God does not average

When you think of your business as a single number…

… you don’t see the details needed to drive growth.

This simple example indicates the great opportunities that most businesses have if they would just segment their customer base a bit more.  in this example, the first picture indicates an average view of the entire country  – as 16%. A business that had 16% market share across the United States is a very successful business. For this example, 16% would be based upon a calculated Total Addressable Market, not the population as a whole.

A simple breakdown of that calculated Total Addressable Market by county or zip code, indicates great diversity in market share. I have seen this many times; in one example, a financial services firm was doing well in 50 zip codes.  The addressable Market was not the US yet marketing dollars and brand dollars we’re purposed into areas that had no potential customers.  For most companies there our wholesale groups of people that are just not interested in what you have for sale. You either have to choose a total addressable market that is grounded in the realities of the current product Market fit or reconfigure marketing and product to reach different segments.

By focusing on the places that matter you do give up some market share. The benefit is focusing on places that can yield significant market share growth by higher frequency marketing (appropriate frequency would be a better way to describe it) to the customers that matter.  high concentrations of potential customers also have a halo effect from high reach and frequency. Where there are no customers but a large population you clearly see the opposite effect.

My recent work examines total addressable market share not by county or zip code but by creating profiles of what people desire ( why people buy) based on real CRM data. It’s a new and better way to reach people not based on geographical boundaries or late-stage marketing such as cost per click. The precision cuts marketing cost, allowing organizations to focus on the people that desire what they produce. You have more time for creative, more time for branding and building better products. You spend less time on media and publishers that are not in any way connected to your desire for profitability.

By understanding why people buy and be willing to reconfigure databases not based off of what Clayton Christensen calls “data of the past”  but focused on theories of customers and why they choose you. You quickly discover you’re removing the noise from the system and getting to the core issues:  how can I reach everybody that will buy something, enjoy it, with the least effort possible?

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