Market focus is directly proportional to deal value

I wouldn’t pay me anything to consult on Java development, if I were you.  Why?  Because, to be frank, I don’t know very much about it.  You are, almost certainly, wasting money.

So why would you separate yourself from a lot of capital, to buy services from someone who didn’t know a lot about your industry?   Again, you probably wouldn’t.

The lesson here for entrepreneurs, particularly those in the business to business space, should be clear: if you do not understand the industry you are selling into, you are unlikely to achieve significant revenues from it.  Is this always a bad thing? No.  Salesforce.com does not need to understand the markets it sells into in particularly great detail – why?  Because it’s a highly disruptive offering, primarily because of its low ticket price, which means the customer cannot reasonably expect to have an industry-specific product.

Salesforce.com is disrupting an existing market – not all entrepreneurs start in such a fortunate place.  If you have a generic product, with a limited market, and are resource constrained – you need to be doing big ticket deals in order to survive.

My argument for the non-Saleforce.com entrepreneurs is this: you need to create market focus to drive up deal values.  What does market focus do you for?  Several things:

  1. Focusses the mind – no more ‘we can sell to anybody / we aren’t selling to anyone’ nonsense
  2. It directs resource – you need to learn quickly, so learn French quickly – don’t decide to become a specialist in European languages tomorrow
  3. It creates credibility – I really understand your industry, and because I understand it you are going to trust me to provide good advice on how to drive business performance
  4. It informs the proposition – a well-researched and targeted proposition unlocks all the stores of value, and increases the likelihood of conversion

So ask yourself this: do I have market focus?  How focussed am I on that market – some entrepreneurs achieve a zen-like state where they will happily refuse business from those that are outside their target group, anticipating that in the long term this will result in a superior return.

One to consider…