Minimum Viable Niche: Defining Your Target Audiences

August 11, 2020
Sandro Meyer

Most of us who work for or own a business are engaged in constant pursuit of one or both of the following two things:

  • Create, optimize and deliver a product or service experience that is superior to what is currently on the market in some shape or form.
  • Grow the company, aka maximize our revenue or profit bottom lines.

And especially if you are a marketer, the latter often takes precedence because after all that is our job. So as we try to grow the company, we invariably need to think about what customers we want to market to. And that's where I see most marketers make the cardinal mistake (and one I have made myself) of defining the target customer way too broadly. It's our natural inclination. If we have an amazing product that we believe in, we see it being "usable" in all kinds of situations and for all kinds of different industries and people.

A comically narrow audience to maximize growth is counter-intuitive for most people. The thinking usually goes, "the more people that try the product, the better the chance for growth." However, especially in the early days, this has grave consequences that are as far reaching as being able to make or brake a business.

What happens if we sell to everyone?

Think about this for a second. Every time you are expanding your target group to another segment, you are making it less specific and less relevant for all the others:

  • You dilute your marketing message, your product features and overall story of why they should buy from you (sales pitch).
  • Your marketing and sales costs explode, because you now need to create landing pages, content and sales funnels for every single persona or target market you have defined.
  • Your customer service will take a hit, because when the same product or service needs to serve a multitude of different scenarios, it's inevitably going to hit its limits on several fronts at once and the complexity of customer complaints/issues/feature requests will multiply quickly, leaving your customer success team struggling to keep the service quality high.

Despite all these problems, you obviously also can't take it to the extreme of niching down so extremely that you end up being relevant to only a handful of companies or customers. And neither can you deny your sales team to have only one customer segment forever. So what do you do?

Defining your Minimum Viable Niche and Expanding From There

How do I find a niche that's both not too small — where I'm customizing features to a single client — and not too big — where I'm becoming a wandering generality?

Andy Johns, ex growth manager at Facebook offers advice:

When entering an existing market you must think through two key questions:
(1) Who is the precise customer I am attempting to serve?
(2) What can I offer them that is 10x better relative to the alternatives?

He offers the early days of Tesla as an example:

I also found some great advice from Reforge founder Brian Balfour on the topic:

In his article How to Launch a Product or Feature To Maximize Growth, he outlines the following REPEATABLE process:

  1. Scope - Define a very specific audience hypothesis.
  2. Access - Figure out how you are going to access that audience.
  3. Filter - Filter for that audience during sign up.
  4. Success Signal - Gather feedback and data that shows signals of success.
  5. Leverage - Leverage it out to the next adjacent audience.

Cycling through this loop should lead you to expand into adjacent audiences. You can think about it as layers of concentric circles. Understanding this in order of operations is key.

I have to emphasize the following though:

Having the restraint to do this is very difficult!

Companies I've seen do this well recently are Haus (Beverage), Superhuman (Email Client), Notion (No-Code Tool), Roam Research (Research tool), and Clubhouse (Dev Colab tool).

Who wrote this essay?
Nice to meet you! We are Growth Bay, a growth marketing agency based in Zurich, Switzerland.
The Growth Report
Every Friday, you receive three stories into your inbox. Woven together from the books, articles and trends we consider most relevant for mindful and curious marketing leaders just like you. Hand-picked and crafted with love by the GrowthBay Crew 😘