Targeting III

Targeting generally involves ranking customer segments on two dimensions: cost to grow  and potential to grow. 

Being second or even third choice for some customers is okay, but you want to be the first choice for a certain group of customers.  The big question is: which ones?  Targeting generally involves ranking customer segments on two dimensions: cost to grow  and potential to grow.  Cost to grow refers to the incremental investments that you would have to make to enjoy more business from a given customer segment.  

Potential to grow refers to the realistically available opportunity should you choose to make these investments.  Segments that offer the best combination of relatively high investments.  Segments that offer the best combination of relatively high growth potential and low cost are obviously the most attractive.  The art of targeting is determining the criteria that should be considered in calculating cost and potential to grow.  The science is collecting and analyzing the mass of quantitative data required to score each segment on each criterion.

ACTION POINT: Consider the cost to grow and the potential to grow of the market segments you are targeting.