Steady revenue growth is the best indicator of a healthy business. As a serial entrepreneur and business growth expert, I’ve found three elements contribute to consistent business growth:
- Identifying Innovators as your Primary Target Market
- Building a Demand Generation Engine
- Differentiating your Brand Effectively
This article will focus on explaining how to identify innovators and systematically target them through your marketing strategy. In subsequent articles, I’ll address Demand Generation and Differentiation. Most executives understand the importance of defining a target market that wants and needs your product, but after two decades of successfully growing businesses, I’ve learned there is a more important consideration.
Targeting innovators and pacesetters
In addition to using traditional demographic measures, there is a better method that correlates to profitable growth – and that is targeting buyers who are innovating, or are pacesetters within their demographic group. This is known as psychographic targeting.
Innovative-thinking, whether in a consumer segment or B2B segment, is critical because these pacesetters are more discerning and thus better …and MORE profitable customers for your business. Let’s discuss examples in both Business-to-Business (B2B) segments and Business-to-Consumers (B2C): If you’re marketing to businesses, start by asking if your target market is thinking about, and preparing for the future. If they aren’t looking at trends, they are not innovating. Is their product recession-proof? Are they targeting segments that are growing? Do they realize that what worked yesterday, won’t work tomorrow?
In the B2B segment, these are the clients you want on your roster. Finding them is as simple as looking at their blog and reading their financial reports. You can also follow their C-suite executives on LinkedIn. Are they talking about innovation and trends, or are they just promoting their business? Innovative companies are led by innovative leaders.
In addition to the ideas above, Forbes publishes an annual list of the World’s Most Innovative Companies. This is a great list to develop a sophisticated demand generation (lead generation) campaign around, and/or create an aggressive “sales contest” to challenge your sales leaders to systematically target these brands.
Ideally, you also want brands that are growing, as well as innovating. In the B2B brands I launch or invest in, we use this Opportunity Map™ (Figure 1) to identify brands we want to sell to.
Let’s explore the 4 quadrants of The Opportunity Map™:
- Survive or Die (Lower Left): These are brands that are frequently looking for a quick fix, or are implementing changes that are not well thought out. They are easy for your sales force to sell to because they come looking for you, and typically have a short sales cycle.
- Market Leaders (Lower Right): These are brands that are growing and in need of solutions, and on the surface, seem like great clients. However, if they are not constantly innovating, they become vulnerable to competitive threats. In addition, because they are growing, they tend to negotiate prices fiercely, thinking they have the advantage because they are currently successful.
- Innovative Threats (Upper Left): These brands are shrinking in size, may have laid off staff, and/or cut costs. However, IF they’ve done this to rethink their Go-to-Market Strategy, or if they are revamping their product to be more competitive, they are superb targets because they have a built-in innovation mindset, and motivation to create change.
- Game Changers (Upper Right): These are brands that are both growing and innovating, and are by far the best target for a B2B company who wants to consistently grow. The best way to reach these companies is through executive-to-executive outreach, or authentic marketing techniques. Although they are not easily “sold,” they tend to be loyal to their partners, and will ensure your brand grows profitably while remaining innovative yourself.
The concept of innovation is not new to the executive suite, however since Harvard Business Review (HBR) published “The 5 Requirements of an Innovative Company” in 2015, I’ve looked at innovation not just as something I want in all of the companies I own or invest in, but also a key component in a business growth strategy.
HBR’s criteria has been used by thousands of companies over the last several years to take their innovation game to the next level.
- Employees who’ve been taught to think like innovators
- A sharp, shared definition of innovation
- Comprehensive innovation metrics
- Accountable and capable innovation leaders
- Innovation-friendly management processes
Think about this if you’re selling to companies. Wouldn’t you want these types of brands as clients? On the other hand, if you’re marketing directly to consumers, one might assume that it’s impossible to identify innovative customers.
That’s simply not true.
Numerous studies show that there are millions of citizens that are innovative and as a result, improve the consumer products they purchase to better fit their needs. These are the customers you want to attract because they will buy more, are more engaged with your brand, and can become your best advocate (if you have a good product). The MIT Sloan School of Management conducted numerous studies and published a surprising report in 2011 that showed the rise of the innovative consumer (Figure 2).
To find innovative consumers, start by looking for consumer segments that are dedicated to learning and growing. This behavioral targeting will help you align marketing plans to find consumers who are pace-setters. Interestingly enough, these types of consumers also tend to be influential, and if you find one, they will bring their friends. To reach them could be as simple as looking for consumers who are also buying books, taking programs, growing their careers, and investing. There are several inexpensive profiling tools that will help correlate with these types of behaviors.
Innovation is a critical psychographic tool for target market definition…if you want to consistently grow. In next month’s Business Growth Series, I’ll address Demand Generation and as critical growth strategy.