Targeting the Right Buyers

Let’s say you’re an early-stage startup founder. You’ve built a great product and have big ambitions. What’s the next step?

For many founders, the answer is simple: “It’s time to hire amazing sales reps and go sell, baby!”

The problem is that there’s a lot more to selling than hiring great reps. The product you build, the sales process you execute, and the sales reps you hire all have to fit together. And all of them have to be aligned toward the right target customer. 

Hiring a great sales team but targeting the wrong customer is like hiring a talented mountain climber, buying him the best climbing gear, and then telling him to recover an undersea treasure. You’ll get nothing but wasted effort.

This article will show you how to target the right kinds of customers.

Three Rules of Targeting

Customers buy products that help them solve business problems. The first rule of targeting is therefore to focus on customers who intensely feel the problems your product solves.

Most markets are competitive; you win deals by being the best. That gives us the second rule: Focus on differentiation by building a product that stands out relative to competitors and targeting customers who value the ways in which your product is different. 

Prospects face constraints that sometimes stop them from buying the product they want. These include security, governance, and regulatory requirements. That leads to the third rule: Target prospects with no blockers to purchasing your product.

That gives us three rules of targeting: problem, differentiation, and no blockers.

Breaking any of these rules leads to failure. If you try to sell customers who don’t face the problem you solve, you’ll never get their attention. If you don’t sell to companies who value the ways your product is differentiated, you’ll lose deals by perpetually being the second best product. If you try to sell customers who face blockers to buying your product, you’ll do a lot of work on deals you can’t ultimately close.

These rules are important, but they’re not secrets. The interesting thing is that startups routinely get them wrong in predictable ways.

Let’s look at how mistakes happen and how you can avoid them.

Targeting the Right Industry

Many startups target too broad of a range of industries. They’re drawn to big markets because big markets mean big dollars.

But creating differentiation in broad markets is hard because there’s lots of competition. Competitors often have large engineering teams. Startups have fewer resources; they can’t build a product that’s genuinely differentiated for all the types of buyers in a large market.

What’s worse: Startups often think they’re differentiated when they’re not. Founders have pride in their product. And they often underinvest in competitor research.

Ask a founder how they’re differentiated and you might get answers like: “We’re more innovative,” “We’re AI first,” or “We’re the premier solution.” But if you ask them to point to a specific capability and say why it matters to a defined set of customers, they’ll often come up short. 

Smart startups adopt April Dunford’s big fish in a small pond strategy: Choose a narrow market that strongly values differentiated capabilities that you either have now or could build. You can go broader later.

If you try to start without differentiation, you won’t get anywhere. Salespeople sell by connecting customer needs to the things that are different about your product. Without differentiation, they have nothing to work with. 

Targeting the Right Company Size

Many startups target companies that are larger than they can practically sell. Large enterprises seem like attractive customers: They tend to sign large contracts and have lower churn.

But enterprise customers have lots of blockers. They have onerous security requirements, need complex data governance structures, have to follow detailed compliance rules, and require lots of integrations. 

Early-stage startups usually can’t meet these needs. 

Here’s the interesting thing: Many founders insist on pursuing large enterprises even when the blockers are clear. Picture the founder who has his team submit a burdensome RFP for an enterprise deal even though the product doesn’t meet many of the criteria. 

Why does this happen? 

Necessity is one reason. Startups often face big sales targets and see that it would take just a couple large enterprise deals to hit the goal. They have an incentive to make themselves believe it can be done.

Hope is another reason. Founders often overcome obstacles by having an appealing vision and finding workarounds. This works when you’re getting VCs to invest or selling to small, innovation-focused companies. 

But large enterprises are risk averse. They have a lot to lose and they’re not going to go out of business if they don’t buy your product. They also have internal teams whose job it is to say no, like IT and legal. Those teams care about their policies, not about your vision.

Smart startups aspire to sell large enterprises… someday. Right now, they aim for somewhat smaller companies because those companies don’t have blockers to making a purchase.

Targeting the Right Buyer Persona

Many startups try to start their sales processes with the wrong initial point of contact. 

One version of this problem is aiming too high on the prospect’s organization chart by targeting C-level executives. This seems sensible: The C-suite is where the power is. Founders often meet C-level executives at conferences and come away thinking they’ve generated a sales opportunity.

The issue is that C-level executives don’t care about the problem your product solves today. That problem is typically much more humble than your company’s long-term vision. Your long-term vision might be to revolutionize the real estate market; the problem you solve today might be managing closing documents. Document management matters, but it’s not a C-level issue.

Your vision might start conversations with C-level executives. But the problem you solve today is what makes someone willing to invest in the hard work of an evaluation process. 

The other version of this problem is working with contacts who aren’t part of the business unit that owns the problem you solve. Procurement teams are a great example. They seem like attractive partners: Their job is to buy things!

But procurement teams don’t make the final decision; they manage the purchasing process. That means making sure company rules are followed or getting a lower price. 

When procurement reaches out to you to ask for a bid, the decision has usually already been made. The actual decision maker (perhaps the head of a department) chose a preferred vendor, but company rules require that they get three bids before signing a contract. 

The additional bidders aren’t really in contention. They just tick the compliance box and give the buyer negotiating leverage against the preferred vendor. 

These fake opportunities can be extremely time consuming. Sometimes procurement wants you to submit a lengthy and burdensome RFP. But it’s all for naught because you started with the wrong buyer persona.

So who should you target? 

You should usually target managers and directors in the business unit that’s most closely affected by the problem you solve today. These folks are close enough to the work to care about solving the problem. They’re high enough up to get a purchase process moving. But they’re not so high up that they don’t have time to talk to you.

Use your initial conversations with managers and directors to build consensus and get access to executive decision makers as the deal unfolds.

Conclusion

Targeting the right prospects is the most important part of selling. If you focus your time on customers who naturally fit your product, good results occur as a matter of course. If you focus your time on the wrong prospects, you’ll struggle to close deals no matter how well you execute.

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Want to see the other articles in this series? Check out our posts on choosing the right sales motion and effective sales messaging.

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For more about the author, check out Mike's bio.