I’ve been immersed watching David Attenborough’s Frozen Planet courtesy of Netflix. I’m equal parts fascinated and horrified by the process animals take when hunting. Cute baby penguin chicks that wander away from parents are carried off and torn apart by swooping birds of prey. Chubby sunbathing seals are flipped off their ice beds, dragged under water and drowned by killer whales. Baby muskoxen are shepherded away from their herd and mauled by ravenous wolf packs. The circle of life… although it’s more like a horror movie than Disney movie in most cases. But you’ve got to hand it to those hungry animals – they get the job done by staying focussed.
If the birds of prey tried to attack all 100,000 penguins on the beach, they would go home hungry. If the killer whales attempted to drown 50 seals at once, they are likely to lose all of them. If the wolf pack had tried to take on a whole herd of charging muskoxen, they would probably become the victims. Carnivores instinctively know that the best way to survive and fill their bellies is to be extremely focussed and work as a team when it comes to catching prey.
Are New Zealand tech companies focussing on their prey?
The same principles apply for the New Zealand technology industry. Having the courage to focus, and suppressing the fear of missing out on sales from non-target companies, drives your ability to grow.
The 2016 Market Measures study of over 300 New Zealand technology companies showed that while tech companies are showing some level of market prioritisation, only 28% are remaining tightly aligned to their most profitable market segments. Reinforcing this lack of focus is the fact that the typical company (if selling B2B), focussed on 4.2 industries across an average of four different export markets.
Main approach to growing export markets (% of companies)
Market Measures 2016 report.
The killer whales would be appalled. Imagine trying to hunt seals, penguins, herring, and sea lions all at once! The pod would have to split up (hindering the success rate of the hunt) as well as use completely different killing tactics. Its resources would be stretched and its efforts frustrated.
Don’t disperse your hunting party
Many tech businesses can understand this feeling all too well. The effect of selling into multiple markets can be akin to selling completely different products, considerably reducing the effectiveness of your sales and marketing spend.
For example, a client of ours has taken on new markets one by one over recent years. They started off selling their software to New Zealand companies, expanded into Australia and are now taking on India. They’re selling the same product, but using a very different channel from their Australasian market. They had to adjust their pricing, customer support structure and promotional strategies to connect with the Indian market. Focusing on penetrating one country at a time has helped them to expand at a faster rate than they would have trying to market their product to the entire world from the beginning.
One Market Measures survey participant offered these words of wisdom –
“The smaller the niche we focus on the more effective we are with marketing and sales. In our case that doesn’t mean focussing on specific geographic markets. It’s more about being very clear and detailed about exactly what our ‘ideal customer’ looks like.”
The real measure of how focussed you are on a market, is the ability to say no to prospects outside of a tightly-defined target.
Going in for the kill
Selecting a market, i.e. a set of customers with a similar level of buying interest, isn’t easy. When you are striving hard to grow and expand, it seems counterintuitive to reject sales opportunities, but the reality is the wider you choose to spread your marketing effort the less effective it will be.
It is one of the hardest marketing decisions you’ll make. But all companies, no matter how large, have limited resources and these resources need to be 100% focused on as specific a market as possible to achieve the maximum gain. Channel your inner killer whale and aim everything at a particular group of customers – the sales process, promotions, the support process, the product. You save time, effort and money and the focus makes things happen.