A business needs 3 things to be able to succeed:
- A problem
- An audience
- An offer
Most people, when they’re launching a startup or a business, fixate on the first of those 3: the problem. I dare say almost no one launches a business without knowing a problem that they want the business to solve.
But once you have your business problem, who do you sell to?
Finding that audience, narrowing your focus, and developing repeatable ways to attract them to your business are all key to the long-term success of what you’re doing.
When I talk about my 9-step go-to-market system, the first part of it is to identify your customer segments, and then figure out where it is you can approach them at scale.
This first round of experiments is how you focus on that.
There are a few key pieces of information to learn here: your best customer segment, the best channel to find them, and the best creative to capture their interest.
Find the best audience
If you’ve got an idea of what problem you want to solve, you probably can think of 2 or 3 or 10 different types of people you could solve that for.
A pool cleaning service obviously targets people who own pools, but there are many types of pool owners: above ground. Retired with grandkids. Athletes who have infinity pools for swimming every day. Hot tubs. And so on. The temptation is to say that, like a pool cleaner, you can service all of the potential clients in your industry.
But that’s a mistake.
When you are first launching, you don’t want to offer generalized services to as many people as you can. You want to offer specialized services to a subset who will value your work more highly and you can deliver extraordinary value. Don’t sell to everyone who has a pool, in other words.
You could pick a customer segment beforehand, of course. You could decide you only want to clean Infinity pools. You’d reason you can service the pumps and the owners are generally quite well off. It sounds like a good customer segment.
But that’s a mistake, too.
What if there aren’t enough infinity pool owners in your city? What if there’s already someone who’s locked up 90% of the available business in your area? Do you know if what you can charge for infinity pool service is more than what it costs to acquire new customers?
You want to test several customer segments out so you focus on the one most likely to be interested in what you’re offering from the start.
❓ Product first or audience first? There is a bit of a challenge to starting your first experiments: the argument can be made that you cannot find your audience before you know exactly what features your product has which appeal to that audience. While that is true, you have to start somewhere, and audience can give you surprising information about the features you should emphasize.
There are a few key metrics you’re looking for here:
This varies by your industry, of course, but you want to have a large enough market that you can believe you can build your first million dollars of business from it. That’s going to vary based on the size of your average deal, as Christoph Janz explains:
You’re not building a $100M business at the moment, but knowing that there are enough customers in your audience size to maybe scale to that size is handy. If you don’t believe you can find 100,000 potential customers for a $100 a year service, you might want to rethink the audience or price.
You need to understand some basic demographics to help you with your identification of the actual buyer. If you can manage to, you want to nail down:
- Job titles
- Age range
- Salary ranges
- Common interests
This info helps a lot with the precise targeting of an audience. For example, if you’re selling to e-commerce store owners who make <$1 million a year in sales, they’re going to be in a different income bracket and have different interests than people who run e-commerce store owners who make >$10 million a year in sales.
All sales are fundamentally B2C because a human is always involved in the buying decision, but you can classify the problems and the needs of those humans. The VP of Marketing at a pet supplies company will tend to have similar problems to the Director of Marketing at a different pet supplies company and will probably share very few problems with the VP of Marketing at an oil & gas company. The main areas of firmographic info you want to use to identify your audience are:
- Company size
- Company industry
- Company revenues
- Technology used
Technology used is a weird one, because it can be applied to either confirm or deny a possible client. For example, if you’re in the business of improving a SaaS company’s subscriptions, it’s possible that you only want to work with clients who use a SaaS subscription monitoring tool like ProfitWell or ChartMogul. Those companies are more likely to have defined metrics and deep knowledge about their churn rates and average lifecycle. Variously, you might want to explicitly avoid people who use those platforms because you’re offering a competitor.
Knowing which technologies add or remove a company from a good fit for your business allows for some very detailed targeting of your audience, and it’s always worth considering if you’re launching a technical product yourself.
What to do when you’ve selected an audience
Of course, you’re guessing.
Without data to back up what you think makes a good audience, there’s a lot of guesswork involved in how you select your audience.
The whole point of our GTM tests is to take that data and confirm or deny it. There are two fundamental ways to approach these audiences. One is to isolate and test each different variable individually and slowly iterate through changes across all 8 different variables until you have complete confidence that you know the mathematical best audience to test your offer to.
This is both very slow and very wasteful. Instead, we’ll need to make some assumptions.
You will want to look at these 8 characteristics and try to construct 2 – 4 very different profiles that your product could serve.
