Startups Must Focus Their Initial Use Case

As a founder of a hardware or software platform with potential applications across many markets, it’s natural to want to showcase your solution’s broad capabilities to investors, customers, partners, and distributors. The cumulative opportunity is indeed massive. However, to successfully raise money and execute effectively, you need to focus on a single use case.

To capture attention during your pitch, you must identify a clear target market and a compelling pain point that your solution addresses. This is most persuasive when built around one type of customer and related pain points, demonstrating your deep understanding of their specific needs. If you try to cover too many use cases, your pitch risks sounding overly broad and generic.

What is a Use Case?

A use case for a startup company is a specific example of how the company’s product or service will be used by a target customer to solve a particular problem. In essence, it’s a scenario that demonstrates the practical application of the product to fulfill a need, providing a clear picture of its value and relevance in a specific context. For a startup, defining a use case helps clarify the target market, refine the product’s features, and strengthen the pitch to investors and stakeholders. The main elements include:

1. Target Customer: The specific type of customer or user that the startup’s product is designed to serve. This includes demographic or business profile details such as industry, size, or role within a company.

2. Pain Point or Problem: A clear description of the challenge or problem the target customer faces, which the product or service addresses. This should be a real, pressing issue that the customer needs to solve.

3. Solution: A concise explanation of how the startup’s product or service directly addresses the pain point or problem, highlighting unique features or capabilities.

4. Value Proposition: The main benefit the customer will gain from using the product or service. This could be cost savings, time efficiency, quality improvement, or other specific advantages.

5. Customer Needs and Expectations: Any specific requirements the customer has for the solution to be successful, such as ease of use, compatibility, reliability, or particular features.

6. Competitive Advantage: How the startup’s solution is superior to alternatives on the market, outlining unique aspects that make it the best fit for this use case.

7. Metrics for Success: Quantifiable outcomes that indicate the success of the solution for this use case. Examples might include reduction in time, increase in productivity, customer satisfaction scores, or cost savings.

8. Example Scenario (Optional): A hypothetical narrative that walks through the steps a target customer would take to use the product in their day-to-day operations. This scenario brings the use case to life and helps investors or stakeholders visualize the solution in action.

Benefits of a Single Use Case

Focusing on a single use case allows you to tell a stronger story, and although it may be challenging to choose one path, doing so provides you and your team with clarity and impact. Here are the reasons why homing in on one use case is crucial:

1. Enhanced Pitch Clarity: When you target a single market with a single pain point, you can vividly bring that issue to life. Multiple pain points dilute the message and can confuse your audience. It can be too abstract rather than specific.

2. Focused Product Development. Startups often try to build too big of an initial product, which costs more money, uses more resources, takes more time, and introduces more complications. Focusing on a target use case can simplify and speed the process.

3. Technical Feasibility: Different use cases often demand unique adaptations, whether specialized libraries, data sets, interfaces, or compatibility requirements. Attempting a one-size-fits-all solution risks creating an unwieldy product that serves no market well.

4. Aligned Value Proposition: Each market may prioritize different aspects of your platform, ranging from cost to precision. Trying to convey multiple value propositions weakens your message and may lead to conflicting perceptions.

5. Focused Go-to-Market Strategy: Diverse markets often require different sales approaches—consumer direct, major accounts, or distributor-based strategies. Juggling these diverts energy and resources, reducing your effectiveness in any one channel.

6. Maximizing Impact: It’s better to execute one thing excellently than to struggle with many. Consider it like catching tennis balls: if someone throws you five in quick succession, you can catch each. But if they throw all five at once, you’ll likely end up with only one or even none.

Focusing on a single use case also lets you map specific pain points directly to your value propositions, customer needs, and competitive advantages. This alignment makes for a compelling story, as in this example:

Starting with one use case doesn’t mean ignoring your platform’s full potential. After establishing traction in your initial market, you can introduce your vision for future use cases to show the broader scope of your platform. The broader uses can be one of the last slides in your pitch deck, showing your startup has space to expand.

Criteria for Choosing Your Initial Use Case

Selecting your first use case is a strategic decision and shouldn’t be based solely on market size. Consider these additional factors:

• Time to First Revenue: Early revenue can fuel growth and attract investment. The ideal market might be one where you have existing relationships, urgent demand, or rapid decision-making cycles.

• Tolerance for an MVP: Some early users may be more forgiving of a minimum viable product and willing to work through issues, whether with feature gaps, a rougher interface, or stability concerns.

• Availability of Partnerships: Strong partnerships can ease market entry. If you have industry partners eager to collaborate, this might be your most viable initial path.

• Access to Grants or Non-Dilutive Funding: Certain use cases may align with funding opportunities, helping to subsidize development without giving up equity.

In the end, this focused approach is about telling a powerful story with a single use case. After gaining traction, you’ll be in a stronger position to expand and convey your broader vision. This is a challenging choice but an essential one for startup success.

