Targeting

Divide a market into segments and then try to serve all of them and you reach none. Split a document tool market into individuals, teams of 20 to 100, and enterprises of several thousand, then send the same sentence to all three, and each reads it as being about somebody else. You end up discussing permission management with a solo user and telling an enterprise buyer to start for free.

Budget scatters the same way. A third to each segment and your name isn't known in any of them.

So dividing and choosing became separate stages. Dividing is a way of seeing the market; choosing is a decision about what to give up.

Look at four things for each segment.

1. Size. Whether that segment alone gets you to the revenue target.
2. Reachability. There has to be somewhere these people gather — words they search, publications they read — for a budget to have anywhere to go.
3. Ability to pay. A segment with a large problem and no budget is the hardest one to work with.
4. Whether you can win it. This is the criterion that goes missing most. Choose a segment a large competitor already owns and your resources run out first, however good the other three look.

The breadth of the choice is one of three: concentrate on a single segment, choose several and write different messages for each, or address everyone with the same message. Teams starting out usually take the first, because only concentrated effort gets a name known inside a segment.

Once you've chosen, write the segments you dropped into the document. Three months later, when a request aimed at one of them arrives, that line ends the discussion in five minutes.

A lot follows from the choice. Positioning — deciding what you'll be remembered as — comes immediately after, and channel, pricing, and build order follow it. Revisit when growth in the chosen segment stalls.

"Target all three and the message fits nobody."

Naming the result of not choosing.

"This year we look only at teams of 20 to 100. Individual-plan requests wait."

Stating what was chosen and what was dropped in the same breath.

"This segment is large and easy to reach, but I can't see how we win it."

Eliminating a candidate on the fourth criterion.

Pagedeck narrowed this decision once. It took all three at first, and when Grace looked at quarterly results, three quarters of revenue came from teams of 20 to 100. The company decided to look only at that segment and dropped individual-plan improvements off the list.

Ravi rewrote the messaging afterward, stripping out lines aimed at solo users and replacing them with the problem of finding documents inside a team. The number of team accounts arriving on the same budget rose that quarter.