I talk about the importance of “focusing on your sweet spot,” a lot, often taking for granted people understand what I mean. My post, An Output Of Your Sales Process Should Be Profitable Customers, generated a number of phone calls and email discussions about the sweet spot. So I thought I’d add some thoughts to clarify and better define it.
When I speak with sales professionals, I often ask them< “What’s your sweet spot?” The responses are all over the place, but include: “We focus on small businesses,’ or “We focus on enterprise selling,” or “We provide solutions for (insert the market/industry name),” or “We provide solutions for the (insert the name of your favorite function–sales, finance, manufacturing, HR, etc.”
Too often, sales people define the sweet spot as, “these customers buy the types of products we sell.” At a high level this may be valid, but there may be a whole number of factors that make the sale very difficult, high risk, or unprofitable. They may be someone’s good customer (maybe even a competitor’s), but they can be your prospect or customer from hell! It’s critical to be more focused than selling to anyone who fogs a mirror.
Generally, the definitions are very broad and provide little ability to focus on where you are really good. The “sweet spot” is a rich definition of the ideal customer–the customer where your ability to create value is maximized–and their willingness to engage you in creating value is maximized.
So there can be a very large number of dimensions to your sweet spot (and you may have several sweet spots, consequently several profiles). Here are some elements of your sweet spot (this is just a starter list, I’d love to hear your additions and refinements):
Market and geographic definitions: You are more competitive and offer greater value in select segments–for example financial services and not manufacturing. Or it could be more refined, and be defined as commercial banks within the financial services markets. In manufacturing, it might be discrete manufacturers versus process, or even more segmented. There can be very rich refinement of the market spaces you compete in. It could have a geographic definition–your community, a region, a country, or so on.
Company characteristics: The definition could be refined by size of company, enterprises over $1 B in revenue, enterprises with less than $100M in revenue, enterprises with over 1000 employees. It could be types of companies, publicly traded companies, private, sole proprietorships, and so forth. Two colleagues sell virtually the same services to very different sweet spots. One focuses on “woman owned businesses,” the other focuses on “family owned businesses.” While to many people, based on the services they offer, they would seem to be competitors, they seldom compete. Each is very successful in their own niche, each has a strong reputation in the niche.
Functional characteristics: Your services may be optimized within a certain function or subfunction. You may be best within the CFO function, or even more focused within the treasury function of the finance organization.
Performance characteristics: Your ideal customer may be customers that are growing very quickly, or those that are in decline. They may have profitability or other financial or market performance characteristics. Companies that are performing well and growing may be great for you, but troubled companies may not be. For example, in our business, we are most successful with companies that are either the performance leaders in their segments or the performance laggards (troubled companies). Those in between are more challenging for us to acquire as customers.
Change/disruption characteristics: Customer whose industries and markets who are being disrupted and changed dramatically may or may not be in your sweet spot. For example, in my prospecting, I focus on markets and companies where there is a high rate of disruption or change (externally or internally driven). I have great success there, people need my services. In more stable markets, sectors that aren’t changing a lot, our sales cycles are very difficult and very long–so we don’t spend time there. We don’t want to convince people they need to change, we want to find people who already recognize they need to change. However, I know some firms that are just the opposite. We deliver similar services, but they are more successful in other segments than we.
Product life cycle/market life cycle characteristics: Does your ideal customer have very short product life cycles, need to constantly be introducing new products to grow–and are your solutions optimized to do this. Do they have very long and stable product life cycles. Are they early market pioneers, those that are fast followers in high growth markets, or those that are best in very mature stable markets. As an example, one of our very first clients was a company that focused on “end of life products.” They weren’t good at innovating and bringing new products to market, but they were among the best I’d ever seen at extending the life cycles of products that others might kill. They created a great business by adding years to certain categories of products. Their sales and marketing strategies were very simple, they focused on current users of the product, selling replacements, additional systems, parts, and service. They didn’t talk about new customer acquisition, they knew 100% of their customers and focused exclusively on them. To grow their business, they would buy product lines that were going to end-of-life, acquiring new product lines and new “old” customers.
“Personality, ” values, or cultural characteristics: Every organization has a “personality,” value system, and culture. You may be more successful with certain types of organizations than others. For example, in our business there is one very large company that fits all our criteria for our sweet spot except for this one. We’ve been very successful in working with their competitors and with others in their space. We don’t waste our time going after this company, even though we know they are buying services that we offer. We know the “sale” will be very difficult–and the subsequent post sale service and support is likely to be a nightmare.
How they perceive “Value.” Organizations and individuals perceive value differently. Some truly recognize and buy “Value,” getting the best deal for that value they can. Some just don’t recognize value at all (usually these are people that are very short term focused). You won’t change their minds or perceptions of value, so don’t waste your time if you and they aren’t aligned. As an example, we do a lot of consulting in Sub-Saharan Africa, India, and China. Each of those regions (with the possible exception of South Africa), values consulting services very differently than North American and European customers. To be successful and profitable in those regions, we have had to change our service delivery approaches quite a bit.
This list is not exhaustive, but it represents some of the “customer characteristics” that help define your ideal customer or sweet spot. But let me shift to some other more internally oriented characteristics that should be leveraged in defining your sweet spot.
Where have we been most successful: Acquiring your first customer in any “segment” is difficult and expensive. You have to learn who they are, their issues, drivers, and how to create value compelling enough to get them to buy. The second customer is a little easier, because they will face many of the issues the first customer faces and they will recognize the value that you create more readily. It may not be a slam-dunk, but you have a better basis to compete–and you have a reference–your first customer. Likewise, the third cusotmer is easier, the fourth is even easier, and so forth. You ability to win, your sales cycle, your cost of selling all get better in customers where you are known, who you know, and who you have a demonstrated ability to create value.
Where we have been least successful (duuugghh Dave): As important as defining “what’s in our sweet spot,” it’s critical to define what’s outside your sweet spot. There are the customers you have sold–but then wish you never had. What are the characteristics of those customers and how do we avoid going after them in the future? There are those we can sell, but it’s a real struggle. The cost of acquisition may be too high, the risk may be unacceptable, or we simply can’t support them profitably.
There are some other criteria–but I’ll leave you to fill in the blanks by asking you to add them in comments.
Sometimes, our sweet spot can be too limiting. We can’t achieve our growth goals and need to expand. This is important from a corporate strategy point of view–but seldom from a sales person view. Focus on your sweet spot, don’t waste your time outside it. I’ll address expanding your sweet spot in another post.
Too often, we ignore our sweet spot in qualifying. Or as business gets tough, we relax the criteria for our sweet spot, until anyone that “fogs a mirror” is a fit. Our sweet spot exists for a purpose. It tells us where we will be most successful, most profitable, fastest! The customer may really be buying something that you can sell, but if they aren’t in your sweet spot, your likelihood of success is going to be very low. They may be someone’s great customer, but they aren’t your great customer. Don’t waste your time, spend it trying to find your great customers!