WEBVTT

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- [Instructor] In our module introduction,

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we talked about how you
create leverage as a great PM

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by aligning your work
to multiple dimensions

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of your product strategy.

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We also discussed how most
PMs have a basic understanding

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of their product strategy but
lack the next layer of depth.

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They need this additional
depth of understanding

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because it helps them
create leverage in two ways:

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knowing what feature
work to modify or avoid

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and knowing what feature
work to heavily invest in.

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In this lesson, we'll talk about

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how to get to that deep
level of understanding

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for the first dimension
of product strategy,

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target audience.

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We start with this dimension
because it directly impacts

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the rest of the product strategy.

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In other words, changing
your target audience directly

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will change the problem
set you can solve for

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which then will change the
range of value propositions

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you can offer.

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These three early changes then affect

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the remaining dimensions of strategy

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making them fundamental to
deeply understand first.

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To illustrate this,

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let's examine how Slack's product strategy

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would completely change

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if they focused on online communities

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instead of workplace collaboration.

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Let's first go through Slack's
current product strategy

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given their workplace collaboration focus

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and then dive into how
each strategic dimension

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would change if they shifted
to online communities.

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First, Slack's current problem they solve

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in workplace collaboration, is
facilitating quick decisions

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and reducing cost of communication.

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They do this via their value proposition,

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saving time by tearing down
communication barriers.

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They differentiate by finding
novel and innovative ways

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to create worker productivity

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especially compared to additional
communication paradigms

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like email.

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Their dominant acquisition strategy

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is viral Word of Mouth signups

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powered by referrals from existing users

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but they also have a dedicated sales team.

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As a freemium company,
they have a free plan

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that is supplemented by several
tiers of premium paid plans.

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They allow users to build
a habit on the product

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and then create an incentive to upgrade

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after the usage habit is established

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by limiting the free plan message history

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to 10,000 messages.

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Now let's explore how
changing the target audience

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completely shifts this product strategy.

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If slack focused on serving
online communities instead,

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they'd have a completely
different problem to solve.

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Online communities tend to need

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strong community moderation capabilities

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to keep them manageable

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and powerful community
discovery capabilities

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to power user engagement.

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Since the problem solved
in value proposition

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are so closely tied to each other,

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this then means Slack's value proposition

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would pivot to focus on automating

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the painful parts of community
moderation and discovery.

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Changing the problem being solved

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also affects the
competitor Slack would need

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to differentiate against
and how they do so.

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Instead of being great
at creating productivity,

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they'd focus on being great

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at community management and growth.

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Additionally, since online communities

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generally have lower ability
and willingness to pay

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than companies,

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Slack would not be able
to rely on a sales team

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powered acquisition strategy.

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They have to power themselves
purely on Word of Mouth.

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Finally, this difference
in willingness to pay

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also affects their monetization strategy.

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Since they might get far too low

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a premium to free user
ratio to sustain themselves,

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they might have to pivot

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to something like an
ads based model instead.

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In conclusion, changing
the target audience

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heavily affects the other dimensions

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of your product strategy.

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Accordingly, it's critical

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that you have a deep understanding

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of who exactly your target audience is.

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PMs sometimes have a
surface level understanding

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of target audience

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and consider it to be their
total addressable audience,

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the broad base of people

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the company aspires to eventually serve.

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For example, let's look at
LinkedIn Sales Navigator.

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Sales Navigator is a premium
LinkedIn subscription

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for sales people built to help them find

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and engage with new
prospects and customers.

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The surface level understanding

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of Sales Navigator's target audience

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is that it encompasses all sales people.

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However, the problem with
such a broad surface level

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audience definition

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is that you end up building
an unfocused product.

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When you try to build for
too general an audience,

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you spread your resources too thin

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and end up not deeply solving
any specific audience's needs.

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This then leads to weak product market fit

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which then ultimately
results in low user retention

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and satisfaction.

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For example, let's assume you were a PM

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at LinkedIn Sales Navigator

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who had a surface level understanding

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of the target audience.

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You try to build for the general audience

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of all salespeople.

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However, imagine how difficult it would be

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to create a deep solution
for all salespeople.

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Different types of salespeople

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can have very different priorities.

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Account executives, also known as hunters,

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focus on hunting down new contracts.

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Account managers, also known as farmers,

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focus on maintaining and
expanding existing contracts.

