Defining your target market: the smaller, the better

Addict_2015_v6-01 2Delimiting your target audience is the second phase in Lemarco’s ADDICT Perpetuum.  It’s a tough exercise because it’s  very counter-intuitive.


We all have this natural tendency to claim that we can be all things to all people. And claiming a target market as large as possible, will guarantee us more potential customers and a larger potential revenue, right?



By being a very small fish in a very big pond, you are doomed to be eaten by the larger sharks out there. And if you survive, it’s because you will be left with the pieces of food (read: customers) that bigger fish don’t want. Those kind of customers will bring you more problems than money, and you will remain small and hungry.

The key to successful targeting is to find a niche. The smaller, the better. For one reason: if you become the best IN that small niche, you will become a trusted market leader and EARN the right to grab more margin and make more profit. In each niche, expect only the top-3 market leaders to make money.

“Choose your target audience so that you have the opportunity, within a reasonable timeframe, to become market leader in that niche.”

But.. isn’t that niche too small ? Well, having made profit in your first niche,  you then have the opportunity to grab a second adjacent niche… welcome to Geoffrey Moore‘s Bowling Alley.

But then comes a second question: what is a “market” exactly? Should we segment by number of employees? By revenue? By vertical sector?

A market is a group of potential customers who share the same business needs. This is nothing new. But there’s another, very important criterion often forgotten:

We can only consider a ‘market’, a group of potential customers who may potentially contact each other on business matters, or at least serve as a reference for each other on a specific product or solution.

“Choose your target audience so that potentially, one day, more than 50% of your new leads can be generated just by word-of-mouse.”

This is why segmentations by company size (SOHO, SMB, ENTERPRISE,…)   have never worked in marketing. These are not markets, but counts in a database. Even segmentations based on major verticals like ‘manufacturing’ or ‘retail’ are too broad to work in marketing.

(On the other hand, markets may very well be defined cross-sector, like CFO’s, IT managers or CMO’s: those people talk to each other!)



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