One of the key areas that is very important to understand about your business is your target market. If you are not sure who you are selling to, this could be the downfall of your business without you even understanding why. I do not know how many times I have been involved in a networking event and met a business owner that told me that their target market is everyone. Narrowing down your target may sound limiting, but if you think that your products and services are for everyone – this could end up costing you dearly in the end.
Your target market by definition is a group of consumers or businesses that are the most likely to buy from you. If you are saying everyone is your target market, let me walk you through why this could be a costly mistake.
Understand who is best suited for your product or service
When you develop a product or service, you need to specify exactly in your mind the following:
- What pain or problem does your product or service resolve?
- Is this a consumer or business product or service?
- Who will actually benefit from the product or service?
- Entire business, group within business, or individual
- Sex, Age, Culture, Race of consumer
- Who is the economic buyer for the product?
- Who in the business will make the buying decision?
- Who is the actual consumer buyer?
- Ex: Do men buy this for women versus them buying themselves?
- What industries can best utilize this product or service?
- Do you have experience in certain industries with the products/services or existing customers to draw on for testimonials?
- Can only certain industries benefit from the product or service?
- Ex: Can only manufacturers of a certain type benefit from the product or service?
- What is the demographic for the product or service?
- Are you selling your product or service locally, regionally, or nationally?
- Are there other geographies that are suited for the product or service?
Look for the Most Obtainable and Likely Target
Once you answer all of the questions above, focus on who is the most obtainable and likely target based on your current resources and your sales and marketing budget.
For us, small business is our target market, but small business is defined differently based on geography. In Canada this means any business under 100 employees which is about 95% of all businesses. If we spent our time on all of these businesses, it would be way too large of a market for us to tackle or address. You need to focus your target market on an obtainable target.
We are located in the Toronto GTA and though there are some services that can be provided to any small business, we have to weigh the travel time/cost versus what is the overall benefit to us and the client. We use the web and social media to market to clients who do not mind covering travel, or have requirements that can be done remotely.
Spend Your Time and Money Where It Has the Greatest Return
If you spend all of your time chasing your “potential” target versus your “best” target, this will end up affecting your revenue and can also increase your cost of sales.
With our business, there may be many of our services that could benefit any size of small business or any industry, but it makes more sense to focus on marketing and selling our services to those companies that can profit the most. Though we have had some B2C clients and small businesses in a variety of sizes, our target market are small businesses that focus on B2B and are between 5-50 employees in business over 2 years. In order to define to this level of detail, you need to understand who the most likely target is for your business.
Here are the reasons we chose this target, hopefully this example will help you understand how to define this for your business:
- We do work with start-up businesses, but most start-ups do not have the money to spend on coaching or consulting unless they have had their first round of funding. Most look for help or are referred, so we do not focus our marketing targeting companies that have been in business less than 2 years.
- Though we have clients that are in the 50-100 employee range, those that are under 50 are looking for someone who can provide a variety of services, where many over 50 have more infrastructure and defined processes need infrequent help.
- We also have done work with sole proprietors and small business owners under 5 employees as well, but most have contacted us directly for a particular business issue through our website, so we do not focus our marketing on this target.
The idea is to focus your time and effort to educate your greatest potential target and spend your sales and marketing dollars where it will get you the highest return. If you are spending your time outside of your target market trying to convince someone your product or service will work for them – you need to rethink where it is best to spend your time. This is not to say that you will not have customers outside your target market – you will. As a small business owner, there are only so many hours in a day and you only have a set number of resources. The idea is to utilize your time and money where your business will get the most benefit.
Make Sure Everyone in the Business Understands the True Target Market
If you as the business owner know exactly who the best target is for your products or services and have not communicated this to your employees, especially anyone involved in sales and marketing, this could also end up being a costly mistake. This means your marketing materials that you have spent money on such as a website, communication materials, or social media could all be focused on the wrong target. It also means your sales reps could be spending countless hours chasing the wrong customer for your business. If your sales rep is spending a long time on small sales or is always chasing “the big whale” just in case they might land because they believe this is the right target – this is costing not only you, but is affecting the sales reps in commissions and at some point they will get frustrated and leave.
Understand How Your Target Customer Buys and Make Decisions
Once you know who your target customers are, it is very important to understand how they buy and how they make that decision. Do they research on the web or through social media? Do they look for the best price? Do they make decisions off of the relationship with the vendor? Will they only buy if you have experience in their industry? Do they buy only through distributors? These are just a few of the questions that you need to figure out once you determine who your target market is for your business.
So the next time you are asked who your target customer is and before you answer anyone – think about the ramifications of that being true. Do your products and services meet the requirements for every customer? Would it be possible for you to focus your company on marketing to everyone or contacting them to buy? Who are your competitors in each demographic that you sell and can you compete? Does your business have knowledge and relevant experience to add credibility?
This is a good exercise to work on with your management team or key contributors in your business. Take 2-3 hours to sit down and answer the questions that were listed in this article. This will give you a good start. Once you decide, you need to make sure that this is communicated not only to your own employees, but is obvious to your target market. It needs to be obvious to them that the products or services that you offer will benefit them as well.