By Robert Jurkowski, On Demand Advisors
In my last article, The Importance of Winning Your Target Markets, I discussed five reasons you should want to win your target markets, including:
In this article, I will present five steps that will allow you to win your target markets. Over the past 10 years I have worked with over 300 B2B companies — many of them software and cloud companies — to not only help them dramatically scale and grow their revenue but also to win their target markets. We’ll include some of these examples in this article.
Assess Your Total Addressable Market
For your solution or service, what is your total addressable market (TAM)? Are there companies that are too small or too large for your solution? Are you focused only on companies in North America or worldwide? Is your solution or service a better fit for some industries than others? As you hone your criteria about your target market you can determine the number of companies in each market.
As an example, if you provide an Electronic Health Records (EHR) to physician practices you determine that there are 230,187 physician practices in the U.S. You further determine that physician practices under five (22.3 percent) cannot afford your solution and physician practices over 25 (19.8 percent) use one from an area heath system. That leaves 133,279 physician practices that are in your target market where your solution is a fit.
Next, you know there are many EHR competitors and 50 percent of you market has already purchased an EHR solution and you do not want to focus on replacing your competitors at this time. That leaves 66,640 midsize physician practices in the U.S. that are a fit for your EHR solution. You now have calculated your TAM for your solution in this market.
Validate What Motivates Your Buyer
How do you understand what will motivate your buyer to invest in your solution or service? There is nothing better than a rigorous market to understand what your buyer or prospect wants, needs, and will justify. All of us make assumptions about our solutions, target markets, and what our prospective buyer wants, but we need to validate those assumptions.
When you use a rigorous market survey to understand your target audience it eliminates all the guesswork about how to engage that audience or how to justify to your board or investors that you truly understand your buyer.
With a large EHR provider in Canada, we conducted a market survey with their target physician practices. Overall, we found their target pool of physicians was agreeable to their solution. However, when we surveyed by specific specialty such as Cardiology or OBGYN, their interest was literally off the charts. With this insight we were able to help them position and market their solution by physician specialty.
We conducted a rigorous market survey of the target audience of a construction management software company that helps customers manage these large capital projects and increase their efficiency to truly understand what they wanted and needed. What was fascinating is we discovered they had three markets with different needs. Companies with a small capital budget were primarily concerned about efficiently managing their resources. Companies with a medium capital budget were focused on managing their growth. Companies with a large capital spend were primarily focused on managing complexity. By understanding the needs and requirements for each segment of their target market this software company was able to tailor the right message for each audience.
The best investment you will ever make is to fully understand what is important to your target audience and buyer through a rigorous market survey.
Validate How You Will Stay Top Of Mind
For any given market, 3 to 5 percent of your target audience is ready to buy your type of solution or service this year. This is true for most B2B markets unless there are market forces or regulatory issues driving adoption.
That means 95 percent may not be in a position or want to buy from you this year. If you want to win your target markets, you need a strategy to remain top of mind with your target audience with a sustained conversation that is important to your prospective buyer. If you want to win your target markets, you believe every company should be your customer; if not now, then later.
As part of your market survey you want to validate the top 10 issues or challenges your target buyer or C-level audience needs your help to address. Once you have validated what is important to your target audience you can communicate to them as to how your solution or service will help them address and overcome these challenges.
Another important criterion is market acceptance or readiness for your solution or service. If you are in a replacement market, you will need to prove why your solution or service is better than the status quo. If you are in a greenfield market, you will need to determine how to best educate the buyer about cost and justify their initial investment in your solution or service.
Finally, many companies present their company and solutions to their target audiences with seller-based content — content focused on your company and your solutions and services. Instead, you want to start with what is important to your prospective buyer and present how your solutions and services will help them address and overcome their significant challenges and business issues.
Reach 100% Of Your Target Market
Your audience can’t buy from you if they don’t know you exist. I have surveyed many software and cloud CEOs and asked them what percentage of their market they are reaching today — in almost every case it is 10 percent or less.
You need a strategy to reach your entire audience over time because you do not know which 3 to 5 percent of your addressable market will invest in your type of solution or service this year. Working with a business intelligence and analytics company, we determined their target audience was 500,000 CIOs in North America. We also realized purchasing or building this large database would be very expensive. Instead, we put in place a plan to acquire 12.5 percent of their target database every quarter so that, by the end of the second year, they would be reach and engage 100 percent of their target market.
The important takeaway here is you need a strategy and plan to reach your entire market so they understand who you are and what value you can bring to them and their organization.
Create And Leverage Lighthouse Customers
The number one reference group for your target buyer or prospect is their peers. When you create successful lighthouse customers — and can leverage their success story to all of their appropriate peers — you unlock the power of peer-to-peer selling.
Recently, we worked with a global social media management services organization and we found all their prospective buyers were most influenced by what their industry peers were accomplishing with their social media programs. For the Food & Beverage industry we were able to present their success story with Starbucks. For the Pharmaceutical industry we were able to present their success story with Novartis. Across 12 industries we were able to present lighthouse customers that had significantly benefited from their social media management services.
These types of powerful, peer-to-peer endorsements help eliminate the number one competitor which is “do nothing” and reduce the perceived risk of implementing these services.
When you understand your buyer, execute your plan to reach 100 percent of your target market, and leverage your ability to deliver success and ROI for your customers, you are well on your way to winning your target markets.
About The Author
Robert Jurkowski is the Founder and Managing Partner for a Global Revenue Acceleration Agency, On Demand Advisors (www.ondemandadvisors.com). He is a Revenue Growth Expert and works closely with Business Leaders to help them grow revenue dramatically and win their target markets. As an operating C-level Executive he has led some of the most successful software and cloud companies in Silicon Valley. As CEO, COO, and Chief Revenue Officer for both public and private companies Robert understands how to drive market share, profitability and triple digit revenue growth. You can reach Robert at firstname.lastname@example.org or call him at 1-800-208-5688.