Defining your Market

Defining your market is a key component to establishing how you actually go to market. There are a number of key elements that you need to have well defined. Your market also is highly dependent on the maturity of your organization. The smaller your company, the more focused your market should be. The plan should be to dominate a specific sector of your target market. Once you have dominance there, then and only then should you expand into other markets.

This focus of having a small and highly defined market is not only smart, it is economical. Smaller markets mean that you can deploy your resources and marketing dollars much more efficiently. You can also make sure that you are speaking the same language as the customer. Meaning that you understand the terms and KPI's that they use to measure success and are well versed in those terms.

There are four main elements to defining your market that you should understand. These include:

1. Ideal Customer Profile
2. Product to Market Fit
3. Buyer & User Personas
4. Value Proposition

Ideal Customer Profile

Your ICP should be specific and tight. You are aiming for the smallest viable market here, not a broad and expansive group of companies. What you are looking for here is a cohort of companies that gives you a dominating value proposition. In short, where do you have an unfair advantage the other companies cannot easily take away from you. Resist the urge to to dilute this with adjacent markets that you may want to go after in the future. Your ICP will evolve as your company grows.

To start with, and ICP should include:

• Company Description: Size, stage, vertical description
• Company goals & aspirations: what is the market attempting to accomplish? How do they measure success? What are the KPI's that they use and how are they defined?
• Pain Points: What pain will the customers have that you can solve with your product specifically? What is your unique value proposition to these companies? What is your unfair advantage?

As you define this, do not forget to use data to inform your decisions here. Analyze your sales calls, look at your win/loss reports and look for insights and key words that you can use to the define the above. Also understand what the size of that market is. How many companies fit that profile and choose your market based on the best opportunity that your company has over the next focus period.

Product to Market Fit

This is perhaps the most critical piece of defining the market. Many companies have died because they are a problem seeking a market. What you are looking for here is a problem that your software can solve, that exists for multiple companies. This is more difficult than one realizes at first. If you have ever worked at a startup in your life you know this. Start up companies will often shift strategies and whole market definitions trying to find their product market fit. That is ok, but the more time you spend looking for this, the less time you have to build the growth of your company. The money will simply run out.

What you are looking for here:

• A Universal Problem: multiple companies can articulate the same pain in a similar language to you. You will begin to see patterns in what the customers say and how they articulate the problem. Many of the same obstacles to solution will exist across the board. Often there will have been attempts to solve the problem that have failed for some reason or another.
• A Novel Solution: You need to come to the market with a novel way to overcome the stated obstacles and solve the problem for them. It helps if solving the issue internally has a high cost. Such as multiple developers or a specific knowledge that is not within their core value and business need.
• A competitive advantage: This can be technological, but it can also just be an experience in a particular market. Whatever it is, there should be a barrier between your advantage and other companies attempting to solve the same problem. This is the reason you are in business.

Buyer and User Personas

Once you have the two pieces above defined, you need to get into specifics about who is going to use your solution and who is going to buy your solution. These personas should be utilized by your product teams to create features that solve the users problems and create an easy to use environment. Buyer personas should be utilized by your sales and marketing teams to not only highlight benefits, but also establish rapport with the buyers in the buying process.

A persona will consist of:

• User Description: Who are they, what do they do and what do they value?
• Where they hang out: Where in the organization do they live? Where do they find information on their job (e.g. where can the marketers find them?).
• Influencer or Decision Maker: Are they engaged in the buying decision or not?
• Problems they need to solve: I like to use a Problem:Resolution:Benefit format to describe this part of the persona. That is what is the problem, how does your solution solve the problem, and what benefit does it give the user/buyer when you solve the issue.
• What happens if you don't solve the problem: this is often overlooked, but it is critical. Define what is the user/buyer's life like if you don't resolve this issue? This can often be the difference between winning or losing a deal.

Value Proposition

Once the above is complete, you can wrap up the value proposition for the market. This includes:

• Problems you solve: and how you resolve them
• Key Differentiators: What makes your company different from the competition
• Unique Value Proposition: what do you do that is unique and novel
• Unfair Advantage: what do you do that no one else can match

Making sure that these elements are not only deifned, but widely published and utilized by your organization can be the key to success or failures for businesses. The most successful companies I have worked with, I could walk through the sales areas and see the personas and value propositions posted up in their cubicles. They were valuable assets to the customer facing teams. Within product, they would name the user personas that benefit within their requirements design. You could comb through the requirements and see who they were built for. And there was a common language internally about the persona.

Hope that was helpful. Now go and dominate your ICP.