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They have completely unique
challenges and needs.

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If you split your time
trying to satisfy both,

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you likely would come up
with an unfocused product

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that doesn't solve either
segment's needs well.

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Deep understanding of your target audience

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requires that you understand
the narrowest relevant

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set of users for your product.

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Defining your audience tightly is key

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because it allows you to
develop a more tailored product

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and market towards your best customers

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who resonate most strongly with
the problems you're solving

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and are thus the most likely

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to become your products' evangelists.

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For example, in LinkedIn Sales
Navigator's initial product,

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they recognized that they
were not serving salespeople

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in general.

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Rather, they were best
poised to serve hunters

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who did high value B2B deals
in tech and or finance.

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Armed with this understanding,
they focused on developing

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specifically for this
highly narrow audience.

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They deprioritized farmer
account management features

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and instead they prioritized

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hunter account executive features.

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This includes features like TeamLink,

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which allowed hunters
to extend their network

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of potential warm
connections into a company.

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This resulted in Sales Navigator

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finding a strong customer foothold,

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giving them a strong
retaining user base of hunters

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to grow with.

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To advance your understanding
from surface to deep,

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you have to filter down
from your general audience

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into your narrowest target audience.

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We call this method the bullseye approach

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because you can visualize
each narrowing down

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of your audience as a concentric ring

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ultimately creating a
bullseye type of visual.

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The bullseye approach to
target audience definition

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solves the problem of having

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too loose an audience definition

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by starting with the most
general audience possible first

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and then narrowing it down

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until you've gotten to requisite depth.

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In other words, until
you've gotten to an audience

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where you have strong product market fit.

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Indicators of PMF vary by company

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but some common indications
are high retention,

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a meaningfully positive NPS score

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and or significant organic traffic.

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The bullseye approach has
three high level steps:

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defining your total addressable audience,

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narrowing your audience based on segments

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you seem logically poised to better serve

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and confirming your target
audience using live data.

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This approach is captured
on the product strategy map

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under target audience

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so that you have an actionable template

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to fill out for yourself.

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We strongly encourage you to fill these in

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during the content walkthroughs

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to better solidify and
apply your knowledge.

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Documenting your process
through the template

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also gives you an easily
shareable deliverable

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which you can use to align on your team

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or leadership later on.

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To assist in your understanding,
we also provide examples

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of how two companies
would apply the template,

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LinkedIn Sales Navigator and Substack.

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Substack is an online publishing platform

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for subscription newsletters.

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It provides a solution for writers

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who want to get paid for writing

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by allowing readers to pay
for regular subscriptions.

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Now let's go back to how
the bullseye approach works.

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First, start off by defining
your broadest audience,

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the aspirational circle of who
you want to serve over time.

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This is anyone you could serve

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or who could get value from your product.

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This has parallels to your
total addressable market,

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a number that's almost always
findable in your investor

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or board decks since it
is a key financial metric.

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The key difference is
that instead of looking

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for the addressable market dollar size,

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you're more focused on figuring out

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who your addressable audience consists of.

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For example, at LinkedIn Sales Navigator,

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the broad audience was
all sales professionals.

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At Substack, the broad
audience was all writers

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because their product could
fundamentally serve any person

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who wanted a publishing platform.

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Then narrow down your audience.

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Consider which audience segments

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your product may be particularly
well suited to serve.

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These make up your concentric
rings of the bullseye.

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Narrowing your audience is typically done

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by filtering on several common attributes.

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Use case, the specific use case
for which they derive value

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from your product or service.

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Role, the role or department
in which they fall

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within in the organization
adopting your solution.

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Demographics, typical
demographic attributes like age,

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gender, race, income level,
education level, marital status

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and more.

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Firmographics, specific
attributes of the company

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that you are targeting, including
industry, employee size,

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department size, business model and more.

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Psychographics, specific
psychographic attributes

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of potential customers

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including things like
willingness to try new solutions,

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personality characteristics,
personal goals and more.

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This narrowing step might involve

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several layers of narrowing.

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For example, at LinkedIn, they
narrowed down their audience

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first to B2B then to
B2B sales professionals

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that manage more than 100k ACV contracts

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and finally to B2B account executives

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that hunt for more than
100k ACV contracts.

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Their logic was that
their products' main value

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was providing social selling information

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which would have the
highest willingness to pay

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from companies that did high value deals.

