Five questions to help you choose your target market

Ken Rosen is an important part of our {grow} community and a wonderful strategic thinker. Today he graciously offers this guest post on choosing the right target markets:

A Sales and Marketing Credo: “If you want to sell to me, solve my pain. And if you want to talk about my pain, do it in my language.” To market effectively, you need to talk to someone. But if you try to talk to everyone, you usually connect with no one.

To solve pain for customers you must choose some audiences…and not choose others. And stakes are too great to leave this to chance. This is one of the most important marekting decisions your company will make.

So what is the best way to pick target markets? We use five criteria. We call them “Market Success Factors” or MSFs … because every consulting firm needs a few juicy acronyms, right?

You obviously need to start with candidate customers groups. How wide you cast your net depends on schedule, budget, and selling experience. For one enterprise storage vendor, we literally started with every NAICS code (the new name for SIC codes). For young companies, we might build a set of 12 with the management team.

Next, evaluate each market against the Market Success Factors. At Performance Works, we use a five-point rating scale. Use what you like, but to keep things simple, a high rating always means “attractive.”

  1. How intense is prospect pain in the area you serve?
    If the pain from the problem you solve isn’t setting prospects’ hair on fire, if they don’t think about it almost every day, your sales cycle will be longer. Personally, I greatly prefer customers who use words like “pain” over “need,” but both trump “desire.” Sell aspirin, not vitamins.
  2. How well do you solve that pain?
    This is where most companies are most comfortable, because it is the most inward-looking question: Do we solve the problem? For too many companies, a “yes” to this question implies “Ok, let’s hire the sales force and start advertising!” We humbly disagree. It’s one of five criteria and you’re not likely the only firm solving the problem.
  3. How strong is competition?
    This criteria is pretty obvious, so I’ll only refer you back to the statement ” ’5′ always means ‘attractive.’” To make comparisons make sense when you add up totals, a hypercompetitive environment gets a rating of “1.”
  4. Can you actually close deals?
    Many companies think about the problem they solve without worrying about whether they can actually reach a decision maker. Maybe she only buys integrated products. Maybe she only buys from F500 companies. Maybe she hasn’t changed vendors in 10 years because the cost to change is too high. Maybe the ideal market is fragmented and requires a sales channel too expensive for this stage your development. You have to convert someone who needs your product into someone who buys your product.
  5. Long-term value of the market
    Market selection doesn’t mean you cut your growth aspirations. Far from it. It means you believe the fastest path to growth is by saying something compelling to someone specific. So our final criteria: What is market growth? Will success lead you to adjacent markets (Geoffrey Moore’s “bowling pin strategy“)? Does one market offer better-known references? Does your team have special background that makes success easier?

If you’re tempted to weight criteria or sub-topics under each criterion, I won’t discourage you, but after doing this for too many markets to count, I’ll tell you a secret: It probably won’t matter. If you apply this approach to 8-15 candidate markets, here’s what’s likely to happen: 3-5 markets will rise to the top with almost equal scores. And you can only focus on 2 or 3 (maybe 4 if you have significant resources and a segmented sales channel). So use management judgment as the final cut.

Finally, what data do you use to rate markets? Here’s one more secret: talk to decision makers. Yes, just talk to them. One-on-one at first, then maybe focus groups and later, for validation only, you can use surveys. (FYI, here’s our view of when to use surveys.) If you don’t try to sell them anything (so no, your reps cannot do this step), people will tell you what they need and even how to sell to them.

When we do market-selection for clients, we start decision-maker conversation with, “I don’t want to sell you anything or change your mind. I just want to know what matters to you.” Executives routinely spend an hour on the phone with us, tell us we can call them back, and say they are surprised how much the enjoyed the conversation. Why? Because they got to talk about their world and what matters to them.

Takeaways

  • Commit to focus: solve the pain of a specific market and speak to decision makers in their language.
  • Pick markets based on the Market Success Factors above. Get data by talking to potential customers in non-selling situations.
  • Align all your functions (Marketing, Sales, financing terms, product or service design, etc.) with your target markets. Remember, this is not a strategy to stay small within a niche; it is usually the fastest path to scale.

Ken Rosen (@ken_rosen) is co-founder of Performance Works, bringing the voice of stakeholders (and a little magic) to executive decisions. He blogs at Performance Talks.

Shooting for the Starbucks of blogs

This week I was sitting in a crowded cafe off of a hotel lobby in New York City.  The cafe offered free coffee for the hotel guests and I helped myself to the delicious hot drink. I am not a coffee elitist. In fact, the more my coffee tastes like a milkshake, the happier I am.

A group sitting next to me had another idea.  They scoffed at the free coffee and sent a scouting party across the street — in the freezing sleet and rain — to round-up four coffees from Starbucks.  Probably paid $4.50 apiece for them.

I couldn’t help but draw a parallel between me — taking the convenient ‘free content” — versus the alternate group willing to go out of their way and pay for their content. As marketers and bloggers, isn’t that really our goal?  To be so unique, so insanely great, to be able to summon a powerful emotional connection that would drive people out into the sleet to find us!

That’s awesome. That’s what I want to be when I grow up. Or {grow} up as the case may be. I don’t intend to charge for blog content but I do want to provide that kind of value to readers. A few people have told me — “I would pay for your blog.” I think that is the highest compliment possible!

How about you? What would it take for people to want to PAY to read your blog? Are you up to that big of a challenge? If you reached for a goal like that, what would you be changing right now about your blog, your career, your team, or your company?

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