By Mike Shook of Accelerence
In his recent article “4 Ways to Know You’re Selling to the Right Market,” Peter Cohan shares his thoughts on the importance of selling to the right market and solving the right customer problems. As entrepreneurs begin the process of scaling their business it’s not good enough to just find a customer problem to solve, the key is to find a big problem to solve.
So often, entrepreneurs go to market with a solution in search of a problem. However, as they begin the process of scaling their business, it’s not good enough to just find a customer problem to solve. The key is to find a big problem to solve. Success dictates that this go to market strategy be inverted. As an entrepreneur, you must start by intimately understanding the customer and the business problem that handicaps that customer and then proceed with providing an efficient and cost effective solution.
Business success today is not just about being innovative. What really counts? To be needed. Part one of the market model is to understand your customer. Part two is to be comfortable that the initial market you serve is large and that you can easily identify adjacent markets and segments that look just like that initial target market. Successful entry into new markets mandates that companies clearly define the differing and unique characteristics of each new market segment being targeted. This critical knowledge becomes the foundation for new product features, target marketing methods, focus and sales positioning.
Another key consideration in target market selection relates to a company’s ability to competitively differentiate themselves in the markets in which they intend to compete. Always remembering that the bigger the market, the bigger the competitors and the number of with which you must compete. In making the right bets on target markets there can be great wisdom in selecting smaller, secondary, under-served markets where your company can be a big fish in a small pond. The strategy of targeting and owning a small pond, then annexing and owning other small ponds, can become a winning formula and market strategy.
A final point on selecting and selling to the right markets relates to focus. Too many companies find themselves in perilous waters when their strategy is to become all things to all people. Intelligently determine what is vitally important to your business, such as target market selection, and then become very intentional about how you allocate time and energy to serving that market. The ability each day to consciously master the filtering and prioritization of time, energy and resources allocation is a critical component and attribute of a successful business model and business team.
Identifying and solving a big enough problem, accuracy in the selection of the right target markets, the ability to competitively differentiate in those markets and giving maximum attention to focus are business musts. Coupled with great execution, these concepts will put entrepreneurial companies on the cusp of creating highly successful investment grade businesses.
Mike Shook is managing partner and co-founder of Accelerence, a high-tech entrepreneurial executive firm with a proven ability to fuel rapid, profitable business growth and create enduring companies.