05 Oct How Do You Find The Right Target Market For Your Startup
From an article by writer Dianna Labrien:
“The better you understand your customers, the faster your business will grow. Yet, new companies often struggle to determine their initial target market, by either shrinking it to the size of zero profits or broadening it to an unreachable scale. By asking the following 6 questions you should be able to determine the ultimate target market for your venture.
- Who will buy my products or services?
- Am I making assumptions based on personal knowledge and experience?
- How did my competitors get started?
- How will I find my customers?
- What is my revenue model?
- Is there space to expand my targeted market?”
For more about each of these questions check out the complete source article.
Here’s some thoughts that I’ve cobbled together in my startup travels:
To have any hope of startup success, your solution must address one, or better yet several, huge problems that your customers have.
Customers that are “oblivious” to the problem you are addressing or aren’t currently actively searching for a solution) are not the right customers to initially target.
The customer segment you should initially target must be highly “motivated” to solve the problem now, (these are your “early adopters”), people who have been actively looking for a solution, may have pieced something together as a temporary solution and most importantly, have a budget to buy and implement something.
And to “win” the sale, your solution must have one or more elements that the customer finds not only valuable, but indispensable; elements that aren’t available elsewhere. In other words, your solution must have “unique value propositions” (UVPs) that offset the risk of going with someone and something new.
To do this, you’re going to have to find and talk to about 20-30 potential customers. And we’re not talking broad demographic groups. You need to get specific. I’m talking laser-focused.
If you’re doing it right, you should discover that you’re getting similar answers to these questions:
- What problem hurts really bad
- Why is it a problem; what goal(s) is it interfering with
- What is your experience when the problem arises
- How do you currently deal with the problem
If what you’re hearing isn’t very similar after a reasonable number of customer interviews, then you should use what you learned from the first round to start over with better targeting. In fact, you’ll probably need to do this at least once.
Learning how to hunt down and engage your target customer is part of customer development. If you can’t find your customers or convince them to talk to you now, how will you eventually sell to them?
When you’ve found a “significantly large” market segment that is suffering from the problem(s) you are addressing (or who have such an insatiable desire for what you are offering) that they are willing to write you a check right away and become an early adopter, (like the people who buy on Kickstarter or IndieGoGo do), then you’re onto something.