In B2B Sales and Marketing, picking the ideal target market is critical. It may determine the success of a new product launch or even the viability of a company. Having a great value proposition helps as well of course!

Picking an ideal target market allows a company to focus scarce resources. That focus on a segment of customers who are likely to buy its products maximizes the chances of success.

Size is a significant consideration in the ideal target market selection process.

Picking a target market that is too small or a target market that is too broad are both bad.

Avoid targeting a niche that is too narrow

Targeting a market that is too small may not generate significant revenue. Most people know this yet this mistake is often repeated.

In 2017 I launched my own startup, ConnectGood. This was a B2B SaaS platform.  It enabled a company to send charitable donations as rewards or incentives. For example, a company could send a customer a $25 donation reward for writing an online review. ConnectGood enabled the customer to pick their favorite charity to send the donation to. It also managed the tax receipting process. On paper it was a great concept.

But the target market for this service was way too small. I had to close the business down. Lesson learned.

Fail by trying to be everything to everybody

By targeting a market that is too large, a company may spread its resources too thin. It is difficult for diffused marketing to reach desired customers.

I see this a lot when I mentor or consult for startups. I hear pitches from founders that claim that “our product is usable in all industries ”. This is a big red flag.  For start-ups and small companies, it’s  impossible to execute on a broad target market.

Even large companies usually struggle to enter a new broad target market. The challenge is lack of alignment. Getting the Product, Sales and Marketing teams all aligned on a new target market is a herculean task. This is rarely achieved.

The result of trying to be everything to everyone is that you end up being nothing to nobody.

How to find the right balance and choose a good size target market

Having a target market that is too broad or too niche both deliver the same inevitable poor results

The Bowling Alley model proposed by Geoffrey Moore offers a good way to select and win target markets. The main premise is that companies should focus all resources on a single niche target market. Once they win this first market (aka bowling pin) they can move onto another target market.

Follow this model. Follow another model. But stop chasing pink unicorns that are so small and rare it sets up companies for guaranteed failure.