Command Your Niche With Credible Stretch Sales Goals That Don’t Tank
Unicorns exist in business. Take Apple; they created a generational disruption with the introduction of the iPhone. With each product iteration, they expand globally and capture millions of users. People all over the world stand in lines to pay a significant amount of money for their products. If you find yourself in the same place as Apple, amazing, don’t bother reading the rest of this. However, if you’re like the rest of us, finding ways to balance “size-of-prize” market potential with credible stretch sales goals (CSSG) becomes tricky. It requires an honest look at your business and setting realistic sales goals.
Where To Start?
Don’t start with the question, “How big do I want my business to be?” Instead, you should be asking the questions, “What is the size of my addressable market,” “Who values my product or service the most,” and “Do I fulfill an unmet need in a unique and compelling way?” In short, “What niche of customers do I have the most compelling right-to-win with?”
As your business begins to scale, competitors will take notice, and new market entrants may form. This is the time to set CSSG. A plan to achieve a 10% market share is not the same as 40%. What I mean by this is, 10% of a $1B addressable market is not the same as 40% of a $250M addressable market.
Create A Stretch Goal That Doesn’t Tank.
In 2017, the Harvard Business Review published an article titled, “The Stretch Goal Paradox,” in which authors Sim B. Sitkin, C. Chet Miller, and Kelly E. See outlines how stretch goals are often widely misunderstood and misused. See, Miller and Sitkin highlighted that “true stretch goals differ from ordinary challenging goals because they demonstrate extreme difficulty as well as extreme novelty.” In addition, many executives set stretch goals (often several at a time) without committing the necessary resources needed to accomplish them — failing.
For this reason, we encourage our clients to set credible stretch sales goals. In order to avoid the stretch goal paradox, organizations must ask themselves if sales goals are right-sized for them and credible given the addressable market.
When your organization is ready to set credible stretch sales goals, they should first identify a niche or a segment of the addressable market. Focus on a niche that views your sales proposition as the aptest to solve the problem they are facing. Be sure that this niche does not have special conditions that will limit launching your product or service into adjacencies later.
Next is where honesty kicks in. You must ensure that your business has had strong recent performance (also known as customer traction) within the addressable market. A company with passionate early adopters and a strong performance record will scale with adequate resources and motivated employees. If an organization attempts to implement CSSG immediately after a setback or during a loss, without a thoughtful pivot, failure is likely. If an organization attempts to implement CSSG without adequate resources, failure is inevitable. Employees are motivated when resources are right-sized to accomplish today’s tasks. It is also great to have validation that companies are interested in the current product/service. CSSG should be hard but achievable. Selling to the entire world from day one is a stretch but not credible. However, setting stretch goals at the right time with the right team is credible.
Not All Effort Is Equal.
Defining CSSG within a niche requires effort. When you seek to command a well-defined space, you give a business focus and clarity. The prioritization of projects and initiatives that your organization has authority over will become easier to define, and financial return will look more pragmatic. However, this often prevents a business from scaling up effectively because they do not know where to focus. As a scaling organization, it becomes even more important to recognize when to say “no” when you have limited resources. Scaling successfully is understanding that narrowing your addressable market and focusing your resources is not limiting growth but enabling it.
Lastly, saying “no” to certain potential customer segments or markets will not limit your access to capital funding sources or sale partners. Being pragmatic with your organization allows you to understand your space well enough to carve out right-to-win opportunities and use capital resources more wisely. When you command your niche, you become more credible. And when you are more credible, you can set attainable stretch goals. So unless you are sure you are a unicorn (check for a horn sticking out of your head), CSSG will prevent you from tanking.