Your Ideal Customers Are Your Target Audience
Posted by Trevor on 28 November 2012 | 2 Comments
As the CEO of pharmaceutical and biotechnology companies, I have always felt that my target customers were not the patients who benefitted from the products, but the physicians who made their patients feel better. The majority of doctors are detectives who have to fathom out the problem, its cause, and then define a treatment for a particular symptom. If a doctor tries something that doesn’t work or that produces side effects that make the patient feel worse, the patient becomes dissatisfied with their doctor, and the doctor then equally disgruntled with my company. I need to ensure that I target the right doctor who can identify the perfect patient profile for my product.
There are, however, almost one million doctors in the United States of which a third are primary-care physicians. There is no way my small businesses could communicate with every one of them. I believe in segmenting the market right down to the point of identifying the subspecialist whose need can be most satisfied by a product. It takes some effort and some experience, a lot of market research, because you can’t just immerse yourself in a market you know nothing about and then decide who your customer is. You have to get out and talk to people you believe to be your potential customers until you actually find your real customer. I am amazed at how few people talk to their potential customers and, according to the Small Business Administration, 88% of all new companies start up without performing market research. No wonder that half of them fail within a few years.
I coined a term in the mid-90s: strategic therapeutic market segmentation, a term that I abbreviated into the acronym, STMS. I remember this as a tongue-in-cheek gesture to a CEO who couldn’t understand that not everyone in the world was a customer for a particular product, but somehow the acronym stuck and became a catchphrase used at every executive and board-level meeting.
Behind the acronym is the concept of breaking the market down into smaller and smaller segments until you have identified your ideal customer. For this CEO, however, one who never left his office to talk to potential customers, any patient in the world was a targeted customer. He produced press releases that suggested the first year sales of a new product would be $500 million. When I finished my market research, it became clear that the target customer was a small subset of physicians, the only ones schooled in the diagnosis and treatment of the disease, and I told him the forecast was actually $5 million. Fortunately he was sitting down at the time.
It was a valuable lesson in how important it is to define accurately who your ideal customer is. The only way to do that is to go out and meet with as many potential customers as possible and ask their opinions of your anticipated product or service. It sounds obvious, but I know leaders of large sales forces who have not spoken to a potential customer in a decade.