Towards Needs-Based Segmentation

Most companies try to segment their markets, and most do it badly. So many work for months to create a "universal" segmentation scheme, only to make things worse. Here is a better way to think about segmentation.

First segment customers differently than prospects. It makes sense to segment customers based on factors such as 1) total revenue for the account, 2) higher versus lower price plans, 4) products purchased, 4) potential revenue growth, and 5) length of time as a customer. These factors may reflect the different needs or value of customers. These types of segmentation can help the customer service team discriminate by the level of service -- phone versus email-only support, phone center hours, phone wait times, etc. Segmentation for prospects should help target the right messages at the right buyers, so separate prospects based on needs. Prospect segmentation can also help define which marketing channels to apply to which targets, which is more a measure of the revenue potential.

When thinking of needs-based segmentation, this article and video from Clay Christensen offers great advice. He calls his talk "Milkshake Marketing", and poses the question "for what task does the customer want to 'hire' the product or service"? This approach requires some fundamental thinking about the role of products, and goes way beyond traditional demographic analysis. It can lead to new insights about customer needs, and can target messages more accurately.

At the same time, marketeers must ensure their segmentation schemes are actionable. This may run counter to some of the Milkshake Marketing insights. But in the end segmentation needs to drive action programs, or else it is purely an intellectual exercise.

Create Demand for Your New Category

I often get pulled in to marketing discussions about whether to lead with brand or with category. We usually go round and round, and never resolve it. 

However, the book Origin of Brands puts this argument to rest and provides great advice around building a brand. The authors are Ries and Ries, the senior of which co-wrote the seminal marketing book Positioning.

Their premise is that brands (like species, thus the title homage to Darwin) are constantly splitting. For example, about 70 years ago computers were a single category. Now we refer to desktops versus tablets, and 7" tablets versus 9" tablets. Every sizable category may split if there is customer demand. 

As a result the authors recommend that marketers build their brands in the following way:

1. Name and create your new sub-category. Identify a sub-category that meets a need better than the original, broad category. 7-up did this when creating the "un-cola" sub-category for people who want a soft drink but not a cola. And Google did this by creating the 7" tablet sub-category, for people who want the tablet format of an iPad, but in a size that fits in the hand.
2. Promote your category. The authors recommend using PR rather than advertising for this. But I am confident they would recommend Social Media as well today, with the advent of Twitter, Facebook, and Google+. The key is to get the audience to want to buy they new sub-category. The authors use the example that a TV viewer goes into the kitchen to get a light beer, not a Coors Lite; they select the category they want, then grab the brand that best fulfills it.
3. Deliver on the promise as the best product or service in that category. Be the best company at delivering on all the customer expectations for your category. Make sure you are number 1 in reality as well as perception, and you never let that slip. 

By so doing, companies can win the "top rung" on the positioning ladder -- the core theme of Positioning. Owning the top rung of a substantial new sub-category is far more profitable than being an also-ran within a larger-but-established category. Some would argue that a new product should be 10X better or cheaper than the current options, or else there is no reason to launch it.

I believe this lays out an effective blueprint for marketing. Many of the examples in the book address consumer marketing, but I find the approach applies equally to business marketing. 

This approach also gives a real purpose to the use of social media. Many companies today lack focus for what they want to do with social media. Engage with customers? Promote their features? Share funny cat videos? The primary role of social media should be to create demand for the sub-category, rather than pump out the equivalent of product brochures on Facebook. That is why so many marketeers today embrace the idea of content marketing, which delivers value to the audience. 

What sub-categories have you created? Are you creating demand for your new sub-categories?

Lead With the Pain Points

I frequently share Dave McClure's rant about pain points (link to article) when I talk with CEOs and CMOs about messaging and value propositions. He points out the importance of taking the perspective of the customer and the need to consider the customer's pain points. 

Too often marketing presentations and pitches focus on the product features or the team. The pitches take the perspective of the presenter, rather than the audience. Sometimes they describe a big trend -- such as social or mobile -- suggesting everyone who rides the trend will win. Even when I see a list of benefits, they often lack context about the target customer, the use case, and the pain points.

Instead I encourage people to write pitches following this outline:

1. Who is the target customer, and what is the use case and current pain point? Think of this as a qualifying question, that the audience will be interested in hearing the rest of the presentation only if they match that target and can related to the pain point.
2. How does the product or service address that pain point? Specifically map the product benefits and features to the pain point. Avoid throwing in some pray-and-spray features hoping to broaden the appeal. Matching product to need is more important than providing a sea of benefits. 
3. Why is your company uniquely qualified to provide this product of service? Specify the experience, assets, or qualifications that tell the audience you will deliver. 

Give it a try. It takes some hard work. And it takes courage to aim each pitch at a specific target.