Last month, I asked everyone on this list what’s stopping you from finding opportunity despite the economic headwinds—instead of putting your competitive advantage at risk by tightening your belt.
Many of you replied that you’re already seeing shrinking revenue from your core offerings and customers. People are adjusting to inflation and preparing for recession.
You need to protect your business.
But a few of you have also spotted opportunities.
One common theme: Moving upmarket. Some readers told me they’re thinking about growing new revenue by developing customer segments who can and will keep spending. Not just now, but for the long term.
What’s standing in the way is uncertainty about who to target and how to bring these buyers into the fold. Quickly. With minimal risk. And with the buy-in and support of their organizations.
In my experience, there are a few key steps required to turn uncertainty and doubt about moving upmarket into a wild success. Here’s the playbook:
1. Realize that your assumptions about what less price-sensitive customers need and want are likely off the mark
You aren’t serving these upmarket customers all that well today, if you’re serving them at all. If you were, the problem would already be solved.
Maybe your staff are familiar with them because, from time to time, they end up in your funnel or store—even though your marketing, assortment and customer experience aren’t optimized to their needs. Perhaps they’re part of the segmentation or personas your teams use to consider new messaging, offerings and experiences.
But if they aren’t your core customer already, doing more of what you do today isn’t going to be enough.
What to do:
Find out what these people are really about with the right kinds of customer research. Don’t rely on typical market research approaches like surveys, focus groups, data analytics or gathering the perspectives of front-line sales staff. These do a great job of optimizing what your organization already believes, and a poor one of revealing new directions.
To discover deeper, truer sources of value, turn to more ethnographic techniques. Some example are exploratory interviewing, participatory design workshops, and in-office, in-home or in-store immersion. These allow people to reveal important aspects of their needs and wants that you otherwise wouldn’t even know to ask questions about.
The result is a set of specific, high-opportunity targets, coupled with a deep understanding of what they value most, and how to best deliver it.
2. Determine where your capabilities align with what matters most to upmarket segments
To build on your new understanding of these higher-value customers, you need to figure out how what you do now, or could start doing in the short term, aligns with what deeply matters to them. The better the fit, the more people you’ll attract, the more they’ll spend, and the longer they’ll stick around.
Can you add to or reposition your assortment? Should you modify key aspects of the digital or customer experience? Do you need to shift your marketing messages or channels, or create a compelling new product or service?
What to do:
It’s critical to engage the people on your team who will be executing this evolution of your business early in the process. Their insight into what’s feasible and desirable to take on minimizes implementation risk, and maximizes the value of the final result.
To do this, bring the team together for a cross-functional ideation workshop. Based on what you learned from customers, what new initiatives and offerings (from mild to wild) can they imagine, and what would they prioritize?
The result is deeper buy-in, as well as a clear line of sight into the kinds of opportunities that are the most promising and most realistic to deliver on.
3. Launch a hero offering that focuses your organization on bringing these new customers into the fold
Now that you’ve identified who you need to attract, what matters to them, and what your business is willing and able to do about it, it’s time to prioritize the highest impact opportunities and drive execution.
There are a few key aspects here often overlooked in traditional growth and product strategy:
- Ensure your new direction is highly visible and attractive to your target customers. Often what feels like a major change to those inside the business can be invisible to outsiders.
- Develop one shared ‘North Star’ offering that crosses organizational silos. Without deep coordination, execution risks a scattered set of low- or no-impact outcomes. Focusing all the initiatives required to move upmarket on a single visionary goal leads to greater momentum and results.
- Think incrementally and launch fast to minimize risk and maximize results. An ideal hero offering is one that gets into market early—even if you need to limit scope—so it can generate real-world data about what to develop and invest in next.
What to do:
Don’t leave it to individual parts of the business to identify how they’ll execute on your strategy to move upmarket in isolation. Instead, go back to the outputs of your ethnographic research and your cross-functional ideation. Using them as inputs, design a singular hero offering that draws upon capabilities across the organization.
If everyone rallies around the same mission, you should be able to get an initial version in front of your customers within the next 3–6 months.
4. Don’t just survive. Thrive.
Growing into upmarket segments isn’t just a way to replace lost revenue. It’s an opportunity to shift your entire organization’s focus from managing crisis to achieving success. Why spend the next two or three years surviving, when you could be thriving?
We know affluent and high-net-worth segments well. Over hundreds of research and innovation encounters, for firms spanning financial services, luxury retail and hospitality, and packaged goods, we’ve learned that understanding and serving these individuals poses unique challenges as well as compelling opportunities.