Target Market Segments

Ryan Hatch:

Everyone wants to think that, oh man, this idea is going to sell to everybody. We can just sell to lots of different people. Everyone's going to love it. But there's, there's danger in that. You know, being all things to all people really can't happen. So you're going to need to zoom in. If you're coming from a services background, you know, you in fact can serve lots of different people, right?

Cause when you're in an agency or services model, we're able to sell different things, different packages. You're actually selling different things. And on, on the execution side, if it's services and it's humans, right, humans have a huge, diverse ability to, to adapt and do lots of different things. When you apply a services based sales model to products, it doesn't work.

It completely falls apart. And what'll happen is the sales team. You know, we'll, we'll be pulling the product in a million different directions and a product can't stretch like that. It, it, can't a product can only do one thing really, really well. And so we have to think about selecting a target market segment as, as absolutely critical to how we design a new venture.

When we have a product based business. I'm going to encourage you to get uncomfortably narrow because you actually can't serve everybody. So you're going to have to choose. I know you want to keep your eye options open, but that doesn't work for products for products you're going to have to get specific.

And that means saying no, at least, at least "not now" to some people in your mind and saying yes to a much smaller group of people, but that's going to make a huge difference in making you successful. So let's talk about that and how. So there's many tools that you can use to help you decide where to zoom in and which target customer segment to go after.

One of those tools is an opportunity matrix. Let's take a look. So this is an example where we have opportunity 1, 2, 3, 4, and however many opportunities you're trying to consider chasing. And then we also have this list of criteria on the left side, strategic position. Market size, fastest sales cycle cost structure, feasibility risk.

And we can unpack some of these, but this is a way for you to kind of. Compare and contrast, that's what you're trying to do with, Hey, where should I go? Where should I zoom? Is it more here or here that we want to go play wherever we want to play in the market strategic position. This might include a, do I want to play downstream?

Where, where I'm playing kind of late in the game. Do I want to play more upstream where I can greater influence the stuff downstream of me, whether that's in a customer flow, whether that's in a data stream, there's lots of different ways to look at. Market size, right? How big is your market segment? Are there enough of these people, fastest sales cycle?

How fast can they make a decision? Can they make a buying decision? You know, we've seen some people that are selling either to corporates or sometimes worse in government. And we're talking with an annual budget cycle. It's a long time, right? That reduces cashflow reduces your ability to experiment.

You have to consider a sales cycle time cost structure different costs in different areas or different operations. How does it impact it? And there's lots of different criteria you could use, right? This isn't, this isn't the the end all be all. There's a lot of different other things that we use, but we suggest you consider when comparing and contrast, right?

These are lenses to help you look at these opportunities differently and decide, Hey, where should I go play? Another thing to consider is who is going to adopt this now versus later? This is a. A pyramid created by Steve blank for early adopters. Well, let's all let's walk, let's walk through it. So the first question is, Hey, does this person have the actual problem?

Okay. And the next one is, are they aware they have the problem? Those are two different things, right? With a Keurig coffee maker, right? Me putting, you know, the the coffee grounds into the filter. I didn't even know that was a problem. It wasn't, I wasn't even aware of it. Right. But then you show me something, something else.

And it's like, well, I guess that was a problem. So in that example, I wasn't aware that there was actual problem. I would not have been a good early adopter for Keurig. So the question is, Hey, do, they have the problem? Are they aware that they actually have the problem? And have they actually been looking for a solution, right?

Are they actually in market kind of like comparing and contrasting different alternatives? That's really important. And then even, even more than that, have they stitched together some kind of solution for themselves? Have they hacked together something that gets them to their end state? If they, if they have, they're trying to do that.

They're more likely to try something new to pull you in. And you're more likely to be able to sell to them much faster and get really good feedback. So this is kind of the pyramid for an early adopter on top of that is obviously, Hey, do they, can they acquire a budget? Do they have money to pay for something like this?

Are they just, are they the decision maker? Or do they have to have someone else make that decision? So these are a pyramid of factors to consider when thinking about, Hey, which, which customer segment should I go out? Who should I be selling to first? You might be thinking back to, Hey, I can sell to everybody.

It kind of looks like this. Well, we could sell to everybody. That's a huge, you know, the who, the customer segments. So that's big. Then when you actually start to peel, the onion has to actually start to walk. It kind of looks more like this, right? Well, the, who is, and by who's actually struggling with the problem again, that no, they have the problem that are actively trying to solve the problem.

What are they trying to accomplish? You know, different people are trying to accomplish different things. They're going to use your solution to get to different places. Right? Which of those people are you going to target? Certain people have different levels of experience. Right? You're talking beginners, you're talking advanced, right?

If we're talking about, if we're talking for instance, baseball coaches, you're talking like, like pro-level AAA AA. We're talking to college, talking, travel teams, talking high school, talking little league. There's a whole bunch of experience levels there. It's not just baseball. Right? Same thing with doctors.

It's not just all doctors. Is it primary care as a specialty care? Is it surgery? Is it, ER and then another example is when does that actually occur? When in that flow, do you want to play right? If it playing off the doctor's example again, is it like pre-visit, is it, is it post-visit, pre-surgery post-surgery recovery there's a whole different flow.

So you have to think about, Hey, all these different things. Who am I going after? Where in the flow does it fit? What role do they play? What experience level? So there's a lot of different factors that can play into customer segmentation. When I want to encourage you to do is to contrast, Hey, we could play here.

We could play here. We could play there and use these different lenses to consider, Hey, what are the different ways to evaluate to compare and contrast where we could play, which customers are in the most pain who's trying to solve it? What are the different factors that would help us determine. Who would buy now versus later?

Don't think about, Hey, I'm only going to target this one customer and I guess that's the only space I can ever play. Don't look at it like that. Think about it strategically. Hey who can I go after first, make a lot of progress with, be super successful with, and then grow from there. Right? Who's going to give you, I mean.

If you get these early customers, maybe it's maybe it's the most difficult customer set that's in the most pain. If you can solve for them, maybe you can solve for everybody. Right. You're gonna have to think about who to go after first. What success story does that set you up for? And really decide which target customer segment you're going to go after first. If you go after the wrong customer segment, it's going to impact all the other decisions, right?

You're going to build a different product depending on which customer segment you go after you're going do different marketing. It's gonna affect all these downstream decisions. So be conscious of where you zoom in.

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