To get more software projects, you need a bigger sales pipeline.
To get more prospects in your pipeline, you need to find more companies looking to buy what you are selling.
To find these companies, you need to understand well what they need, when they need it.
To have this understanding, you need a crystal ball.
Or you can use customer segmentation properly.
Scaling a successful software development company
The general tendency of managers looking to grow their business is to work with any client that comes in.
There is this untested belief that by having a very long list of services and skills on offer, companies increase the size of their potential market and thus have higher chances to get more clients.
That is not true.
On the contrary.
By choosing to target everyone, you risk targeting no one.
This is especially true if you are trying to sell higher quality services, at prices that cannot be described as “cheap”.
To be able to justify and defend the prices you need to charge, you need to have a very good problem – solution fit with your prospects.
This cannot happen randomly.
Of the hundreds of thousands of potential customers that you could talk to in a given year, there is a very small statistical chance that you will, by chance, find the 10 or 20 customers that need exactly what you are selling, at the right moment, at the right price.
To rely on luck is not a healthy business strategy.
It’s a big world
The incredible size of the world economy is what makes managers of software companies believe they need to be open to all kinds of projects, to not miss on opportunities.
But this is exactly the reason why you should go narrow in your segmentation, not broad.
Exactly because the world economy is so big, you have the opportunity to define a very narrow customer segment that can sustain a profitable, growing software services company.
There are 3 critical areas where working with a very specific customer definition will make a big difference:
- Go to market channels
- Sales process productivity
- Pricing optimisation
When you have a very clear and specific definition for your Ideal Customer Profile (ICP), it makes the job of your marketing and sales team more manageable.
There are many, many different channels that could be used to find and attract customers. New ones are added almost every month.
If you don’t have a narrow ICP definition, you can use any channel. This is not going to be effective and you know it.
If you have a narrow ICP definition, your go to market efforts can be targeted, efficient and much more likely to bring in the right types of prospects.
Selling software services means preparing custom proposals for each customer.
If you don’t have a narrow ICP definition and every prospect comes from different industries, geographies or economic circumstances, your sales team will likely spend days and weeks creating the project proposal.
If you have a narrow ICP definition, your sales team can re-use templates, the case studies and testimonials will be extremely relevant for every prospect and the overall productivity will increase significantly.
Finding the right price for each customer is a big challenge.
If you don’t have a narrow ICP definition, every price calculation will be heavily influenced by fears of and will require searching for competitive pricing information that is difficult to get on short notice.
If you have a narrow ICP definition, you will know exactly what your direct competition is doing and you will have a very good understanding of the economic value you create for customers. This will ensure optimal pricing.
WHAT THIS MEANS FOR YOU
The world is much, much bigger than you think.
Even if you define what might seem like a small target market, it will take years before you will be able to “consume” it all, to reach all potential customers in a meaningful way.
Just do the research with numbers:
- People (potential buyer roles in those companies)
If there is one lesson that I take from all the projects I did in the past 3 years it’s this one: the world is very, very big.
Use this to your advantage by selecting the right, narrowly defined, Ideal Customer Profile for your company.