In a recently published ebook on The 7 Deadly Sins of US Market Entry, I called out “Too Broad A Field of Focus” as the first of the deadly sins. In this article, I will elaborate further. Specifically, the sin was defined as follows:
“In their home markets, which are small compared to the US, companies are forced to diversify across multiple industries, use cases and even product categories to generate sufficient revenue. This is a losing approach in the US where competition forces narrow segmentation. The US is a specialist’s market. “One stop shopping” as a competitive strategy usually doesn’t work here.”
The US market is vast. For most, if not all, international entrepreneurs, their home market is much smaller. This gives rise to the strategy of selling broadly across many segments.
This is not something entrepreneurs do because they are foolish; it is something they do to survive. A “niche” segmentation in their home market would result in too limited a market and doom their initiative from the start.
Failure to adapt their sales strategy
When they come to the US, the natural inclination of most international founders is to continue the “sell broad” strategy they started out with. This is a poor strategy.
A Nordic company that offers a cloud platform for producing customer testimonials identified their Ideal Client Profile as “pretty much everyone”. By everyone, they meant any company of a certain size that has a marketing organization and can benefit from testimonials. They explained that the solution is “horizontal”.
Another company, out of central Europe, offered a Customer Journey SaaS platform. They entered the US selling to multiple use cases across multiple verticals. Customer Journey was also “horizontal”. Both companies struggled to get to a repeatable sales model.
A Better Approach To Sales
The problem is, when you try to be so general that you offer something to everyone, you are not really offering anything compelling to anyone. A perfect fit is compelling. Not a “one size fits all”. One ideal customer profile, one value proposition, one use case.
For me and the team I work with, it is fairly unusual that we see a “perfect fit” approach. Recently we did though, and we were immediately impressed. A diagnostic lab testing company from Latam were narrowly targeting late-stage cancer patients and a limited number of cancers. They had gained 85% market share in their home market. By focusing narrowly, they had succeeded in completely dominating their market.
A narrow focus is the key to market domination, and it’s the path to investors’ hearts. Think big, yes. But bite off a piece you can chew. And chew it thoroughly. As was pointed out almost 20 years ago in Crossing the Chasm, each market niche is a “bowling pin” on the road to market mastery. Facebook started with Harvard. PayPal started with supersellers on eBay. Tesla started with the roadster. And so on.
Why You Should Narrow Your Focus
There are many synergies that come from a narrow focus:
- You get a deep understanding of your ideal client’s business and the job you are helping them do (the problem you are helping them solve)
- Since every customer is similar, each new customer becomes a convincing reference for future customers
- You get to focus on a limited feature set instead of having to satisfy the needs of multiple industries
- As a specialist, you improve your competitive advantage
- Your target market is more reachable – they go to the same trade shows and conferences, follow the same influencers, etc..
- The sales process from one customer to the next is similar
- You get to a sales “playbook” faster that you can pass on from the founders to hired sales personnel.
The end result of these synergies is that the sales process becomes repeatable and selling becomes more and more predictable over time. It gets easier with time because each sale builds on the foundation of previous sales.
Let me finish off with a story. Many years ago, commenting on my company at the time, one of my venture investors remarked to me that “1 x 50 <> 50 x 1”. I thought that was kind of odd. Was he a “commutative-property-of-multiplication” denier? But then he went on to explain.
From his perspective as an investor, having 1 customer in 50 industries was not the same as having 50 customers in 1 industry. The latter was far more valuable. It showed that you had figured out how to sell in a repeatable way. “1 x 50” on the other hand showed you had done 50 different things to sell to 1 customer instead of 1 thing to sell to 50 customers.
Bonus: you don’t even need to choose THE very best segment to sell to. The simple act of limiting your focus to a single value proposition for a single Ideal Client Profile will put you ahead of most of the companies out there.
Interested to learn more?
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