Hey everybody, it’s Jenni from GrowthMode Marketing. You are listening to The Demand Gen Fix – the podcast where our team of growthmoders and our guests discuss the ins and outs of demand generation and why we believe it’s the key to long-term sustainable growth, especially in HR tech industry.
Hey everybody, it’s Jenni from GrowthMode Marketing and I’m here with Erica and Deanna. Today for the Demand Gen Fix, we’re going to be talking about why narrowing down your audience focus will actually expand your reach. That may sound counterproductive, but we’re going to talk through why it’s a good idea why going after your whole addressable market isn’t always the right approach if you’re trying to grow. So narrowing down your focus can allow you to build a better momentum. I think we could start by talking about what does the term total addressable market actually mean. Do you want to take that one, Deanna?
Yes. When we think about total addressable market, a lot of companies are building up their marketing databases based on that total addressable market. What that is in a nutshell is if you step back and you think about who can we sell our product to? It’s everybody within the territory that you sell, whether it’s nationally, regionally, globally. Who are the companies that could conceivably buy your product or your service? And that is going to be your total addressable market. Now, it doesn’t mean you are going to sell to all of them, that’d be amazing. That’s where you start to think, what is the market share that we can take from this? We’ve worked with companies who their total addressable market share they believe is 200 companies. Then there’s a lot of companies where it could be thousands of companies that they believe are within their market that they could conceivably go and sell to.
Depending upon your product, you could say everybody, every company is my total addressable market. Right? And that’s just way too much.
Yeah. I think it depends on the market. Some markets are much more crowded than others. In the HR technology industry, let’s look at human capital management platforms. There are a lot of options out there for human capital management technology. Let’s say you’re targeting organizations that are between 500 – 5,000 employees. I’m just picking a random number here. You would look at every company that has employees, potentially across the globe, that could buy your human capital management technology. So that’s the way to think about your total addressable market is who can we sell to?
So how should a company leverage this information, their total addressable market? It feels like you should try for everybody and see what you get, but we’re saying to not do that. Right?
I think again, it depends on the market that you’re in. If your total addressable market is 200 companies, you probably want to go after your total addressable market. If your total addressable market is 50,000 companies, then I think there’s an opportunity to really narrow your audience focus so that you can expand your reach.
If you’re in a market where there’s a million solutions out there; to start to combat some of these issues that you’re having. Or a solution for the problems that you are experiencing, a new technology, things like that, vendors really start to sound the same. So there’s a lot of vendors out there that offer a similar solution to your issues and everyone starts to sound the same. It’s really easy to start getting lost in the crowd. And if your message doesn’t stand out and resonate directly with your audience, a lot of times what you’re going to do is start to lose their interest because they just searched for a certain type of technology or a certain let’s say it’s an HR tech or human capital management platform, that now they just saw thousands of solutions for that same problem and they have trouble following and figuring out what’s actually going to fit their needs specifically. So ultimately your prospects then are just becoming overwhelmed with all of these options they have, and they really have no direction on which way to go.
And if you’re trying to sell to that many people, I can only imagine that your message that you’re trying to convey, you have to make sure that it hits so many people, it’s really diluted at that point, right?
Yeah. Someone could say, well, there’s not thousands of human capital management systems, but there’s probably at least a couple hundred if not more out there. But think about even if there were 50 solutions out there, and I have to sort through all of the content for all of those things to solve the same problem, it’s really hard to start to delineate, this one’s better, this one is inferior. A lot of them have the same features. As much as companies want to say, our solution is different, our solution is better. I can tell you I’ve personally as a business owner, evaluated different solutions out there. And some of them had better marketing than others. Some of them had prettier interfaces than others, but overall the functionality was fairly similar across the board, there might be one or two things different.
It can be overwhelming, who do I pick? Is it going to be the company that is doing the most marketing that I see the most? Is it the company that actually seems to understand my problems and resonates? Or is it a shot in the dark and I’m price shopping, which no vendor likes to hear that someone is price shopping unless you are the cheapest solution. We’re all trying to sell on value, right? And some of those premium products out there that are the Cadillac version, may have differentiation from the cheaper solution. But if I’m just looking for a down and dirty product, I’m going to price shop. And so how do you stand out in the crowd when people are getting overwhelmed with the options that are out there? I think that’s where when we say, narrowing down audience focus will expand your reach, this is why, because people are overwhelmed by the choices that are being put in front of them.
