A common problem Asia has seen in her growth marketing consultancy Demand Maven is businesses being stretched too thin in which customer vertical segments they're targeting.
When you're stretched too thin, making progress in growth is harder because you're unfocused on priorities. This leads to dozens of false starts with inconclusive results.
An obvious solution is to niche down into one particular market, but how do you choose which market to choose to focus on?
Asia recommends that instead of thinking about this as a problem of niching you should think about it as a problem of focus. If you're a CRM for law firms you'll automatically focus on law firms, but you can also choose to focus on law firms without niching down.
A Niche can and will give you you Focus, but you can still focus without a Niche.
What are other ways to achieve focus other than niching? You can use strategy and process.
Focusing your go-to-market (GTM) is simple. Use the Jobs-to-be-done (JTBD) framework to define the job customers hire your product to solve. Any segment will have this.
Clearly define which customer segments you could potentially focus on.
Define the processes that your team will follow and be disciplined about to follow a strategy to the end without bouncing between verticals.
The Focus Framework
Once you've defined the customer segments using your product, prioritize them by looking for segments that:
- have the greatest marketing opportunity and biggest Total Addressable Market (TAM)
- have the strongest product-market fit
- are the easiest to support
Does the context of your customer segment change how they buy? I.e.: will you need to drastically change how you're selling depending on the verticals? If so, focus on just one vertical at a time. If you can apply the same selling strategy to multiple segments, you can pursue more than one at once.
GTM Across Many Verticals
Focus on one segment at a time for at least 6 months.
In those six months, work on a product roadmap, sales cadences, marketing campaigns, content, and sales enablement content focused on that segment. You might speak at conferences in that segment, write up case studies, and make targeted high-value content.
After the engine is working you can move onto the next segment.
Remember that the market moves slower than your marketing. It takes an hour to set up a google ad but it can take weeks to see results.
The market moves slower than your marketing
Case Study: ProfitWell
ProfitWell is a subscription metrics platform known for targeting business-to-business (B2B) software as a service (SaaS) companies, however they've recently been focusing on direct-to-consumer (DTC) verticals.
Though they've recently come out with DTC marketing content they haven't niched their homepage or alienated existing customers. Existing B2B customers don't care that ProfitWell is expanding to help the DTC vertical.
Similarly, your customers probably don't care if you expand into a new vertical.
Questions
How do we evaluate a viable segment vs. a shiny object?
If your top segments are unclear check out the customer discovery process outlined in The Lean Product Playbook. Baring a black swan event your viable segments will still be there.
Six months is a long time for a startup. Can we iterate faster?
If you don't know if a segment is viable you have to go through the full vetting process. If you know it's viable (so the risk of wasting six months is low) it's better to completely focus for the full six months for the best result in 2-3 years.
Would you rather spend 3-5 months to know if a GTM vertical is worth it to have the next 2-5 years set?
Should we segment pricing across verticals?
Unless you're going upmarket (ex: enterprise pricing) you model ideally shouldn't totally break between segments. A simpler pricing model is better.
