David Gates is a consultant at Rapid Innovation Group, where he specialises in supporting early stage technology companies through their go to market challenges. He is also a mentor to young entrepreneurs, a charity trustee and road runner. David runs the Entrepreneur in Residence programme at RIG. He is speaking at our Startup 101 course on Saturday 9th March (tickets still available – download our free startup guide here). Here, he talks about market focus.
I wouldn’t pay me anything to consult on Java development, if I were you. Why? Because, to be frank, I don’t know very much about it. You are, almost certainly, wasting money.
So why would you separate yourself from a lot of capital to buy services from someone who didn’t know a lot about your industry? Again, you probably wouldn’t.
Why do you need market focus?
The lesson here for entrepreneurs, particularly those in the business to business space, should be clear: if you do not understand the industry you are selling into, you are unlikely to achieve significant revenues from it.
Is this always a bad thing? No. Salesforce does not need to understand the markets it sells into in particularly great detail.
Why? Because it’s a highly disruptive offering, primarily because of its low ticket price, which means the customer cannot reasonably expect to have an industry-specific product.
Salesforce is disrupting an existing market – not all entrepreneurs start in such a fortunate place. If you have a generic product, with a limited market, and are resource-constrained, then you need to be doing big ticket deals in order to survive.
My argument for the non-Salesforce entrepreneurs is this: you need to create market focus to drive up deal values. By focusing on one market, you will be able to develop and attain the level of industry knowledge necessary to create and deliver value for your customer and earn revenues as a result.
What does market focus mean?
By market focus, I mean targeting your product and your messaging to one specific industry sector. Many entrepreneurs are inclined to try to sell their product to anyone and everyone. As a result, their understanding of any single market tends to be weak. Furthermore, their messaging is not tailored to resonate with any one group and as a result, resonates with no one.
Focusing on one market increases your ability to deliver value to that market: if you understand its challenges, drivers and processes, you are more likely to be able to develop strong product/market fit. As a result of delivering greater value to the customer within the industry, you have a better chance of capturing value (i.e. generating revenue) from that market.
Your knowledge and focus on market should increase the perceived value of your offering, thereby creating a platform on which to build a pricing point that is at least in part value-based.
What does market focus do for you?
Market focus can help you achieve several things:
- It focusses the mind – no more ‘we can sell to anybody / we aren’t selling to anyone’ nonsense
- It directs resource – you need to learn quickly, so learn French quickly – don’t decide to become a specialist in European languages tomorrow
- It creates credibility – I really understand your industry, and because I understand it you are going to trust me to provide good advice on how to drive business performance
- It informs the proposition – a well-researched and targeted proposition unlocks all the stores of value, and increases the likelihood of conversion
So ask yourself this: do I have market focus? How focussed am I on that market?
Some entrepreneurs achieve a zen-like state where they will happily refuse business from those that are outside their target group, anticipating that in the long term this will result in a superior return.