We’ve actually, as a marketing agency come across this, right? We’ve had clients who really felt like they should be marketing to everyone in their market because they felt like they could, their product could benefit everyone. But as we saw, that didn’t necessarily work out.
Yeah, it was really hard because, we go to the client and we say, okay, who is the target audience? The answer? Well everybody, there’s so many applications for our new technology, we’re really excited to get it out there. We can’t wait to see where it gets traction. Now this is not a best practice that we would recommend because we’ve seen how it doesn’t work. When you take that approach, you’ve got to know who your audience is, you’ve got to be specific. And when you’re trying to be everything to everyone, you’re really not resonating with anyone. And lo and behold, the client comes back and they’re like, our marketing programs aren’t getting the results that we expected. It’s like, yep. Cause you guys haven’t figured out who you are yet. The message was too broad.
And neither have your prospects, right? The message was way too broad. We can do everything for everyone. Well that’s great, but that’s not what people were shopping for. So, they had to really take a step back and define who are we actually going after? So okay, we thought there were 20,000 companies that we could market to, but we’re diluting ourselves too much. We need to get more focused in what we’re actually doing.
Right? If you put yourself in those buyer’s shoes, you want to find a company that feels like they’re the expert in that space or they’re going to resonate directly with the issues you’re having. It’s not just a down and dirty, I’m just going to choose based on price. Typically, when you’re evaluating something like that, a solution, and especially if it’s a larger investment or it’s a long-term solution, you’re looking for. People put in the time and the effort to do all of that research upfront. They’re looking for somebody who feels like that company is speaking directly to their needs. And I think not to open another can of worm, but a lot of times this is the difference between lead gen and demand gen as your focus or your goal when you’re focused on lead gen, people are like, well let’s throw out there anything we possibly can and let’s try to bring in as many leads or contacts as we can.
We want to target everybody we can, we have solutions for everybody. And when you focus on demand generation and your demand generation strategy, in order for that to be successful, this is really something you need to start to identify and determine. What is the best fit audience for your company and how can you speak to them directly and get more focused? On not only just your content but starting to focus on the channels that you’re speaking to these people and you’re showing up in the places that you know your specific audience is. And ultimately you start to identify and understand your ideal customer profile in a way that you’re going to start to see success in these marketing efforts.
Erika, don’t you have some experience in that when you worked on the other side of the coin, you were actually being marketed too and you had some experience in that regard? Correct.
Yeah, and I think in a lot of cases, in my past life, I’ve had experience in the manufacturing industry, on the client side of things. And I think a lot of times when you’re out searching for solutions like this or you’re looking for a company and even in one case as a prospect of a marketing agency, so I’m on the marketing side in the manufacturing world and I’m looking for an agency to come in and help. I’m looking for solutions to come in and help with our internal marketing efforts. I’m looking for an expert. I was looking for people in that space, that knew manufacturing and were speaking directly to the issues I’m having. And to be honest, I think every industry can identify the troubles that they have and the issues that they have in their day to day.
And when you start to do that research and look for a solution or a service, and in my case, I’m looking for a service to come in and someone who knows my industry, knows the issues that I have day-to-day. Knows the daily struggles in marketing for a manufacturing company. That’s something that I was looking for and that we found in some of these agencies. As someone who ultimately is an expert in that space and spoke directly to me and they clearly identified the pain points I was having and were able to come in and speak my language and that’s the vendors we would end up choosing typically.
And I think when you’re talking marketing it absolutely is obvious. You need to pick an agency that’s going to be able to understand your industry and talk to your prospects and clients and really dig in deep. But I think the point of that story is it’s also applicable when you think about the HR technology that you’re going out and selling. So going back to that human capital management example, okay, imagine you have 50,000 companies that you could conceivably sell to. There are a lot of human capital management platforms out there for people to choose from. If I’m getting marketed to by all of these different companies, or at least a portion of them and I’m a buyer, it’s going to be overwhelming and I’m not sure which one to choose. And that’s where I start price shopping.