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Then within the sales audience,

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account executives would
receive the most value

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since key LinkedIn
Sales Navigator benefits

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like a way to contact the user
and pre-sales intelligence,

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were more relevant to them
than to account managers.

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At Substack, they narrowed
down their audience

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first to writers who wanted to get paid

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because their product was designed

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around monetizing written content.

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They knew they could design
Substack's user experience

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to encourage readers to pay and subscribe

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making it the most attractive
platform for writers

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who specifically wanted
to get paid for writing.

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They then narrowed it down further

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to writers who wanted to be paid

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and who published on a regular basis

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because their product was designed

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to support subscription based writing.

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So to recap, in step two
of the bullseye approach,

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you're narrowing down your
audience based on your hypothesis

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of who your product is
best set up to serve.

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In the final step of
the bullseye approach,

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you'll refine the audience hypothesis

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by looking at actual data

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on what customer segments seem
to be most attractive to you.

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In order to determine
what customer segments

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are most attractive, you might
consider several attributes.

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These attributes are:

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Segment size.

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What is the total addressable
market size for this segment?

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Is this segment large enough to enable you

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to build a meaningful business against it?

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Resonance with value proposition.

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How well does the
existing value proposition

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resonate with this audience?

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willingness to pay.

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Can you effectively monetize
against this audience

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based on evidence of
their willingness to pay,

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available budget, derive value, et cetera?

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strongest delivered value.

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which customer segment is the most engaged

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and the happiest with your solution?

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NPS and retention are
good proxies of this.

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Channel strategy.

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Can you effectively and affordably

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reach this target customer segment

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via your available marketing channels?

00:12:39.970 --> 00:12:41.390
Strategic fit.

00:12:41.390 --> 00:12:44.350
Does this audience fit the
overall strategic vision

00:12:44.350 --> 00:12:45.370
for the company

00:12:45.370 --> 00:12:48.480
especially in light of where
you ultimately want to expand

00:12:48.480 --> 00:12:50.770
with feature products and services?

00:12:50.770 --> 00:12:53.130
When you evaluate your live customer data

00:12:53.130 --> 00:12:55.660
to find which segments
are most attractive,

00:12:55.660 --> 00:12:58.880
you'll commonly end up
with one of two outcomes.

00:12:58.880 --> 00:13:02.540
One, you realize your target
audience is even narrower

00:13:02.540 --> 00:13:04.760
than your original hypothesis.

00:13:04.760 --> 00:13:07.020
Two, you realize your target audience

00:13:07.020 --> 00:13:08.770
is different from what you thought.

00:13:08.770 --> 00:13:12.140
In some cases, the target
audience is refined.

00:13:12.140 --> 00:13:14.170
For example, LinkedIn Sales Navigator

00:13:14.170 --> 00:13:16.920
discovered that tech and
finance account executives

00:13:16.920 --> 00:13:19.370
engaged particularly well after launch

00:13:19.370 --> 00:13:22.560
due to the fact that LinkedIn
overall had a high density

00:13:22.560 --> 00:13:24.480
of tech and finance members.

00:13:24.480 --> 00:13:27.960
These sales professionals got
more value out of the product

00:13:27.960 --> 00:13:31.130
because they had more
prospects already on there.

00:13:31.130 --> 00:13:33.490
This signaled to the Sales Navigator team

00:13:33.490 --> 00:13:37.050
to refine their target
audience to B2B hunters

00:13:37.050 --> 00:13:41.720
with more than 100k ACV
deal size in tech/finance.

00:13:41.720 --> 00:13:45.630
Substack also had a refined
target audience in this step.

00:13:45.630 --> 00:13:47.530
They found that professional journalists

00:13:47.530 --> 00:13:50.220
benefited the most from
Substack's offerings.

00:13:50.220 --> 00:13:52.840
Since they were already
professionally writing,

00:13:52.840 --> 00:13:54.330
they needed to find a platform

00:13:54.330 --> 00:13:56.260
that could financial support them,

00:13:56.260 --> 00:13:58.340
which wasn't the case for hobbyists

00:13:58.340 --> 00:14:00.510
who only occasionally wrote articles.

00:14:00.510 --> 00:14:04.050
In other cases, the target
audience is pivoted.

00:14:04.050 --> 00:14:06.700
For example, consider Notejoy.

