B2B entrepreneur and investor says that there are 4 stages to a business: Jason Lemkin : when you’re looking for ; First customers Product-Market fit : when it’s not really repeatable, but you have revenue coming in; Under $1M : when the engine is starting to work and you can start spending; Over $2M : when you’ve made it. Over $10M sortof Easy, right? I love these simplifications. Maybe it’s that easy if you’ve done it many times before (Jason has!), but to most entrepreneurs . it won’t be easy The people you’ll need to engage with or sell to will be completely different in these 4 phases. In fact, — the people you should be targeting at the start — just . the early adopter market won’t allow you to reach $10M in annual revenue That’s why is a much better way to look at what needs to get done. Crossing the Chasm built on the work of , an assistant professor of rural sociology and the author of . Crossing the Chasm Everett Rogers Diffusion of Innovations is the book that introduced the 5 types of adopters and coined the term ‘early adopter’ to identify a company’s early customers. It’s one of . Diffusion of Innovations the all-time best innovation books This is the model expanded on in (1991). It’s a vital part of and any market segmentation process. Geoffrey Moore Crossing the Chasm Lean B2B Why Crossing the Chasm Matters for Market Segmentation Analysis The core theory behind Crossing the Chasm is that customers in any given market belong to one of five groups: , , , and , and that the way you sell to these groups of customers needs to reflect the stage of adoption of your technology. Innovators Early Adopters Early Majority Late Majority Laggards Moore covers at length — a first customer segment — to get a foothold in the market. This refers to the D-Day invasion of Normandy during World War II and is of the utmost importance for startups at various stages of their growth curves: the importance of finding a beachhead : That’s when you have a solution looking for a problem — or . It’s challenging, but if the technology is valuable, you can find a market. That was our challenge at , the startup that led me to write Lean B2B. For entrepreneurs with a product looking for the right customer segment the segment with the biggest pain HireVoice : That’s why I was hired at . The company had almost 250k users when I joined. Some users saw value, and some didn’t. We had to do a full market segmentation analysis to find a beachhead market and . Entrepreneurs with an established customer base, looking to double-down on growth LANDR Audio scale beyond the early adopter segment : That’s the initial Chasm Crossing. It’s the challenge we faced when I joined , a relationship profiling tool used during complex sales processes. For entrepreneurs selling to early adopters looking to Cross the Chasm Psykler Running a Market Segmentation Analysis at Psykler When I started at Psykler, the company already had customers in pharmaceuticals, aviation and consulting. Product usage was low, and . we clearly didn’t have product-market fit I sat down with the founder and we (pharma, enterprise software, consulting, integrators). identified the 4 or 5 verticals where we felt Psykler could add the most value We did that led to the realization that slow-moving industries like healthcare, telecommunications, education and defense are notoriously hard to sell into. a short series of customer interviews Sales required strategic preparation. For this reason, teams had to run account development meetings where Psykler could be really useful. When customers were selling to large companies, , it forced complex sales and . there were many buyers team selling In the service industry, . The sales team can get great rewards if they understand the entire organization they’re selling in. long-term relationships and customer upsell are key We also realized that companies selling strategic IT services like Business Intelligence and Security are forced to sell high, to CIOs, CTOs and VPs of Technology. For them, there was a high cost of failure if those meetings didn’t go well. Psykler — After our Market Segmentation Analysis Based on , we realized that . all the validation we did Psykler, in its current form, was best-suited for consulting firms in the security industry As we refined our pitch and understanding of the segment, the product really started to click with early adopters. From there, we could refine the product and marketing to meet the needs of our newfound beachhead market. How to Run Your Own Market Segmentation Analysis To find success with your market segmentation analysis, you have to and talk to prospects and customers. get out of the building You can start by listing the 4 or 5 verticals where you feel that your business can provide the most value. Do a quick series of 3 to 5 customer interviews in each of these verticals, listening for signals of pains your product could alleviate. Focus on the segments with the most pain and keep interviewing organizations until you find the best market segment for your product. It’s an iterative process well worth the investment ( ), so keep learning, and keep refining your market hypotheses! Marketo spent a year going through a similar process! 👏 Clap and get other people to discover it! Enjoyed this story? Want to Build Products Businesses Need? The Lean B2B Course 🎥 includes 5 hours of and on the . High-Quality Video Lessons, Worksheets Templates expanding Lean B2B book The Lean B2B: Build Products Businesses Want Video Course Curious? Sign up for our Free 2-Week Email️ Course 👇 Further Readings on B2B Customer Development I publish articles on B2B customer development every week : on my blog Can The Lean Startup Techniques Work in B2B? How Much Time Do You Need to Get to Product-Market Fit in B2B? 16 Tips for Better Customer Development Interviews in B2B Originally published at leanb2bbook.com .

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How to Find Your Best Customers with a Market Segmentation Analysis

Too Long; Didn't Read

Etienne Garbugli

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How to Find Your Best Customers with a Market Segmentation Analysis

Too Long; Didn't Read

Etienne Garbugli

About Author

TOPICS

THIS ARTICLE WAS FEATURED IN...

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