The purpose behind finding an addressable market
The purpose behind the exercise of finding an addressable market is focus.
When focus and clarity exists inside a business, the people on your team have the ability to prioritize.
Example:
- Marketing knows who they need to develop relationships with and topics to create content on
- Sales knows which prospects to prioritize or focus on
- When delivering the solution, you understand the nuances better and create a more positive experience
Take a look at this image:
The total addressable market is filled mostly with bad fits, freebie seekers, people who won’t do the work, people who can’t pay you, procrastinators, and people who aren’t even bothered about the problem you solve (even though it affects them)
Your goal with this exercise is to establish which side of the market is worth paying attention to. This is an important exercise, because most companies want to try and help everyone and in that process, attract the bad fits of the market.
This is largely because the marketing message that they release into the market is too general to target the right side of the market
Your energy and the addressable market
You’re also playing a game of ENERGY. Bad fits and people who cannot pay you demand more energy from you — even stripping it away — and that continues all the way through marketing, sales, and when delivering the solution.
The right side of the market adds to that energy.
There is a saying that “not all leads are equal” and this is definitely true in this scenario. People are complex creatures, and everyone who starts the client journey with you will require different amounts of effort and energy from your marketing and selling process before they even consider giving you any money.
What that means is that some people buy faster than others, or some require more proof than others to make a buying decision.
Knowing this, you as the expert can start to identify your best type of clients, and what they expect from a company like yours to even start up conversations.
Here is the nuance — If you solve important problems, your clients almost always expect your branding and infrastructure to meet a certain standard. This is completely normal. It’s work that you do upfront as PROOF that you are the right person to help them solve their problems.
Online demonstration and the addressable market
You’ve gotta build up online demonstration to show your market that you are the right person to help.
(I’ll write some demonstration articles here in the future. Make sure you’re following)
Here’s another point:
“The value of your offer will be enhanced or diminished by the value of your content.”
What do I mean by this?
It means that if you give great value through your marketing, and you communicate this value in a powerful way that builds up aspects like belief, certainly, enthusiasm, and connection — and you do that all upfront for your prospects — your offers have a greater chance to be considered.
Here’s a real-world example:
Look at people who call themselves “digital marketing experts” or “branding experts.” Most don’t even have digital footprints or the infrastructure to back up the fact that they can help you with your online marketing. What happens in the mind of the market when these types of people make an offer to help with online marketing? There will be resistance, there will be doubt, because there is a lack of proof.
The point of this section is proof. When you lack online demonstration, your target market becomes unsure of your ability to help them. You also put a lot of pressure on yourself to install this proof, certainty, or belief when you have to rely on a single meeting to “try and prove” that you are the right person to help.
How the addressable market impacts core business function.
Identifying the wrong addressable market will impact your standard operating procedures. Here’s an example of how:
Picture 4 cups.
- Cup 1 = Foundations
- Cup 2 = Marketing
- Cup 3 = Sales
- Cup 4 = Delivery
Foundations: A part of getting foundations right is understanding WHO your ideal client is that you want to attract. This is important because there is something called a “market to message fit.” Your messaging needs to be clear so that it hits the right side of the market.
Marketing: When your messaging is wrong, everything that marketing produces will miss its mark. Remember — the message to market fit needs to sift through the total addressable market (that is filled with bad fits) and land in the minds of the ideal client. To set clear expectations, you’ll always get different parts of the market — it’s an exercise of increasing the chances of attracting better fit clients
You do not have this ability when your messaging is not clear.
You do not have this ability when your messaging is not clear. So you essentially attract the ‘wrong leads’ when you try to go too general.
Now here comes the next issue — marketing passes the wrong bad fit leads over to sales.
Sales: Your sales team now engages with unqualified people. That provides them with less of an opportunity to close the deal.
Do you see how when your foundations are not correct, you attract the wrong people? When that happens, marketing doesn’t work, sales cannot perform and hit targets, and you’ll have issues on the back-end with unhappy clients who want refunds.
Understanding your Addressable market
Identifying the right addressable market is not only a demographic exercise but also a psychographic exercise.
Demographic targeting involves aspects like:
- How much money this group makes
- What their role is
- Where they live
- Are they the decision maker?
Psychographic targeting involves aspects like:
- Will they actually do the work and follow your process?
- Are they willing and capable of taking advice from you? (huge one)
- Are they procrastinators or “too busy” to even work on solving the problem with you?
In many cases, understanding psychographic makeup is a stronger indicator whether or not these people will be good clients.
Those who qualify based on “Yes they have the money to pay me SO WHAT” can be met with a lot more chargebacks, refund requests, unhappy clients who tell others how bad their experience with you was because you didn’t meet their expectations.
So those are the 4 main “cups”. Foundations pours into marketing, marketing into sales, sales into delivery.
Total addressable market and the flywheel.
You need enough of the right liquid too in each cup.
It works as a flywheel. And that wheel starts at understanding which side of the market is worth paying attention to. It’s very easy to say “Well yes, I have 100,000 potential clients right now.” I ask — “Out of those 100,000 people, how can I identify the 1,000 people that would be PERFECT FITS for the solution I have?”
If you can retain 100 clients you’ll be ahead of many, many companies. The keyword here is RETAIN.
I still remember back in 2018 I was sitting with a guy named Patric. His company was doing multiple 7 figures in revenue at the time. He said something that will always stick with me, and it will solidify this lesson for you. He said, “If only I had looked after my current clients back then, this company would look totally different.” I felt that, I felt the emotion in his voice. I sensed the sheer cost of having to try to win new clients all the time. It can and WILL become overwhelming having to chase new clients all the time.
The lesson? A business has two goals — to (1) win great clients and to (2) retain great clients.
Retaining clients is FAAARR cheaper than acquiring new clients.
It all starts at understanding which part of the market is worth paying attention to.
This is why this addressable market exercise is so important. Do the upfront and your future self will thank you for it.
Onward and upward.
— Justin
Justin Booysen