For the first 90 days of this year, I'm each week posting the "single most important thing you need to know" about 13 essential aspects of sales and marketing. Why? Because of the Pareto Principle of the Internet Age: "1 percent of your activity creates 99 percent of your success." Here are the columns so far:
This column is about market targeting, which is a fairly involved topic, so I'll give you the gist right now... and then explain why that gist is so darn valuable. Here it is, in 10 words:
Say "NO" to opportunities that are not easy to close.
Think of market targeting as an archery contest. A good archer aims carefully and hits the center of the target. A lousy archer just shoots and is happy so long as he hits something or other. But aiming (market targeting) is more than just pointing the arrow the right way; it also means making a decision not to point the arrow elsewhere. It means saying "NO" to shooting the referree, even if he's an easy target.
Some Quick Background
Back in the Mad Men era, marketing meant "mass marketing." In those days, everybody in the country watched three TV networks, read Time and Life, and bought the same cars, the same food, the same everything. Market segments consisted of huge demographics like "housewifes" or "office workers." Even toys were marketed as "fun for boys and girls of all ages."
Very few mass markets of that type don't exist any longer. Marketing means targeting a specific audience rather than a broad swath of buyers. While there are some products that have broad appeal (iPhones, for instance), most successful products appeal to a certain type of person and (just as important) do not appeal to others.
Mass marketing has long been ineffective in business-to-business products and services. Even companies that have products that can be broadly applied across multiple industries find that they sell more and more quickly if they concentrate on the needs of specific industries, or find distribution/customization partners who can do that for them.
CRM is a good example. While big vendors (Salesforce, Oracle, Microsoft) provide capabilities that can be used in virtually any sales environment, they depend upon integrators, customizers, add-on application developers, and other partners to address the needs of specific industries and individual customers.
How To Do It Right
Market targeting means asking yourself two questions:
- Who are the strong prospects (people likely to buy) and how can we reach them?'
- Who are the weak prospects (people not likely to buy) and how can we avoid them?
It's that last bit that most startups and SMBs often don't understand. Rather than actively avoid weak prospects, they leave the door open to working with them, or even expend scarce marketing dollars to reach them. The logic here is: "Well, you never know... one of these long shots might become a customer."
But that's silly attitude. Strong prospects buy quickly, have a low cost-of-sales, can be easily upsold new products, and tend over time to become loyal customers. Weak prospects take a long time to decide, have a high cost-of-sales, are difficult to support (because there's a mismatch), and eventually cancel their contracts.
Winning a weak prospect as a customer might seem like a victory, especially if you moved hell and high water to bring them on board. In fact, though, winning a weak prospect as a customer is a type of failure because you'll be lucky if you get any profit out of the deal; chance are you'll eventually take a loss.
That's why market targeting is so important. If you have a clear sense of who's likely to buy, it will always be more effective to spend marketing and sales efforts finding more of those strong prospects than following up on weak prospects. In fact, you're probably better off--profit-wise--binge watching Netflix at your desk rather than selling to weak prospects.
Effective market targeting thus means having the courage to say "no, thank you" to opportunities that look attractive but lie outside your target market... even if you're hurting for business.
I can tell you from personal experience, there is nothing more scary--and ultimately more energizing--than saying NO to an opportunity or customer that's just not right for you... even (and especially) when you've got an empty pipeline.