DEFINING THE RIGHT CAPITAL INVESTMENT TARGET
Nothing can add more power to your life [or program] than concentrating all your energies on a limited set of targets
Quote attributed to: Nido Qubein
One of the most critical steps in any place branding effort is to get clarity on WHO you are trying to communicate with. Lack of target clarity leads to inefficient investment and ineffective promotion. Taking the time to get the target definition right pays dividends by helping you make operational choices on which media to include in your promotional mix, and importantly which not to include.
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To find real world examples of how most EDOs define their targets, I did an online search for “economic development strategic plan”. Here are a few of the target descriptions I found in those plans. Note, in each case, strategic planners made a classic mistake – the defined targets are too broad to really help in making choices. Each of the cities below has selected huge industries with thousands on companies in them to pursue. As a result, investment in marketing and sales will be highly diluted and likely ineffective. In all cases, the right targets are likely a subset of the industries identified. These are called your prime prospects. The argument for the current approach is this is how NAICs describes industries and reports data. But, in my experience, if economic development professionals want to use NAICS they need to peel the onion back at least one more layer before they will be able to create a list of specific companies and CEOs to target. Doing so dramatically increases the odds of place marketing success. Developing mobile apps for the medical industry is the first step towards more reachable medical care. Healthcare industry can benefit greatly from proper software like the ones on https://www.foreseemed.com/predictive-analytics-in-healthcare.
City of Pasadena – Market Pasadena as a finance, healthcare, design, engineering, and innovation hub.
City of Arcata – The six targets of opportunity are (in order of decreasing total employment): 1) Diversified Health Care, 2) Building and Systems Construction and Maintenance, 3) Specialty Agriculture, Food, and Beverages, 4) Investment Support Services, 5) Management and Innovation Services and 6) Niche Manufacturing.
City of Portland – Grow traded sector jobs through the implementation of a cluster strategy targeting four industries: 1) Clean Tech and Sustainable Industries, 2) Activewear, 3) Software and 4) Advanced Manufacturing.
I truly understand why the above plans read the way they do. I made the exact same mistake when leading the marketing of Ohio. One of the targets we identified was the Aerospace industry (2012 NAICS 3364). This is a huge industry and one Ohio has a concentration of businesses in. Consequently, it made logical sense to pursue and the fact there was available NAICs data reinforced our choice. But, when we convened panel of industry leaders to discuss how to translate the Ohio promise in a way that delivered against industry needs, we discovered our error. The panel told us the only area within the aerospace industry Ohio had a competitive position in was aircraft engines (2012 NAICS 336412). This insight allowed us to work with a much better targeted subset of companies. By focusing on the aircraft engine and engine parts sub-industry we were able to develop an actionable list of both companies and CEOs that we could actually afford to communicate with on a frequency that would make a difference. It made a huge and positive difference in our marketing/sales approach.
So What Does A Good Target Look Like?
I think a good target definition must be able to pass these three tests –
Test of Sufficiency. Is the target group large enough to deliver the results you need? Are there enough members in the group that (with reasonable assumptions) your capital attraction, retention, or expansion targets can actually be achieved?
One common mistake is to define a target so narrowly that it requires above average success to deliver the goal. This allows no margin for error and the probability of success is low.
As illustrated in the examples about though, another common mistake is to assume that broadly defined target groups deliver more success than narrowly defined. Practically, if you can’t afford to communicate with the companies in a broad target on a frequency that will make a difference, your effort will be underpowered for success. In my experience, it is typical that a small percent of your possible target will actually contribute to delivering your goal. The more tightly you can define the target, the better your odds of success in generating real leads.
A good working rule of thumb is to make certain the target list you end up with is large enough you can miss your base lead conversion assumption by –20% and still hit your capital investment objective.
Test of Meaningfulness. Is your location’s business climate and asset portfolio relevant and appealing to the target group you have defined? What is your right to win with this group versus your location competition? Does your location meet the important current and future needs of your target? Remember, needs are not only functional, they can also be emotional.
Test of Actionability. Do you know the target well enough to be able to translate your location promise into a compelling message and communication plan? Do you have sufficient resources allocated to deliver a sustainable reach and frequency of message to create attention, interest and desire? Is the target definition specific enough you can generate an actionable list of companies and their respective CEOs to communicate with?
Remember, in order to be actionable a communication plan must fit your budget. It is almost always a much better decision to narrowly focus your target so you can invest more per target in getting your marketing message communicated.
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