5 Questions you must be able to answer on your target audience
Self-confidence is very important, some will say that you can’t be an entrepreneur without it. Self-confidence in the early stage of a startup boosts the decision-making process, doesn’t matter if it’s a single founder or group of founders.
One of the first mandatory choices or definitions in every company is the target audience, each product, company have its way to define it. The target audience definition process is very important and should be done before you kick-off but keep in mind and don’t be surprised if it changes or sharpened as you go.
In my opinion, there are too many startups who don’t put enough effort and thoughts on their target audience in the early stage. In many cases, we have a very clear idea of what is the business all about, what is the product, and from that point defining the target audience seems like a walk in the park, but keep in mind, it can be a very nice walk or very bumpy road. The importance of the target audience definition process is critical for almost any organization, from product requirements through sales and marketing.
A common mistake in many startups is to define a very wide and generic target audience instead of being precise. We tend to convince ourselves that our product/service can fit a big market but the deep inside we know it won’t fit everyone and we’ll have laser focus on a specific audience. A good example I always share is a game of darts, to get any points you should at least hit the board (missing the board can be very embarrassing) if your aim is very good towards the center you might hit the bulls-eye, which is great! but even you missed it by a bit, you’ll get some points on hitting the board.
A few years ago, I joined an early-stage cybersecurity startup, the company offered a database security solution. The target audience was small-medium businesses (SMB), this choice had a big influence on almost everything — marketing plan, user interface, client-side integrations, and supported databases. In hindsight, we all know what was the right thing to do, but during that time the chosen target audience was the right one and we all felt it was well defined.
We started to slowly realize that our SMB definition is too wide, how do you even define if a business is small, medium, or enterprise?
Gartner for example define SMB by the number of employees and annual revenue they have. In our case, our pricing model and product implementation were dependent on the number of databases in the organization…what we learned is that there are small companies with a huge data center and a complicated environment that for our product in that given time — was too much to handle. On the other hand, we saw enterprise companies with a relatively small data center that our product would easily fit.
A target audience definition can change as we go, but it has its price. Most changes would be time-consuming and would require many and sometimes expensive resources. From a product perspective, UI or client-side integrations changes may cause product core and infrastructure changes…in those cases, you know how it starts but have no idea when, how and if it will be over.
Marketing strategy changes might sound easy but keep in mind that in our case, our sales team was getting all leads from marketing activities, from the moment we launched a marketing campaign to the moment sales reps saw the results it took between 3 to 6 months, it means that a new marketing strategy might launch quickly but will affect the sales after a minimum of 3 months — What should we do by then?
Picking the wrong target audience will directly impact the business plan. Let’s use the example I shared above — pricing model, sales cycle, support team knowledge, and experience is completely different for SMB and enterprise. Our entire sales process in our business plan was based on remote sessions, there was no need for physical presence for training or implementation — just because our target audience was SMB. Enterprise prospects and customers’ story was way different, they insisted on 24/7 support, on-premise implementations, comply with crazy regulations…in other words — a complete mess.
There are so many ways to define your business target audience, it’s dependent on the product/service — there is a huge difference between B2B, B2C, and B2B2C. That’s why it’s so difficult to come up with a winning formula to define your target audience.
From my experience, once the target audience definition process is completed, ask yourself the following questions, just to be on the safe side:
- Are there enough people/companies in your target audience?
- Will your target audience benefit from your product/service? is there a real need for it?
- Do you understand what drives your target audience to make a decision?
- Can your target audience afford your product/service costs?
- Are you able to demonstrate the real value of your product/service to your target audience?
I do believe that if you were able to successfully answer all five questions, you probably kick-off on the right foot…good luck!
