Narrowing your market focus may sound counterintuitive when scaling your business, but it can actually fuel significant, sustained growth and set you up better for long-run expansion than just immediately starting to add products and customer types once you’ve reached product/market fit. Here’s why:
1. Less competition
In order to create value you must bring-to-market a unique solution to the problem. And it’s exceedingly rare that there won’t already be significant competition chasing customers in an already large market. This inevitably makes it much harder for you to differentiate (and be unique) and you’ll also likely be at a large resource disadvantage relative to incumbents.
2. Increased efficiency in sales and marketing
- Targeted messaging - Tailoring to the needs, pain points and value prop for as specific a group of customers as possible will increase the likelihood that your campaigns land with your target audience and drive higher conversion rates than if you broaden the audience and dilute your messaging.
- Optimizing channels - Whether you are iterating more on fewer channels or using a multichannel campaign to reach your customers, the few customer types, the greater the focus and the bigger the gains you’ll make in your experiments.
3. Better understanding of your customers
Fewer customer types also means you’ll have less varied and more consistent feedback from your customers. Using more insights to more rapidly iterate on your product will lead to a stronger solution for your customers and higher satisfaction.
4. You can dominate the smaller market and accumulate resources
Once you have dominated the smaller market and accumulated resources in the form of market knowledge, customer relationships, a talented team, or raised capital on your existing traction, you’ll be in a much stronger position to take on the greater competition of the larger market.
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