How to Evaluate and Find the Best Customer Segment for your Startup


How to Evaluate and Find the Best Customer Segments for your Startup
© Control Alt Deceit: A Game of Lies, Betrayal and Questionable Business Strategies

Great. Your product could be useful to different customer segments. Pharma, legal, marketing, construction… How do you go about selecting which one to focus on?

First thing first, you need to create an hypothesis profile for whom you want to target.

Have your company ever sold to businesses in those market segments? Are there specific users or customers you could refer to to get started?

You need to understand the pains and benefits your solution could have for these customer segments. You’ll conduct customer interviews to gather enough information to make your decision.

You’ll create basic personas – archetypes representing certain types of users or customers – for the prospects you need to recruit for the interviews.

If you’ve never sold to these markets, don’t worry, we’ll use assumptions to get the ball rolling.

Defining Your Customer Segments

For each segment you’re exploring, ask yourself:

  • Who would be the buyer?
  • What would be their typical job title?
  • What interest groups do they share?
  • Which associations or trade groups are they members of?
  • What are their professional goals?
  • How big are the businesses they work for?
  • Which industry or niche are they serving?
  • Which blogs, industry publications or websites are they following?
  • Where are they located?
  • Why would they buy your solution? What makes your offer compelling?
  • What are they currently doing to solve the pain your product is solving?

You don’t have to go too deep here. You’re merely looking for a frame to guide your recruitment for the interviews.

You want to know:

  • Who your solution is for
  • What their typical role is
  • Why they would buy a solution like yours
  • Where you can find them

With qualified prospects, good credibility and the right email script, you can expect a 10 to 20% contact-to-interview success rate.

Because we’re only trying to speak to 5 people per segment, we’ll contact 50 contacts per segment. All in different organizations.

If you look for more, you may accidentally find yourself lowering your recruitment standards.

When targeting companies under 100 people, it’s often best to start with the CEO.

When targeting companies between 100 and 200 employees, VP or director level in the appropriate department is a good place to start.

If you’re targeting larger enterprise companies, you can find the right roles to target using a neat trick on LinkedIn.

How to Recruit Within Different Customer Segments

Once you’ve identified the right people via LinkedIn, Twitter, industry directories or any other relevant platform, you can use tools like Hunter.io, DiscoverOrg or LinkedIn Sales Navigator to find the right contacts.

I personally like to use a widget called Clearbit Connect to build contact lists. It allows you to quickly understand the company structure and find email addresses. It’s also free under 100 contacts per month.

From there, you’ll draft a simple, straightforward email asking for a 15 to 20 minutes call or meeting. You won’t need much more.

The email script below should help you get started. Remember to adapt and personalize it for every contact, not just the name!

Subject: {International growth}

Hi {Max},

I enjoyed {your 2-part series on employee retention. I had tried to find a job with startups in Hong Kong when I was living there and I know it’s not easy}.

I’m contacting you because I have a software company trying to {improve how businesses expand internationally}.

I’m not looking to sell anything, but since you have so much expertise with {international growth}, I’d love to get your input to make sure we don’t build the wrong thing.

Can I schedule a quick call with you next week? {Monday or Tuesday} perhaps?

Let me know, thank you.

{Etienne}

 

Sending one-to-one emails is time-consuming. You can use tools like MailChimp or Streak to send bulk personalized emails.

If – after sending the emails – you don’t hear back within a couple days, followup. I like to followup every 2 business days, but it’s really up to you.

Don’t take silence as rejection. Prospects are busy; they take vacations. You might have to followup 7 times to get an interview, but chances are, you’ll get 5 interviews before that.

How to Conduct Problem Interviews

From there, your goal is to have educated discussions with the prospects.

You want to figure out:

  1. Whether the problem your product solves exists within their organization, whether they’re actively trying to solve it, and how much pain is caused by the absence of your solution.
  2. If the company has budget and typically buys solutions like yours.
  3. What kind of impact (or ROI) solving this problem could have on their business.

Key questions will be:

How much is this problem costing you?

AND

Within the organization, who is responsible for [ the problem ]?

If it’s them, jackpot! If it’s ‘no one’, the problem either doesn’t exist or it’s just not a priority at the moment.

If they say ‘someone else’, take note, and consider you might have to change the role you’re targeting within these organizations.

You can get started using my latest customer interview script below:

Get Started Fast – Download my Latest B2B Customer Interview Script for Free

Make sure you ‘own it‘, and adapt it to your solution and target segments.

If you don’t, you’ll just be collecting wrong data points.

As you conduct interviews, make sure you establish common ground with prospects and open the door for a follow up call. You don’t want this to be the end of the relationship.

You’ll want to steer clear from:

  • Confirmation biases: the tendency to interpret information in a way that confirms your preconceptions. In other words, wanting to confirm that this segment is a good fit for your product.
  • Interviewer biases: The tendency to frame customer development questions in a way that suggests an answer. For example, do you think Google is the most innovative company in the world?
  • Response bias: Making the prospect feel pressured to share a certain point of view or idea.

How to Evaluate Customer Segments

After doing 5 interviews in each segment, do you feel the need to dig deeper or speak to different stakeholders?

You don’t want to go too far, but if you need to dig deeper, do another series of 5 interviews with the new role or segment.

The information collected should help you select the right beachhead or target market for your business.

It might feel like a lot of work, but once you’ve mastered the basics, you can run through this process in just a couple of weeks.

More on Customer Segments


⚡⚡ Enjoyed this content? I go into way more detail on this subject in Lean B2B. It covers the ins and outs of finding traction in the market for B2B products. Check it out »


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