Now, if in the sea of marketing I’m getting, let’s say there’s 25 different companies that are targeting me because they know I’m in market for an HCM. Or they’re making an assumption and they’re reaching out to me, I’m right in their sweet spot from an employee size, and one of them as a manufacturing company, and I don’t know who to pick. That one vendor comes and they’re speaking my language, they’re an HCM solution specifically for the manufacturing industry. They understand how we hire, they understand the employment challenges that we have, how we pair employees, all the nuances that come with manufacturing and having an employee base. Which one do you think that that individual is going to end up picking? It’s going to most likely be the one that resonated with them that they can say this one, they get the challenges that I am having.
And so, when we say you might get better traction if you narrow down your audience, that’s exactly what we mean. When you’re in a very crowded market, like the HR technology space, it is really easy for buyers to get overwhelmed by the options that are out there. Which means you’ve got to be able to really target and hone in and stop being everything to everyone. And I don’t think that means we have to pick a niche and we can only sell to that niche, and we will never sell to anyone else again, you can still sell to other people, but from a marketing standpoint, plant a flag and then get really good at messaging to them.
And how do you decide who are these people that you need to market to? Your target audience, your big audience. How do you narrow that down and decide who are the companies that you should be revolving your messaging around?
You really need to start to narrow down your audience, which means you really need to define your ideal customer profile. I think it’s important to make a note here, that ideal customer profile is different than your buyer persona. I think a lot of times our clients think that sometimes those two concepts get intermixed and maybe aren’t so clear. Just reiterate, the ideal customer profile is really focused on the types of companies or the types of accounts that are ideal for your solution or your product, or they would be ideal customers for your business. Whereas a buyer persona is more focused on the individual buyer within that company. So the actual profile or the person at that company that is going to be the decision maker or the influencer to purchase your product or service.
So, the goal is really to start to identify types of company’s key characteristics and start to make an idea of what is the best fit company for your product. What is the best group of customers or that profile of customers that’s going to best fit your products? So, you want to start to look at things like firmographics, technographics, also looking at buying triggers. So, you’re looking at, again, really focusing on more so the company. Focusing on things like the size of company. Maybe the annual revenue. The industry that they’re in, which obviously plays a big role in being able to speak directly to this audience, understanding what industry you want to resonate most with.
I feel like companies are going to be really nervous when they hear this message, right? They’re going to think, oh, but what about all those other people that I could be reaching? What about the missed opportunities. There’s going to be a little bit of pushback, but how do we convince a client that this is the way to go?
I think it’s common to have concerns that narrowing down your audience focus is going to mean less opportunity to uncover leads because you’re not putting as many fishing lines in the water. Which means you’re pulling less people in and you’re missing revenue opportunities. I think that that is a misnomer because again, if you’re going into this really crowded market and you’re trying to be everything to everyone, your message is not resonating and as impactful as it could be. So, if you think about it and it’s like, I’m going to go out and I’m going to shout from the mountaintops, ‘we’re here, we’re a human capital management system’. If you’ve got between 500 and 5,000 employees, we are your solution to this problem. Well, every other peak around you, there’s someone else shouting the same thing. And as a buyer, I don’t know who to pick and I’m overwhelmed with it.
So you’re not actually getting a lot of traction. I’ve seen this play out, I’ve made this mistake, back in the day when I was on the corporate side. I was looking at it like, we need to build up a database for our total addressable market. And I happened to be working in the network security space. Well guess besides HR people, who else is also the most called upon by salespeople in an organization? It’s your IT and technology departments. So, trying to break through the clutter and tell people we’ve got this network security solution that’s going to solve your problems. There was so much competition out there that it was hard to get traction and we were struggling as a company to really get the momentum that we had intended to get because at the end of the day, we didn’t necessarily stand out from the many other solutions that were there. And years later, having worked with many clients at GrowthMode and seeing how buying has changed, how many more solutions have come out there, how challenging it is to do really good marketing that actually gets momentum. We’re finding that narrowing down that audience and being more specific and intentional and focused in our messaging and forgetting about everybody else in the total addressable market actually gets the traction and gets more attention because it speaks more to an individual company than to everybody. Right?
