I love working with young technology companies, and that’s part of the reason I volunteer as a mentor at startup accelerators like Montreal’s Founder Fuel. I was there yesterday, putting on a session I do for each cohort that teaches these budding entrepreneurs a framework for the strategic planning of their marketing function.
I was reminded yesterday of a conversation I had with a Founder Fuel CEO a couple of cohorts ago. It was just a few days before Demo Day, that high-pressure moment when each cohort company presents its investment proposition to a room full of angel and VC investors. I had been working with the CEO on his messaging for his investor deck, and the revised deck he was reviewing with me and another mentor reflected some of that work.
Then the other mentor said, “You know, this is too high level. Half the people in the room aren’t going to understand what you’re talking about.”
“Um, Francis told me that was okay,” the CEO tentatively replied.
“I never told you that,” I retorted.
“Um, yes; yes you did,” the CEO responded, with a bit of sharp concern creeping into his voice.
“No,” I said. “I never said half. What I said was, ‘it would be okay if 95 percent of the people in the room don’t understand what you’re talking about.’”
Here’s the thing: This company was a niche proposition in a refined space where very few investors play at all and even fewer would be able to grasp the investment opportunity the company represented. In the scant few minutes the company had to pitch its investment potential, it had to reach the four or five investors present who would be both interested in, and capable of, investing in them. And to hell with everyone else. If the CEO tried to dumb down his presentation so more people would understand his business, he’d lose the only people who mattered.
The CEO I related this to yesterday immediately got it.
“Gee,” he said. “I’ve been trying to craft a message that everyone would understand on Demo Day. It makes a lot more sense to forget about most people and to talk directly to the investors who can actually help us.”
It’s called segmentation, people, and it’s the process of figuring out exactly who wants your product and has the means to buy it and forgetting about even trying to reach anyone else. The examples I’ve discussed were investment oriented but the principal holds just as true — indeed, it is even more universally applicable — when it comes to figuring out how to identify your real customers so you can talk to them and only them.
Far too often, we hear clients and senior company executives suggest that “everyone needs our product.” Even in cases where this might be technically correct, segmentation still rules. Everyone needs to drink water, for example, yet a great deal of market segmentation analysis goes into the development of specific water products and the marketing of them to the well-defined market segments which will be attracted to the specific attributes boasted by each individual water product.
Effective marketers know who is likely to buy their product and shape their messaging accordingly.
Whenever I hear a client complain that half the people who come to his website don’t understand what the company is selling, I agree that we have probably failed in our messaging. Not because we’re losing half the people but because we’re losing only half the people. I don’t want any website, which is the front door to the entire sales funnel, admitting anyone except genuine prospects. So long as those who leave are not genuine prospects, it’s perfectly okay that they don’t understand what you’re saying.
Image: Griffin People