Riches in Niches - To Get Big, Think Small

I regularly speak with European, Indian, or Asian companies who want to enter or expand their business in North America. Often, the first question I ask is “What is your strategy for the USA market?” More often than not, this question is answered with the reply “I want to grow my sales by $1 million (or $2 million, or whatever). I immediately know this company will fail unless they start to focus their efforts.

The North American market is large, perhaps the largest in the world. In fact, if the state of California were a country, it would rank as the 7th largest economy in the free world. It is nearly impossible for a company, American or otherwise, to try to attack the market without a great deal of market segmentation.

On the other hand, if you target your market correctly, you will reach success in a much shorter period of time, because even a small industry segment in North America is big enough to make you rich. In general, you will spend less money on sales and marketing it because your marketing and sales dollars will be focused on a specific market segment, and specific companies. (I recommend working with only 100 companies at a time. You can slowly qualify or disqualify them after a thorough needs analysis.)

Additionally, once you learn the needs of a market segment, you begin to get a feel for the customers needs and wants, which make you even MORE effective in your sales and marketing campaigns.

I recently had a discussion with a manufacturer of data encryption products for notebook computers. With over 5000 PC dealers in America, over 100 PC distributors and 20 million notebook computers sold each year, one would think it would be easy to get into the market and make a great deal of money. Not so fast. We started asking questions about who needs data encryption? Why would someone buy it? What industries have government requirements to have their data encrypted? Which market segments have the most to lose if their notebook PC is lost or stolen and the data is compromised?

Over a ½ day of discussions, we narrowed the field down to the Finance industry and certain offices of the USA Government, such as the Department of Defense. But wait. The finance industry is huge, containing many, many market segments such as banking, investments, credit card companies, financial consultants, accounting companies, auditing companies, private equity companies, venture capital companies, etc. With a quick database search, we identified over 5000 companies… far too many to approach with a small budget.

We quickly decided to go after those companies that process and handle credit cards. It seems that the market is most sensitive to the loss of customers credit card numbers. A quick search identified about 150 companies that we felt were large enough to help us reach our sales targets if we were able to engage with them. We found success in about 20 companies that provide credit card processing services to USA retailers, and have a large and mobile sales and support force. We were easily able to identify, market to, and sell to these 35 companies. The orders began to come in immediately.

To be successful in North America, you should ask yourself these questions:

• What industry is the biggest market for my products?
• How is this industry segmented?
• How large is each segment and can I reach my sales goals by targeting one segment?
• What benefit does my product bring to this market and why will they buy it?
• Who are my competitors in this segment? (Note: if your market segment is neatly segmented, you can position your products so you have fewer and fewer competitors)
• Who are the specific companies in this segment and where are they located? (Note: group them by state or region to maximize your sales efforts and reduce travel costs, you may even find that prospects in certain geographic regions share the same issues and problems that your product / service may solve)

Dedicated to your success in America,

Jim Worrell, The American Entrepreneur