And then that individual company is going to be more likely to buy because they know you are an expert in their field. Or you speak their language, you know their problems and so you’re more likely to make that sale.
Yeah. You know, there are times where organizations will say, but there aren’t enough companies to target in a specific segment or vertical. I know we have worked with some companies that are very successful, that have 200 prospects total in their base now. Yeah. They’re going to grow to a certain point, dominate the market and there’s nobody else left to sell to and they’re going to have to maybe reinvent themselves. Or maybe they’re fine with mastering that market and staying the leader in that market and not growing beyond that. But for most companies, that’s not going to be the case. And I think you can look at different verticals and you can figure out, it’s not just about, pick an industry and do it. There are so many more factors that go into an ideal customer profile, find ones that are rich with opportunity because you can be a big fish in a small pond or a small fish in a big pond. The question is, which one do you want to be? Which one do you want to dominate? And if you can’t dominate in that big pond and you can’t even take a significant enough bite out of the market trying to go after everybody. There is case study after case study of companies that grew significantly by starting with a focus to a specific audience instead of trying to be everybody to everybody.
That doesn’t mean that that’s your niche and you have to stick to that audience from here to the end of time. You have the opportunity to really master that area and then continue to grow and develop content and really develop your messaging and build out the infrastructure internally. You need to be relevant within those different audiences and be able to speak directly to them. I think a lot of times people are afraid of getting too small with their audience or their target
Absolutely. That HCM platform that you’re targeting to manufacturers, get really good at positioning and speaking to those organizations. Maybe you’re even doing product development that specifically supports needs within that niche. But it doesn’t mean you can’t, once you’re good at it, develop out another niche. Let’s say then you’re going to go after hospitals with our platform. Well, you can’t talk to hospitals the same way you’re talking to manufacturing companies because while they both have employees, they both have shift workers, there’s a lot of nuances that are different in the employee model for a hospital than there is for a manufacturing company. So if you’re going into another niche, you can have multiple, but your messaging really needs to focus in and be specific to that new niche. So, the content for manufacturing might be completely different than the content you’re creating for hospitals, but you start to hone in on the messaging for hospitals because you want to resonate with them too, but in a different way because they’re not necessarily speaking the same language per se as someone in manufacturing.
And so, a lot of companies will build out verticals. A lot of times they’ll do it one at a time, they’ll master it, then they’ll add a vertical, they’ll master it, and they’ll just keep adding verticals with very specific messaging for each of those verticals. And eventually they do come across as a product that works for everyone in the total addressable market. But they did it in a really smart way because they had tackled it a vertical at a time and created messaging that resonated with each of those verticals and created a client base and case studies and proven examples that say, we know how to support manufacturing companies. Hey, we also know how to support hospital companies and here’s our proof.
So you could potentially have more than one ideal customer profile is what you’re saying.
Yes. I have seen companies who right out of the gate, they’re like, okay, we need five ideal customer profiles. Before you go down that route, really stop and think about. What are you trying to accomplish and are you ready to manage five different ones. I would look at it like, okay, we’re going to do five different ideal customer profiles. We’re going to have to have five different content engines to build up and speak to them. Five different positioning. Is it realistic or not? If it is, and you can manage it and you can do it well, okay, go for it. But a lot of companies aren’t there where they could manage all of that and do it really well. And so they start to get into the, I’m trying to be everything to everyone again. And sure, there’s some content you’re going to create that can be finessed and used across each ideal customer profile that you’re trying to target, but there’s still work that goes into repurposing it for each group.
What are the key takeaways here? Bigger is not always better. Being everything to everybody is not necessarily the right path. Narrowing down, getting more focused and ultimately seeing better results in your marketing efforts.
Right. And I think that if you want to learn more about Ideal Customer Profiles, we will be having a podcast talking all the way through that at another time.
Thanks for joining us on The Demand Gen Fix, a podcast for HR tech marketers brought to you by GrowthMode Marketing. We sure hope you enjoyed it. Don’t forget to subscribe for more perspectives on demand generation and B2B marketing strategies. Plus give us a like, tell your friends, we’ll see you next time.