80/20 David and Goliath: The Power of Ideal Clients

80-20 David Goliath - Power of Ideal Clients

Your prospects naturally compare your business to what they perceive as your competition. If you want to get leads and acquire customers efficiently, you have to choose your market and ideal clients carefully.

It turns out how we feel about our achievements is relative to how we measure ourselves. How we perform in the future, is impacted by how we relate to the results of the measurement.

Harvard or MIT

If you graduate at the top of your high school class, you might feel pretty good about that. So you head off to university thinking you were the smartest person in school. But the institution you choose is fed by hundreds or many thousands of high schools – all people who are also academically accomplished.

So you go from the little pond, to the big pond.

Then let’s say you go to a prestigious university like Harvard with higher than average entrance requirements. You are now with the brightest of the bright.

This situation is the premise of one of the examples in “David and Goliath” by Malcolm Gladwell.

Now to be sure, it is not just raw intelligence that matters. Everyone tends to have talents that seem natural and become their developed advantages. So some of the people arriving at Harvard may be smarter, and some may have had more preparation or practice – or both.

Everyone in a prestigious school doesn’t get the same grade. Some will struggle, and some will be at the top of the class. There will still be both a bottom 20% and a top 20%.

Remember that the people in the bottom of the class at Harvard -because of the tight entrance requirements – were near the top of their classes in high school.

Interestingly, the bottom performers at Harvard may feel just as bad about their performance, or worse, than the bottom performers at a school with less strict entrance requirements. They still drop out or switch to something less demanding. Losing still hurts. Maybe when you usually are on top, it is even harder to take.

Here is the other thing.

The people who perform at the top 20% of their class at Harvard have more confidence and go on to greater future academic and other success than their peers. So do the top 20% of people who graduate from tier 2 schools.

Who you measure yourself against is extremely important. And so is your attitude about that measurement.

Most of us measure ourselves relative to our peers, not the more significant population as a whole.

If you are entering a bigger, more competitive pond, it is much harder to be the big fish.

The 80/20 Education

Here is my theory about how this is the 80/20 rule at play. Keep in mind; the exact percentages don’t matter as much as the concepts.

As I mentioned in my prior post, The 80/20 Go-Giver, the 80/20 rule is fractal.

Pareto 80-20 Rule Business Ideal Clients

For our purposes that just means if I take the top 20% of a group, the performance curves will still be the same shape for that smaller group. I can again break out the next top 20% who achieve 80% of the results. You can keep going as long as the sample size is big enough.

In the Harvard example, we see that top schools are probably recruiting from the top 20% of university applicants which is around 40% of high school graduates or the equivalent about the top 8% academically of high school graduates. They don’t select them all, but it is an elite selection pool.

Even people in the bottom of the class at Harvard were likely from this pool.

If they are in the bottom of the class their beliefs in themselves are lowered, and they don’t perform as high as the people in the top 20% graduating from a university with lower entrance requirements.

The school you go to plays a role in success. But, where you place relative to your class and how you feel about your place in that group has a significant impact on your future success.

Arrows in Bulls eye Ideal Client for Target Market

The Power of 80/20 Ideal Clients

When applying this principle to your business, two factors come into play:

  • How do you see yourself relative to your competitors?
  • How do your prospective clients perceive you relative to your competitors?

When you are starting and building your business (or professional) credibility, you ideally want to go back to being the big fish in the little pond.

This approach will mean you are not comparing yourself to the industry giants who can offer lots of different solutions to many different client segments – and they already have significant brand name recognition.

Who will benefit the most from what you do? Who will get the most value and be most likely to talk about it?

Being the big fish will likely boost your sense of worth and achievement.  It will undoubtedly increase your prospect’s perspective of you. Both of these lead to greater early success because there is no disconnect.

They give you the powerful social proof and testimonials you need to both get out of the little pond if you want to or to serve the small pond well – if that is where you want to stay. You don’t want to be in the bottom 20% at Harvard you want to be in the top 20% in your school.

Don’t think top 20% to start. That is likely still too broad even in B2B.

Go fractal:

  • The top 4%. (The top 20% of the top 20%.)
  • Or better yet, the top 0.8% (3 levels deep)
  • Or…

How specific about your niche would you have to get?

How would you target that group?

Ultimately you can market a lot more heavily into a small niche than a large market for the same budget. When you consider getting attention may require 10-50 touch points you then understand the power of focus in your marketing and sales activities.

You Don’t Have to Stay There

After you reach critical mass in your target market, you can branch out. However, because you are an authority in one area of expertise, you can use that to jump to related industries or markets.

As you grow over time, you can become a bigger fish in a more substantial pond.

Who is your perfect or ideal client right now? Find their pond.

Bonus – Leads from Pond Jumpers

Most business owners worry that if they get too specific about their target market and ideal clients, they will turn away other companies that could use their services.

In countless examples, the opposite happens.

Whether it is the exclusivity attracting them, or they see a similar need or benefit, people will find you and line up to get the results you are providing.

It is up to you to decide to let them in or focus on your current niche.

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Publishing History: This article was updated on 18 October 2017 and originally published on 15 January 2015.

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About the Author:

Doug Wagner is an entrepreneur, President and Co-founder of Sunwapta Solutions. Sunwapta's mission is to help businesses transform from surviving to thriving, sustainable growth. From strategy to implementation, this means marketing, sales, managing your brand and delivering consistent value. Get more clients and keep them.