Are you searching for the pivot point that will transform your sales, but not sure what that looks like, never mind how it will happen?
There’s a lot of talk about “product-market fit” in the start-up world — that point where your product offering matches closely with the needs and aspirations of your ideal target market. When that happens, things change; your ideal clients buy more quickly, they share your solution with others, clients start coming to you instead of you always going to them.
That same thing can happen with your creative agency or service business. Are you finding it hard to land clients? If folks aren’t lighting up when they hear about what you do, it might not be your sales or outreach technique — you might need to adjust your offer or your chosen market.
First, ask yourself, where are you now?
Are you missing service-market fit? Start by answering these questions:
Do you feel that your clients aren’t getting maximum value from your service?
When you get referrals, do you find that they aren’t a perfect fit for your services?
Are your sales growing slower than they could?
Does it take too long to close a lead?
Do lots of prospects fail to convert to a sale?
If the answer to any or all these questions is ‘yes’, then improving your service market fit could be the answer.
So, what is product-market fit?
The definition of product-market fit is relatively easy to understand. It’s the point at which a product’s features and benefits so precisely match the needs and goals of a market segment that the need to push the product to market recedes. Instead, clients seek out the product. It is this momentum that drives traction and exponential growth.
How does product-market fit work? The product-market fit pyramid
The product-market fit pyramid walks you through the elements of PMF. From bottom to top, the PMF pyramid layers are as follows:
Your target market client
Your client’s underserved needs and goals
Your value proposition
Your feature set
Your user experience
Lots of ideas but no time to execute? That’s why service market fit is essential.
We meet many creative service firms that have more ideas than they have time. You’re constantly looking to generate sales by delivering unique solutions to clients. You’re continually innovating and hoping to sell your new services to existing clients (more push marketing!).
If you compare this strategy to the PMF pyramid, you’ve got stuck at level 3. You’re trying to adjust your value proposition for every client. Worse, because you’ve innovated your service for a new client, you drop back to level 1 and try to develop a new market segment.
The result is a compendium of services that is hard to manage, difficult to sell, and that never really satisfies your market. Consequently, each service becomes like a small business itself. Each is at a different stage of growth, and you can’t grasp what stage of growth your business is at. Are you:
Without understanding where your business is on its growth path, you cannot prioritize your strategies. You’ll be running like a startup even though you’re trying to grow. But until you’ve locked down your offer, you can’t start the process of scaling. Saying yes to everything means your operations will be messy, you don’t get a chance to perfect anything,, and you’ll employ more people than you should just to try to keep all your juggling balls in the air.
(If this sounds like you, you need to read my article, ‘The easy way (and hard way) to get leads and sell your services.)
Achieving service market fit is crucial. It’s the only way to relieve the pressure of working too hard to get clients.
Developing service market fit in your business.
When developing your service market fit, there are four key steps to take:
Pick your niche
Position your service
Test and iterate
I’ve created a basic overview of each step below, with references to more in-depth articles if you need them.
1. Market segmentation
The first thing you need to focus on is your clients’ pain points. What frustrates them? What stops them from doing what they need to or want to? What problem do they have that makes them want to call you? What opportunity are they missing out on that your service can make possible?The deeper and more specific you get about this, the more powerful your insights and strategic choices will be, so drill down and get super detailed. My friend Paul Higgins has written an article titled ‘5 tips to identify your target market’ in it he says::
Start with what you know.
Don’t ignore clients who moved on
Ask for feedback
Make your customer come to life
How deeply should you understand your clients to develop your target market segment? Let’s put it this way: trying to please a vast market is impossible. To develop a service market fit, you need to narrow it down. Focusing on too big a market leaves you lost in the crowd without identifying the patterns and choices that will make up your perfect solution to their needs.
(Learn more: read my article, ‘The Market Segmentation Process for Agencies: Strategies for Success.’)
2. Pick your niche – where do your products services fit in the market?
Right now, you’re servicing a myriad of clients. You’ve got a book of business but no specialization. How do you specialize in a niche?
First, you must focus on the horizontal and vertical:
Horizontal focus is offering a single service to a wide range of industries. You’re looking for a particular problem that comes up over and over. (e.g., We manage google ad accounts to maximize return on ad spend.)
Vertical focus is offering a broader range of services to a specific sector of the market (e.g., We do websites to help custom home builders to find more customers.)
As you’re considering this, also consider the following:
What is the most profitable aspect of your business?
What is it that you do best?
What is it that you love to do the most?
When you find the intersection of all these factors, you’ve found your niche. The specialization will draw people to you to solve their problems more effectively than anyone else – reducing risk for your client. The specialization that will allow you to adopt value-based pricing and deliver enormous difference to your profit margins – the difference that will propel you above $1 million in sales.
(Learn more: read my article, ‘How to specialize your agency.’)
3. Position your service
You now know who you are marketing to and what service you will provide. It’s now time to position your service for easy sales by marketing yourself with a positioning statement. This should cover five points:
Who you work with
The problem you solve
How you solve that problem
The benefit you deliver
How you are unique
(Want to know how to do this? Read our article, ‘Developing a positioning statement.’)
4. Test and iterate
If you don’t find the fit to satisfy the market right off, you need to iterate and develop a service product that can satisfy. Do this gently.
Make small changes and test responses. Such iterations might include how you price (for example, competition-based pricing, tiered-pricing, or value-based pricing – or a combination). The elements you have, the timescales of delivery, and so on.
Measure your product-market fit as you iterate. You should see deals moving more quickly, more eager buyers, higher margins, etc.
The power of knowing where your product services fit in the market
When you learn where your product services fit into the market, you’ll find that the potential for your business to grow is unleashed, as did my client Bridget Ingebrigtsen.
In 1998, Bridget started work as a freelance writer. She was making money, but it was inconsistent. Certainly not enough to sustain her as a profitable career. She explained, “I didn’t feel like my bank account ever reflected the amount of work I was doing or the effort I was expending. I didn’t see how I could have my own successful and profitable business while raising a family.”
We explained to Bridget that she needed to find the right market and evolve her business model by stepping away from charging hourly rates. Coaching Bridget, we identified that her niche was working with small business owners who needed help building their businesses and did not have full-time marketing staff or assistants.
Bridget’s business began to grow, producing consistent profits, and she was able to expand by bringing in outside talent and resources. This isn’t to say that Bridget stood still. She continued to iterate and adapt to take advantage of new opportunities, eventually “putting the entire puzzle together.”
You can read more about how Bridget took our advice and transformed from a freelancer into the confident owner of a viable, profitable small business in our article, ‘Moving in the ‘write’ direction.’
Your service market fit is constantly evolving.
To maximize your sales and profits, you must make offers that your target market wants to respond to. You’ll need to pick your niche, position your business, and test and iterate to develop your service market fit.
The potential benefits are enormous. Instead of working so hard to push your service, clients will come to you. Consequently, you will improve your pricing as you deliver the value solutions that clients will be happy to pay for.
However, developing your perfect service market fit is not a one-time event. You must continue to revisit and evolve as your customers’ needs change and your business grows over time.