“I’m still too resistant to the right amount of niching down.”
I heard this at least five times this week in more or less similar wording. And my immediate question is always: ‘Why?’
The three answers that typically come back:
- “What if we’d miss out on some big opportunities?”
- “Our SaaS platform is extremely flexible, so we don’t want to corner ourselves too much.”
- “It would make our Total Addressable Market (TAM) too small.”
On the surface, all valid answers. However, they’re all creating a false sense of ‘security.’
Here’s the thing:
Keeping your segmentation wide doesn’t mean you’ll win more.
On the contrary. Every SaaS business I have worked with so far showcased three symptoms because of too broad segmentation: Slow sales cycles, low win rates, and high discounts – Until they narrowed down.
Let me share an anecdote from a conversation I had earlier this week with a B2B SaaS CEO from Seattle. He made a similar remark.
“Your current segmentation is similar to the size of the Pacific Ocean,” I said. “That’s where you need to find and catch the 30 fish that will give you a fantastic year. That’s 30, not 30 million fish. And hearing your story, your ideal fish weighs 50 pounds, has a length of 4-5 feet, but looks like a Yellowfin Tuna.
So why are you fishing for dolphins, sharks, and everything else of that size? What if you used that specific bait only the Yellowfin Tuna loves and started fishing in that part of the Pacific where you have the highest chance of finding them?”
The more specific you get, the more attractive you become for your ideal ‘fish.’ As a result, you’ll catch more, more often, and faster.
Question for you to reflect upon
What are the stories in your head that make you anxious to niche down further? What if you’d just experimented in one specific area?
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