00:14:06.700 --> 00:14:08.490
Notejoy is a collaborative notes app

00:14:08.490 --> 00:14:10.160
for teams and individuals.

00:14:10.160 --> 00:14:13.210
It differentiates itself
primarily on the simplicity

00:14:13.210 --> 00:14:17.570
of the user experience being
highly intuitive to use.

00:14:17.570 --> 00:14:19.879
When narrowing down their target audience,

00:14:19.879 --> 00:14:21.490
Notejoy originally thought

00:14:21.490 --> 00:14:23.950
they would best serve
small tech companies.

00:14:23.950 --> 00:14:26.130
These smaller companies
likely would not have

00:14:26.130 --> 00:14:28.450
a formal note software already in place

00:14:28.450 --> 00:14:31.030
and their tech savviness
would make them more likely

00:14:31.030 --> 00:14:32.820
to adopt something new.

00:14:32.820 --> 00:14:35.710
However, Notejoy found
that its most engaged users

00:14:35.710 --> 00:14:39.480
were actually non-tech, small
and medium sized businesses

00:14:39.480 --> 00:14:41.350
like law firms and agencies

00:14:41.350 --> 00:14:43.990
because they had the least tech savviness.

00:14:43.990 --> 00:14:46.770
As a result, Notejoy's
intuitiveness and speed

00:14:46.770 --> 00:14:49.160
was highly appealing to them.

00:14:49.160 --> 00:14:52.830
In contrast, users in tech
didn't value the intuitiveness

00:14:52.830 --> 00:14:55.250
as highly as they did powerful features.

00:14:55.250 --> 00:14:57.550
Additionally, an important nuance to note

00:14:57.550 --> 00:14:58.790
in the bullseye process

00:14:58.790 --> 00:15:00.660
is that refining your target audience

00:15:00.660 --> 00:15:04.300
does not necessarily mean
you are turning people away.

00:15:04.300 --> 00:15:07.510
For example, Substack
isn't actively turning away

00:15:07.510 --> 00:15:11.360
hobbyist writers or writers
who don't care about get paid.

00:15:11.360 --> 00:15:12.780
They're still perfectly happy

00:15:12.780 --> 00:15:15.350
to have them sign up as
writers on the platform.

00:15:15.350 --> 00:15:18.820
Rather, target audience means
that you actively prioritize

00:15:18.820 --> 00:15:21.630
developing for a certain
subgroup of your users

00:15:21.630 --> 00:15:23.860
for whom your product resonates most

00:15:23.860 --> 00:15:26.130
and deprioritize feature development

00:15:26.130 --> 00:15:28.100
for those outside their user group.

00:15:28.100 --> 00:15:30.950
So for example, Substack would prioritize

00:15:30.950 --> 00:15:33.310
feature request from
professional journalists

00:15:33.310 --> 00:15:36.010
over feature requests
that specifically serve

00:15:36.010 --> 00:15:37.510
hobbyist writers.

00:15:37.510 --> 00:15:38.960
So, to summarize.

00:15:38.960 --> 00:15:39.793
In this lesson,

00:15:39.793 --> 00:15:42.370
we covered how to develop
a deep understanding

00:15:42.370 --> 00:15:44.230
of your target audience.

00:15:44.230 --> 00:15:45.850
Using the bullseye approach,

00:15:45.850 --> 00:15:48.330
you went from the typical
high level understanding

00:15:48.330 --> 00:15:49.740
of your general audience

00:15:49.740 --> 00:15:53.320
to deep understanding of your
narrowest target audience.

00:15:53.320 --> 00:15:55.350
When you connect this deep understanding

00:15:55.350 --> 00:15:56.620
to your product work,

00:15:56.620 --> 00:15:59.550
you'll develop features and
products that better resonate

00:15:59.550 --> 00:16:00.980
with your core users

00:16:00.980 --> 00:16:04.120
leading to higher retention
and user satisfaction.

00:16:04.120 --> 00:16:05.920
Without this deep understanding,

00:16:05.920 --> 00:16:09.130
you run the risk of developing
less focused products

00:16:09.130 --> 00:16:11.890
leading to poorer product outcomes.

00:16:11.890 --> 00:16:14.100
In the next lesson, we'll
cover how to develop

00:16:14.100 --> 00:16:16.853
a deep understanding of
the problem you're solving.