Growing a startup is challenging and this is the reason why 50 percent of them fail in the first two years. There are several reasons why any startup or why most of them fail. Not having a proper understanding of target audience is a major hurdle to startup growth.
When I talk to startup founders and ask if they have created a buyer persona, the look on their face tells the whole story. I don’t get surprised when a co-founder of a startup tells me that he doesn’t know anything about buyer persona.
How can you create a whole business without having a clear understanding of who your target audience is? What if the product you’re offering them is not what they're interested in?
Your target audience is what should drive your startup. Here are a few reasons why your startup is struggling or will struggle or won’t be able to grow if you don’t know your audience inside out.
1. No clue of demand.
Is there are a demand for your product in the market? Do people really want to buy what you’re selling (or will sell)?
The number one reason why you should understand your audience is to determine the demand and desire for your product.
If there isn’t enough demand, your startup will eventually fail. Just because a few people who are close to you love your product and are dying to use it doesn’t mean it is something that everyone will buy for an indefinite period of time.
Understanding your audience will help you forecast the current and future demand for your product. When collecting data from your audience, your focus should be on the future demand. Will they be interested in the same product in 5 years or 10 years?
Here is the problem.
Most startups don’t measure or predict future demand and that’s what hurts their growth the most. Especially, if your startup is linked to or work closely with other businesses. Consider Buffer which is a social media platform tool that’s in high demand today. But its growth and even existence are related to social media sites.
If social media platforms cease to exist in next couple years, Buffer will go out of business.
The thing is, if your startup is closely related or dependent on other businesses, you have to do a lot of homework in terms of future demand.
2. No idea of whom you compete.
Understanding your audience helps you identify your top competitors, their strengths, and weaknesses. Do current competitors miss something that audience is still craving for?
If so, what are the chances of your startup’s success if you offer that ‘missing’ feature? What will be your product’s demand then?
What if one of the competitor’s (or all of them) offer the same ‘missing’ feature after a few years?
If you know your audience and you have invested heavily in market research, surveys, and interviews, you'll be in a much better position to understand how your audience will respond to your startup.
When collecting data from the target audience, you need to make sure to consider your competitors seriously. They will definitely know this ‘shared target audience’ better than you because they always have action-based and behavioral data. This puts your competitors in a better position to understand the audience.
You should do your homework seriously. Not knowing your competitors or taking them lightly is a lethal mistake that could cost you a lot. That’s where understanding your audience will help a lot.
3. Misconception about market size.
What is the size of your target audience? How many people are interested (or will be interested) in your product?
If you collected enough data for demand and competitors, calculating an estimated current and future market size won’t be an issue.
If you have identified your competitors, analyzing a few of them will reveal the estimated market size. But don’t just stop there.
You should also calculate the estimated future market size. A customer today won’t be a customer tomorrow. And someone who is interested in your product today might not be interested in your product tomorrow. How your audience behavior has changed in the past and how it is expected to change in the future will help you determine the actual market size.
Understanding your audience is indeed challenging and this is why most startups don’t like wasting their resources on it. The rule is simple, the more you know your audience, the better.
It will be best if you do market research prior to launching your startup as it will help you get better at marketing. When you know what your audience is after, marketing and selling become easier.
On the other hand, if you have no clue of your audience, starting might be easy but growing your startup will become a lifelong challenge.