When marketing your business, one thing is clear above all other things – know your market. That sounds dumb and obvious, but an amazing number of people ignore this simple piece of advice and they are making a terrible mistake.
What is a target market
A target market (or niche) is a small, focused, group of people or businesses who are interested in buying your product or service. The smaller and more focused the better, as long as the market is big enough to sustain your business. A target market is basically, a very clear and defined list of the characteristics of your ideal customer. This can (and should be) industry, business size, business structure, turnover, geography, or anything else you can think of. You can be even more specific and think of the type of customers you definitely don’t want.
Why is picking a target market important
Imagine you’re at a big sporting event, and you’re trying to get the attention of everyone in the area. You just want them to listen to you, if they could only hear you they’d be so much better off – you have the wisdom of the ages to impart on them – if only they could hear you. You shout at the top of your lungs and still no one can hear you. You have some resources available to you. You thought this might happen so you brought a megaphone! Now they’ll hear you! Nope. The noise of the crowd chatting and the music in the background is drowning you out. Only those within a few feet of you can hear you, but turns out they don’t care about your ideas on how to improve their lives or work or whatever product you’re selling. Next thing you know, Coke rocks up with a Public Address and starts broadcasting to your crowd hundreds of times louder than you could ever hope to. A few heads turn across the stadium but in the end no one cares. Coke had more resources than you and drowned you out with their messaging, the lives of the people you were speaking to drowned you out with their own business and interests. They didn’t care what you had to say to begin with.
Burned from your experience at the stadium you don’t want to go back. Instead, you head to a local viewing party in your neighbourhood – go sports! – There are maybe fifty people present. You start to talk about your ideas with some of the people you’ve met at the party. They aren’t any more interested than the people at the stadium where, but you’re talking to fewer people, you can take your time and build a connection, explaining your ideas to each one in turn – making them interested.
Picking a small target market lets you have focused conversations with a few people, a few people who you really can serve. It makes attracting new customers much simpler, as you know who will be buying! You can tailor your language to how they communicate. You can target your ad spend towards very specific groups of people, letting them see your message much more regularly that if you were using a generic campaign. Your prospects will have more confidence in you as you have done the same project for similar businesses or seen the same outcome from your product time and time again. People will trust you more and you will be able to demonstrate expertise!
Think about it from the side of a potential customer, or as yourself in a buying situation. Say you are engaging an accountant – which is more valuable to you: a) the cheapest possible accountant who crunches some numbers and tells you how much you owe at the end of the year, or b) the accountant who specialises in our field, understands your business and pricing model intimately and can help you be more efficient, as they see what’s happening across your industry, because they specialise.
Specialisation, Niching or picking a target market can ultimately help you become more profitable by focusing on a small group of people, building trust with them and then providing them with the best possible result. You can become famous for your service in a small market, that’s much harder when your market is huge.
How will it impact my business?
Niching is hard. Don’t let anyone tell you otherwise.
It changes how your business operates and it takes time to do right.
First you need to pick your niche and then you need to stick to it. That might mean turning down work or selling to particular customers for the first while if they don’t match your target profile. You need to do this in order to open up your schedule or supply chain to help the customers you want to focus on. You can’t do that if you’re busy helping other distracting customers and clients.
Second, you’re going to find you’re self-salving the same problem over and over again – this is good. You’re going to get really good at solving a particular set of problems for a particular type of business, you’re going to become a genuine expert in a topic. As you solve the same problem again you can refine your process or product to produce even better results for your customers and clients more quickly and more profitably.
Why doesn’t everyone do this?
Niching is hard and scary – as I said above it takes time and you will have to start saying no to customers that don’t fix exactly within your target, that’s a brave move for many small businesses. The sooner you can do it, the sooner you can target individual and specific companies to become your customers. People also think that specialisation will lead to boredom and always doing the same thing, instead it really leads to focus and full understanding, and getting asked to solve interesting problems, rather than the generic work of your industry
Finding a Market to Target
This can be the hardest part for niching. You may be lucky and have an obvious market you can tap into, a collection is similar people with similar problems that you can start to work more closely with.
There are a few keys to picking our target market –
- Work with people you like.
You’re going to be spending a lot of time serving these people, you better get on with them
- Work with people who need what you sell.
There is no point trying to sell snow to eskimos’s. Its not big and its not clever.
- Work with people who can afford you
The point is to have more customers and be more profitable – they’ve got to be able to afford you
- Work with people you can provide real value to.
You’re an investment – show your customers a return. (Not necessarily financial though!)
If you can find a niche where you meet all four of those criteria, you’ll go far.