B2B Mentoring Marketplace
Let’s look at an example of something as simple as a marketplace where a business can connect to proven experts in a variety of fields to build and grow their expertise in a number of technical and soft skills areas. That seems like it appeals to a pretty narrow kind of person, but with a little investigation you can find 3 ideal personas.
|Job Title||CEO||HR Professional||Team Manager|
|Age||18 – 40||25 – 55||25 – 40|
|Salary||<50% of incomes||>30% of incomes||Middle 50% of incomes|
|Interests||Entrepreneurship, My First Million Podcast, Tim Ferriss,||Training, people management, BetterUp, Bernard Moya||Team leadership, 15five, Peter Thiel, Computer Science or Marketing|
|Company Industry||Technology||Services, Technology, Retail||Technology, e-commerce|
|Company Revenue||<$500k ARR||>$10MM ARR||>$25MM ARR|
|Company Key Tech||Webflow, WordPress, Stripe, Profitwell, Hubspot CRM||Salesforce, Oracle, Akamai, WebDAV, Atlassian, >3 HREF langs||Shopify, Magento, WooCommerce, Stripe, Google Analytics, HotJar|
Selling the exact same service—coaching and mentoring to improve someone’s professional career—would be a very different process for the scrappy CEO of a new company than for the new team lead who’s been given an L&D budget to spend on improving his own team’s growth. The kind of company you’d want to seek out would change dramatically for each of these personas. A scrappy CEO might want to work with Sparrow, a larger company’s HR Director might want to talk to the team at GrowthSpace, and the team manager might want a more automated system such as what can be found at Botany.
The core idea—get better at your profession—is the same for all 3 services, but they have very different audiences.
So when you’re ready to launch, you want to develop those very different profiles that fit into a consistent story about a person. Then, of course, you need to figure out how to choose a winning profile to build your business around.
And for that? You test.
Read our article about how to specifically create a first Facebook market test here if you want to know how to tackle that first test.
Constructing your tests
Each test should try 1 main idea. In this case, you want to know which of a given set of audiences responds better to your offer.
First, you’re going to need to create a few different ways to talk about your business idea to each of those profiles you’ve built. Start with two profiles and write 3 different positioning headlines for each.
That will leave you with 6 different ways to talk about your business. Use the handy templates we’ve created to get you set up with the 12 different images you’ll need to run those tests, and then you’ll end up with something like this:
Mentoring marketplace – CEO (Facebook Ad Format)
|Appeal||Image Text||Primary Text||Headline|
|Logic||Cut 40% off the time to PMF||We have active startup CEOs and practitioners who can help you take your idea to market in months, not years. Because they’ve done it before themselves.||Experienced Mentors. Available today to help your business.|
|Emotion||Expert guidance for your business||Most advisors can talk the talk. We can walk the walk—because they’re all running startups right now & know what works. Get expert advice on your business problems today with Sparrow.||Launch with confidence when you have expert mentors at hand.|
|Social Proof||We’ve launched 200 companies this year||When you’re grappling with a problem you have launching your business, come get help from the team that’s launched hundreds of startups this year as mentors and advisors. One of our 30 mentors has seen whatever your problem is before, and they’ll be happy to help you, too.||Launching is hard. Unless you use our help.|
Now you’ve got 3 different ways to appeal to one profile. Do that for the other one and you’ve prepared the ad copy and the images for both tests.
Make sure you’ve set up your ad account correctly, have your Google Analytics set up as well, you’ve built your links with unique UTM tracking included for each creative, and then build this as 1 campaign on Facebook (We the first experiment ER1 internally) and then create different ad groups for each profile you’re testing. You’ll want to target your Facebook audiences intelligently based on the above profiles that you’ve built.
Let them run until you have at least 3,000 impressions on each ad.
Analyzing your tests
Once you have that, pause the ads, go to your Facebook ads reporting, and see:
- What is my click rate on the ads?
- What did I pay per click?
- How many clicks did each creative get in a given ad group?
- Did one ad group perform better than the other?
- Did any ad get >2% click through?
You’ll also want to look into Google Analytics.
- How many of the clicks that Facebook sent my way ended up reported by Google
- There is always a discrepancy here. Don’t fret unless it’s >30% difference.
- What was their average time on my site?
- How many pages did they engage in?
- How many performed the conversion actions I care about?
- Which ad group brought the most traffic
- Which ad group brought the traffic that stayed the longest?
- Which ad group brought the traffic that performed conversion actions (if any)?
This will give you a first impression of which profile performed better—if one ad group clearly outperforms the other, you’ve already found the beginnings of proof of which profile is a better fit for you.
You’ll want to keep track of each of these tests and their performance over time. We use Notion for that in-house at CrowdTamers, but there are limitless ways you can do it yourself.
Running a variant of your ad
If none of your ads do better than 2% on the CTR, you probably don’t have a great fit for messaging & audience. That’s okay. There are two ways you can mix things up:
- Change the audience and run the same creative
- Change the creative and run it to the same audience
Testing both independently will tell you whether your problem is with the audience you’ve selected or with the creative you’re running. Your variant should test one or the other, but we usually test audience changes as variants on our creative. New creative usually calls for a new experiment entirely.
Our standard second test, then, would be trying that third or 4th audience that we described at the start of this experiment and then running the same basic creative with different text to them.
At the end of your experiment, you’ll have information on how well your basic creative performed to 3 or 4 different audiences.
Running a second audience experiment
Choose your two best audiences from the first experiment and then make new creative. Try a new set of graphics—they are key to the performance of a display ad—and new text as well. See if you can’t change how you talk about a key feature or mix up the main thrust of your appeal to change what you offer those two best audiences. Try moving up market or down market in your messaging. You’re looking to find the audience that most clearly seems to identify with the problem you want your business to solve.
When you’re done with that, you’ll be ready to tackle weeks 3 and 4: refining your offer. 🙂