Blindly casting your sales net will sink your ship: B2B startups 101
In 1993, advertising agency, Goodby Silverstein and Partners, produced a campaign “Got Milk?” to promote the consumption of milk products in America. They spent $13 Million annually on advertising budget only to realize that the target audience was not actually buying enough milk.
After losing millions of dollars, milk producers finally called for another extensive research and found that they got the ideal customer profile wrong for the past 40 years.
Instead of pushing the benefits of milk, they changed their tactics to focusing on consumers who would drink the beverage as a complementary to other food items, such as Oreo. With the right campaign, it boosted milk sales by around 7% within a year.
The ‘Got Milk’ campaign was a less unfortunate episode of a failed target audience as there was adequate funding. However, many startups do not share the same fate and opportunities for trial and error.
While it sounds intuitive to work within one’s resources, there are many factors that can lead to mistakes and rush decisions for your targeted consumers.
1. FOMO: Fear of missing out
In 2017, Lee Hoik, a Korean entrepreneur opened up a photobooth chain ‘Life4cut’ (인생네컷) in Korea, which allows users to take pictures that are printed on the spot for $3USD. The resurgence of photo booths and instafilms have led to a huge surge in social media trending. Not only so, owners of private buildings find it a lucrative venture as self-manned photobooths do not require any external vendors or new hires. These photobooths will remain in operation till an attractive rental offer is made on one of the many gentrified streets in Seoul.
Life4cut is the unicorn that currently owns over 315 branches in Seoul alone, with an estimation of 2 million visitors every month.
And you have guessed it right. Soon, thousands of photobooths littered the streets of Seoul and other huge metropolitan cities in South Korea.
While it seems like a lucrative and low cost business venture, it does bring about questions on the differences in revenue among the different stores. When would there be too many photo booths and the fear of missing out becomes financial loss?
2. Market changes
Market volatility would probably be one of the vital reasons founders jump into bandwagons. During COVID-19, many significant business ventures were made to ride the wave. It led to a sudden surge in mask productions and the increase in ICT platforms, among the various market disturbances. However, towards the end of COVID-19, the usage of masks have decreased drastically, while software industries were winning…dramatically.
In a report, telemedicine industries have increased 616% from March 24 to 30th in 2020, web conferencing by 445%, and remote desktop by 242%. By spotting market changes just in time, the correct ICPs can be captured accurately to maximize your win rates.
3. Spending too much time in the valley of death
The morbidity of this chart truly reflects the challenges and dangers of building a startup. In the valley of death, startups are struggling to keep afloat; their focus on product and market development requires extensive amounts of capital while making little profit. As companies remain in the Valley of Death for an extensive amount of time, it gets stressful and terrifying. Under such negative situations, fatal mistakes can be made, including the selection of a wrong targeted ICP.
Let’s move on to your Ideal Customer Profile (ICP).
ICPs should be as specific as possible, using a few factors such as:
- Company size
- Industry
- Services provided
- Servicing customers
- Customer sizes
- Geography
- Revenue
Found your targeted ICP? Let’s do the MOM test
The difficulty of innovations these days is that innovators aren’t creating, but mostly improving on current systems: Thomas Edison created the lightbulb and was later improved into smart bulbs that we can control with Alexa (so that monsters in the dark would not chase us down the corridors). Arguably, many innovations recently are meant to add-value to products that have provided significant improvements to our lives. So how do we know what works and what doesn’t?
Simply put, MOM test places you in the perspective of speaking to your mother about a sparkly new idea that you have. To understand the actual needs of your best prospects, interviewers are told to plan questions that will lead to open-ended, objective and truthful responses, rather than the ones that are avoided to not hurt your feelings.
From there, you can decide on the actual selling point and troubles your ideal customers are facing, rather than building a flashy new product that does not solve any problems.
MOM test can also be seen as the courting stage before your sales pitch– you bring your prospects out on zoom dates, listen to their troubles at work and consider if you should put in the effort to bring your relationship from lead to clientele.
What is affected by your ICP?
When I work on ‘Visual Text Analysis’ with my IB and SAT students, we learn about the importance of figuring out the target audience of advertisements.
By looking at this advertisement, you may automatically and easily assume that the ICP are people who love burgers, or worse people who are hungry.
However, ICP forces you to break it down further. Ask yourself the following questions:
- Will Vegan burger lovers eat this delicious looking Big Mac?
- Will my Asian grandma who likes to eat baos (Chinese buns) eat a burger?
- Does everyone have the budget for a burger?
- Would a health conscious, calorie counting gym rat eat a Big Mac?
From there, my students realized that ‘people’ seems like a broad population and changed their answers to: “Hungry consumers who enjoy eating big macs and are willing to spend money on them.”
Business Trajectory
Just like your B2B ICP, it is important to ask all the questions and find the points that suits you best– your customers are not the ones who should be picky, as your first client could potentially set the whole trajectory of your business outlook and profile in the future.
Branding
With the specific ICP, your branding will eventually make a shift towards meeting the expectations of your clients. Colour schemes, logos, advertising platforms, tone of voice and professional jargons will be tailored to fit your ICP to increase conversion rates.
Product Features
The ideal product would contain all the specific features that allow mix and matches in your ICP. Unfortunately, limited resources would force business owners to choose what to prioritize and what not to. With the MOM test results collected, founders would have to decide the specific features to include during their initial stages of launch.
Conclusion
Should you be in the midst of starting your own business venture and have no idea where to start, it will be best to list down your ICPs and conduct MOM tests. Soon, things will be clear as day, and you will be a step closer to your very first closed deal. :) good luck.
