You can't be all things to all people.
Yet when it comes to startups, too many founders have too broad of a target customer. If you’ve fallen into this trap too, then your growth has likely slowed down.
Why is market segmentation so powerful in creating a 10x product?
Market segmentation strategy allows you to:
- Constrain your messaging to better resonate with your customers.
- Focus your positioning to improve conversions while cutting your marketing costs.
- And optimize the product features to build a truly 10x product.
What’s a 10x product, you ask? And how does market segmentation help you create a product that’s superior to your bigger competitors?
In 1976, Kodak had 90% of film sales and 85% of camera sales in the USA. (1) With profit margins as high as 80%, some considered Kodak the Google of its day. (2)
At its peak, Kodak sold 10x products because each product was for a big market and had high profit margins.
Fast forward to 2012. Kodak went from the king of the photo world to filing bankruptcy. As digital cameras roared onto the scene, film soon became extinct. Add an additional rush of smartphones to the market and film became a footnote in tech history.
How does a market segmentation analysis allow you to create a 10x product and avoid the startup graveyard?
Believe it or not, the first digital camera was invented in 1975… by a Kodak engineer.
The inventor, Steven Sasson, presented his invention to management. After one look, the powers-that-be told Sasson, “That’s cute, but don’t tell anyone about [the digital camera].” (3)
Like many successful founders, Sasson’s product had a small but passionate group of people who loved his idea. (3)
But Kodak had millions of customers. It’s likely Kodak managers missed the signal from the noise because they lacked market segmentation.
Market segmentation is the process of finding the small group of customers who *love* your product.
With market segmentation, Kodak would have realized that the digital camera was the next 10x product. Their customers would have told them everything they needed to know to perfect the digital camera before anyone else.
Instead, Kodak buried their heads in the sand, ignored their customers, and died a slow and painful death.
For you, finding this core growth of early adopters is critical to your success.
Why? Because it's easier to expand the number of customers than improve customer satisfaction. And once you understand these customers, it’s easier to find more customers like them.
You’ll find this same advice given at Y Combinator. They’re the startup seed accelerator that funded Airbnb, Stripe, Segment, and over 125 startups valued at $150 million or more. (4)
Had Kodak used Growth Ramp’s market segmentation services, we may have been able to scale the digital camera’s growth from a handful of customers…
Yes, we only serve SaaS clients.
But the principles of successful segmentation are still the same. Market segmentation will help you find your product’s place in the market and then dominate it.
Here’s how Growth Ramp might have helped Kodak find product-market fit (PMF) and turn the digital camera into a 10x product:
- Survey and interview Sasson’s friends who used the digital camera. The goal is to understand the buyer journey of the small group of customers who love your product. For your product, we’ll survey and interview your customers to find out which customers we should first target. These insights will allow us to build your brand positioning, pricing, and go-to-market strategy.
- Survey and interview Kodak customers. By talking to Kodak’s larger customer base, we’d find the patterns of what’s needed to create the next 10x product. How does this apply to you? You may be thinking, “I don’t have millions of customers like Kodak had.” This is true of all startup founders that work with Growth Ramp. But if you have an email list, freemium users, or free trial users, these are potential customers worth surveying too.
- Segment the research. Regardless of the number of customers we survey, we need to find the signal in the noise. Our goal in this step would be to help Kodak know which of their customers love their product. For an early-stage startup, we’ll invest in qualitative research to find what’s missing to turn your passive customers into loyal fans. This will allow you to increase your word-of-mouth, the holy grail of marketing.
- Synthesize the research and prioritize growth opportunities. Large amounts of data wouldn’t do Kodak any good without an actionable plan. For you, we’ll synthesize what we’ve learned into an actionable growth strategy. Afterward, Growth Ramp will prioritize your strategy based on what will most likely get you results faster.
- Execute the growth strategy. For Kodak, that strategy would convert customers of other products into raving fans of the digital camera. For you, we will put your positioning, pricing, and go-to-market strategy into action to get 1,000 customers in a year.
If you want to carve customers away from the existing market, then you need Growth Ramp’s market segmentation services. Apply to hire Growth Ramp today.
Johnathan Dane, CEO and Founder of Klientboost
“Over 20% increase of client leads worth $25,000 or more…”
Do you know when you're super excited to finally stay consistent with your blog? And then someone like Growth Ramp comes around, smacks you in the face, and tells you when you're shooting yourself in the foot?
I didn't believe the team at Growth Ramp at first, but we saw an increase in over 20% of inbound client leads that have LTVs of $25,000 or more. If you're not promoting what you sweat to create, then you won't get as far as you can.
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Brenden Mulligan, CEO of Podpage
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Marketing hires are very hard. Everyone I talked to told me I needed at least six months to start seeing results. None could prove to me they understood my market, my product, or my customers.
When I approached Growth Ramp, I was coming in cold. But they estimated I could make it all back with a price increase campaign in two months.
In two months, I got data from my customers on my pricing, why some weren’t buying, what features to add for a new price plan, and so much more. If I were to hire a general manager or CMO, I’ll use Growth Ramp’s research to ramp them up. They then handed me everything I needed for the price increase campaign on a silver platter.
After the price increase campaign, we’ve been adding new customers at the same growth rate. We didn’t lose a single customer from the price hike and customers did not question the change.
Furthermore, I made my money back in two months as Growth Ramp promised.
I don’t think enough founders are focusing on pricing to optimize their growth strategy. You may have a gut feeling about the right price of your product. But without data, you’re likely leaving money on the table.
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This, people, this is how you delight clients as a vendor.
We hired Growth Ramp back in May. They’ve…
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