Startup Market Segmentation: 5 Steps to Selecting a Target Market

Startup Market Segmentation: 5 Steps to Selecting a Target Market

For startups, breaking your market up into addressable market segments is important. First of all you have limited money and people to execute programs, therefore you have to focus your efforts on the audience that has the highest probability of purchasing. Secondly, focusing on a segment allows you to build early momentum more easily – awareness and word of mouth builds faster across like-minded groups, and success stories resonate well across a segment of similar prospects. A key element of your company’s positioning is “Who are you selling to?”. It sounds like a simple question to answer but often for startups, a sloppy market segmentation is the root of a lot of marketing (and ultimately sales) problems. When I ask the question “What’s your target market?” I often get an overly simplistic answer like, “SMB’s”. That’s just too big to be a practical target market for a startup. You aren’t going to close business with every single SMB this year are you? Of course not. You are going to close business with a certain kind of SMB. A special snowflake sort of SMB that gets what you do, loves what you do, and will pay money for what you do. You’re going to sell those weirdo, magical, unusual SMB’s that are willing to ignore the fact that you’re small and broke and you’ve never really done this before. What makes those people so strange and awesome? The answer to that question is the key to your segmentation. “What are the characteristics of prospects that love my unique stuff the most?” Here are some steps to choosing a good market to target: Really get a...

Positioning for Advantage

I gave a keynote at East Coast Startup Week this week on Startup Positioning. Think of these slides of the skimmable version of my earlier post on Startup Positioning (read that post if you want some color on what these slides are talking about) with the addition of a couple of examples using the template. Plus motorcycles, monster trucks and racing pigs because I know you secretly love all of those things. Enjoy. Positioning for Advantage from April...

Growth Hacking and B2B Startups

The first time I heard the term “Growth Hacker” I got a little excited. I have often said we need a new term for marketing – one that separates the good metrics-driven marketers from the bad “spray and pray” ones.  So suddenly there’s a new term that describes me perfectly: a person that has a technology background (me: Systems Design Engineer, check), a person that deeply believes in testing, iteration, and data as the basis for good marketing (see point about being an engineer, yup), and sees marketing as something that reaches from product to marketing to sales (you might call that product marketing and hey, that’s me too). For a while it looked like I could be a growth hacker. But then I kept reading and it became clear that growth hackers weren’t worrying about the same things I was worrying about. Discussion around the premise for first creating the term is what first started to make me question it. Growth hackers keep saying that they are differnt from “traditional marketers”, where “tradition” means – “measures nothing.” The TechCrunch series on growth hacking for example describes traditional marketers as being allergic to data and overly focused on PR/promotions without closing the loop back to growth. I’ve seen marketers like that for sure, but I wouldn’t say they were “traditional”, just lousy at their jobs. Certainly there’s no “tradition” of startup marketers that look like that – at least not at any of the startups I’ve been with. We tended to get rid of those folks pretty quickly. I could get into my opinions about how marketing operates at...
Lousy Marketing Messages: 5 Causes and Solutions

Lousy Marketing Messages: 5 Causes and Solutions

I was chatting with a startup CEO about marketing messages and how important it was to create a great story. His company has an awesome story and even though they only have a junior part-time marketer on staff, their messages are great. “I don’t get it,” he says to me “I see all this lousy messaging out there and yet we manage to do it! What’s wrong with people?” That got me thinking. Why is there so much bad messaging out there? Here’s what I think: 1/ The Team Stinks at Message Creation – The company has a good story but the team stinks at message creation and can’t translate that story into compelling messages. In my example above, the company happens to have naturally great storytellers on staff so they don’t have this problem. Not every startup is so lucky. Solution: Hire or rent some marketing talent. If you go with a consultant make sure they come with super references and make sure you stay heavily involved in the process. The output will be better that way and the team will get a better understanding of how to create messages. Caution: keep reading because this might not actually be the problem. 2/ Marketing Doesn’t Get It – The company has a good story but marketing (or whoever is creating the messaging), although great at message creation, lacks the understanding of either the offering or the market to really understand or believe the story. Messages are then created based on this (incomplete or flawed) understanding, resulting in weak messaging. Solution: Either spend more time with the marketing folk making...
Why You Can’t Market like Apple (or Why Marketing is Hard)

Why You Can’t Market like Apple (or Why Marketing is Hard)

The reason marketing is equally interesting and frustrating is because you are never exactly sure what will work until you try it (this is particularly true in startup marketing). Contrary to the belief of armchair marketing critics, we can’t simply copy what marketers at Apple or Facebook or Groupon are doing and expect it to work. Heck, we can’t even always repeat OUR OWN successful tactics and be guaranteed good results. This concept frustrates the hell out of the engineers that I’ve worked with in particular. They want there to be a formula or a textbook that simply tells us what to do and how to do it. Hey, I’m an engineer myself so I understand the desire for a formula but the reason it doesn’t exist is because there are too many variables that impact what works and what doesn’t and many of those are constantly shifting. Some examples: Markets – Mature vs. new, expanding vs. contracting or consolidating, geographically constrained vs. global, heavily regulated or government subsidized vs. open, big vs. small – markets come in all types. What works when you are selling to banks probably makes absolutely no sense when selling to grandparents, or families or law offices or insurance companies. Except occasionally it does. Offerings – Marketing tactics for high value items are different for low value deals – smaller deals close faster, are often non-competitive, often only involve a single purchaser, etc. The economics of customer acquisition are obviously different (you can spend $100K closing a multi-million dollar deal. selling a $5 a month subscription, not so much).  The type of product matters too, even...
Customer Retention: 7 Ideas for Marketers

Customer Retention: 7 Ideas for Marketers

As marketers we are often so focused on new customer acquisition that we sometime forget to pay attention to the customers that we already have. That would be a massive mistake. It costs 6-7 times more to acquire a new customer than it does to keep an existing one. You are 4 times more likely to close business with an existing customer than you are with a new prospect. I recently brainstormed with a CEO about programs for their current customers both to improve customer retention as well as to drive new business – here are some of the ideas we came up with: 1/ Give your Newsletter a Kick in the Pants – We all get too much email. Your newsletter is going to have to kick ass just to get folks to open it, let alone take action. What could you give customers that would be so interesting, awesome or remarkable that they’ll say, “Yippie, the newsletter arrived today!” What works for you will depend on your market but I’ve seen good results with sample code, a customer spotlight feature, sharing industry data your customers don’t have access to, interviews with industry experts and video snippets of product managers or support folks sharing their favorite tips and tricks. I’m sure you could come up with a hundred other ideas. If your newsletter doesn’t feel like hard work to create, you could probably do better. 2/ Campaign to your Lost Customers – You are twice as likely to close business with a lost customer than you are with a new prospect. With close rates like that, you should...
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