with great value for which they may be willing to pay significant sums.
6. What are the Adjacent Verticals or Industries?
The approach here is to examine other industries or verticals that are facing the same challenges or have the same processes as the ones in your product or service. It may be wise to think about other industries or verticals outside of the ones you initially identified, as they may represent easier access to target customers or be suffering more dramatically, which may make them more receptive to your product or service.
Often focusing on these types of adjacent industries or customers is a type of pivot. These kinds of pivots can result in additional, unexpected market success. Your venture may in fact opt to pursue this new set of customers more aggressively now or return to this new market after achieving great success in the original customer base you’d chosen for your venture.
The key to finding your target market is to focus on a small enough subset of customers that will enable your venture to have a successful go-to-market campaign targeting those specific customers. This will include effectively introducing your product or service to this customer base in a manner that addresses the needs and wants of those particular clients.
If you have any questions, please drop me a note. I’d be happy to provide you with advice and guidance. Please read and share all of my blogs at LeadingVentures.com.
About this blog – The goal of this blog is to share my experiences, to capture and reveal valuable insights, and to draw from my serial entrepreneur-ship through 7 ventures over the past 20 years. I have encountered many impressive entrepreneurs along the way and I hope to share our collective experience with you to help teach and perhaps motivate you to launch your own B2B or B2C enterprise.
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Great blog! From your selected industry and target customers, what company metrics will you look at to produce your bell curve? Appears that keeping these metrics consistent would produce more tangible results and could be used for tracking movements between leaders, laggards etc.
Thanks for the positive feedback. I’d agree that you’ll want to keep your metrics “standardized” over time – so as to track movements of companies as they move from leader to laggard or vice-versa. I’d say for the Fortune 1000 some of the common metrics, like sales, profits, brand value, customer survey’s and other materials commonly available from trade and other press would work well to create a set of metrics for you to use to identify the leaders from the laggards.
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