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One of the most crucial decisions that startup companies, or divisions launching a new product in established businesses, need to make is where to target their sales and marketing efforts.
Specifically, they must decide the vertical industry, geography, company size, functional group, and title(s) of where to focus finite resources. This is doubly important for organizations that have created something that doesn’t currently exist — there is no category or context within which a prospect can evaluate it.
The tendency of many companies, young and old, is to avoid the decision to target a specific market and rather to try and be “all things to all people.” For many executives, this strategy feels less risky.
Nothing can be further from the truth. This fatal decision has been the death knell of many startup companies and new product attempts. This go-to-market approach dead-ends in:
- Poor sales results
- Frustrated senior management
- Wasted sales, marketing, and product development resources
- A demoralized team and burning through precious capital and time
- And more
Here are a few important criteria to consider when making the target market decision.
Nice-to-Have vs. Need-to-Have
Does the target prospect view your offering as something they must purchase in order to build their business or is it an innovative/cool/exciting product that isn’t viewed as compelling enough to purchase and implement?
A telltale sign of a Need-to-Have offering is that during the sales process prospects develop a sense of urgency to purchase and implement the solution.
Early Adopter Behavior
There’s inherent risk in purchasing something new that doesn’t have reference customers, analyst reports and a track record of results. Is the prospect that you are targeting willing to take this risk? Can you find examples where they have done so in the past?
I can’t stress enough the importance of validating that your initial target market will be willing to take the leap of buying and implementing your offering. Failing to honestly answer this question has been the downfall of more than one startup.
Change is Resisted
In my experience, change is the biggest competitor to getting a new product purchased. The hard question to be researched, analyzed, and answered is whether the target prospect is willing to change what they’re doing (including re-prioritizing already stretched resources) in order to purchase, implement and enjoy the benefits of the new offering.
Size of Addressable Market
Are there enough prospects in the target market to enable meaningful sales traction in the form of revenue, reference customers and critical sales, marketing, and product management learning?
Prospect Reachable
Very simply, can you contact — via email and phone — the target prospects so that you can engage them? It’s very challenging to build market awareness, conduct lead generation, and execute selling efforts if you can’t build a robust contact database of the prospects in your target market.
Benefit vs. Work
Is there a disconnect between who has to be a part of assessing and purchasing the offering vs. who will benefit from its use? Will the functional group that must play a major role in the buying process benefit from your offering’s value?
Decision Making Process
How will the decision to purchase and implement be made? Who has to be involved in the decision? In today’s matrixed organizations, stating that “the COO makes the decision” is naive and oversimplified.
Have the discipline and courage to honestly answer the questions above. As you get initial feedback on your new offering, via customized demos and functional overviews, don’t be lulled into the false belief that selling it will be easy because they said “this is fantastic — the best thing since sliced bread.” That statement can make you feel good, but it won’t help you make payroll.
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In our next CMO Coffee Talk meet-up (which is just around the corner!), we’re covering the role sports sponsorships can have in accelerating B2B awareness, interest and pipeline. Specifically, you’ll hear how one SaaS company is accelerating its enterprise pipeline through partnerships with Formula 1 racing and the National Hockey League. You don’t want to miss this one!
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