One of the challenges I’ve seen is when an entrepreneur gets positive initial feedback from their target market on a new idea, builds the product with customer feedback, and then realizes the initial target is not actually the right market to go after. Thankfully, this realization almost always arises in the race to 10 unaffiliated customers as paying customers provide the best feedback.
Here are a few challenges that might indicate a poor initial target market:
- Sales cycles, even when it’s a perfect fit prospect, are substantially longer than expected
- Customer budget isn’t commensurate with the complexity of integration (e.g. the customer can only pay $250/month but it will cost $10,000 just to set things up)
- Product usage is sparse, even after paying for the product (likely indicates a nice-to-have for that market)
- Even with regular product usage, customer feedback and feature requests are limited, indicating lack of engagement and value
Once it’s clear that the initial target market isn’t right, it’s time to either change markets (typically go up-market, which has its own set of challenges) or to change product directions (sometimes a pivot and sometimes a heavy iteration). They key is to move fast and work to find product/market fit followed by a scalable customer acquisition process as quickly as possible.
What else? What are some more challenges from a poor initial target market?
One thought on “Challenges from a Poor Initial Target Market”
At ITC, our take on this was that customer acquisition nearly always takes “twice as long and twice as much money” than the initial business plan. We always adjusted our expectations …..including funds needed and pre-money valuations accordingly.