Do You Really Know Your Sweet Spot?

Maximizing sales success, market penetration, and growth requires knowing your “sweet spot.” The sweet spot is that set of customers having problems that we are the best in the world at solving. These customers are likely to be our best, most loyal, and most profitable customers.

The biggest drain on sales performance is selling outside the sweet spot—trying to get customers whose problems we aren’t the best in the world at solving to buy. It takes tremendous effort to win them—if you can, then it takes tremendous effort, resources, and cost to keep them and to attempt to make them happy.

But too often, I see organizations with poorly defined sweet spots, with sales people wasting huge amounts time on marginal deals or prospecting where they have no business.

Knowing your sweet spot and defining it well requires a couple of things.

First, a brutally honest assessment of what you are the best in the world at doing. What problems do you solve better than anyone else? What can you help customers achieve better than anyone else? Too often, we don’t look at it rigorously. Too often, we’re dishonest with ourselves–hoping we are the best in the world, where we are really marginal. Or we are filled with wishful thinking. Or we aren’t prepared to do our homework. We can always define and characterize a set of problems that we are the best at.

I’m reminded of stories, perhaps myths, from the Jack Welch days at GE. Every business had to be 1 or 2 in their markets or they were at risk for being sold or shut down. The mythology has it that business unit managers would be very creative in defining their target markets in so that they were number one, for example, “Red haired women, over 6 feet tall, with one green eye, one grey eye, who are fluent in Urdu, English, and were born on a night with a full moon….” It may be mythology, I’ve never seen that in my work with GE, but….. The point is, we can always define markets where we are the best. If those markets aren’t sufficiently large to support our growth ambitions, then we need to acquire the capabilities to solve more or bigger problems.

The second step is to characterize the customers that have those problems. We’re really trying to define our “ideal customers.” We do terrible jobs at this! I don’t know how many organizations that I’ve encountered that say, “Every company in the world is a potential customer!” It’s impossible, whatever problems you are the best at solving, you can’t be the best to every company. Some narrow it, “We focus on the SMB market.” I’ll typically ask, “What does that mean?” The response is, “Companies with revenues between $10 Million and $1 Billion.” Wonderful, now they’ve narrowed it down to millions of companies! How does that tell me where they are the best?

Some organizations are getting better. They define the demographic, geographic and other characteristics. “We focus on beer breweries of a certain size in North America.”

We may want to look at some other dimensions of the target enterprise, things like where are they in their life cycle—entrepreneurial start up, high growth, stable, and so forth. things like culture, attitudes toward risk, change, innovation, collaboration, and so forth. What is their operational style—very centralized decision making, decentralized? For example while Google and Yahoo do much of the same things, they are very different organizations. One may fit well into our sweet spot the other may be outside our sweet spot.

Related to the previous point, we may want to look at the maturity of our solutions in their space. Is it very new and game changing, best fitting early adopters. Is it something more that fits late adopters–perhaps less risk orientation, less focus on “new and innovative,” more focus on “solid and proven.”

All of this is oriented to defining the characteristics of the enterprises that best fit our “ideal customer profile.” Doing this requires huge knowledge about our customers and where we have the greatest impact.

Once we’ve defined the ideal types of enterprises we best fit, then we want to do the same thing with functions and “personas” within the organizations. What functions do we target, what personas within those functions, what are the characteristics where we best fit? Who are the people that are most likely to have the problems that we solve? What are they going to want to hear–does that align with how we want to be positioned, and so forth.

With a little homework–first knowing ourselves and what we do best, then knowing the customers that best align with what we do, we can drive dramatic results. Win rates will skyrocket, sales cycles will compress, margins will be higher, customer satisfaction, customer loyalty will be higher.

It’s when we venture out of those areas our success start to decline—at least with what we currently do. We can grow in new areas if we become the best in the world at the problems those customer have. It may be taking the problems we are very good at with customers in our sweet spot and expanding our capabilities to serve more customers.

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