“Stop Selling To Everyone…”
How To Identify Your Target Market
This is probably the one single step that is often ignored by businesses or, at best, given far too little consideration when developing products or marketing. Here’s the hard truth and the one thing you MUST get right:
Getting your target market right is the single most important aspect of marketing success.
You can have the most amazing product but if it’s marketed to the wrong people it will never be that successful.
What I’m about to explain to you may chill you to your core. But in order for your business to separate away from your competitors, you need to take a piece of the market and own it. Unless your market is very small, and that would be a whole other conversation we’d need to have, you cannot successfully serve your entire market. Doing so just dilutes your products and they will be weak generic ‘also rans’, and I’m sure this isn’t what you want for your business.
Stop trying to sell to everyone. You cannot be all things to all people, you simply haven’t got the budget, the time and the resources for it.
The analogy I often use when talking about target markets is fishing. Imagine one of the beautiful large lakes in the Lake District, or an equally beautiful Scottish loch. In this lake or loch are thousands of fish of just about every freshwater variety you can name. Every day you get up early to sit around this lake or loch with hundreds of fishermen who are just like you, you’re all competing to catch the most amount of fish. Daily you’re all there and you keep catching fish, all using pretty much the same equipment, the same baits and the same methods. And of course, you all catch the same random types and size of fish. Over time you grow smarter and work out that not all fish are equal, catching certain types of fish are much more valuable and rewarding to you.
So you think, “why don’t I catch more of those?” But, and here’s the scary bit:
- You’ll reduce the volume of fish you catch.
- You’ll need to invest in working out how to catch your right fish.
And of course you’re addicted to catching volume and breaking from this would be very courageous. You get thinking about how rewarding it would be to get up every day, sit around the beautiful lake or loch and only catch the fish you really want. You don’t need to waste time catching other fish that sap your time and energy, only for you to eventually throw them back. Over time, and while your competitors keep fishing for everything, you specialise in salmon fishing and become the market leader. A bit later you work out that trout are also caught a similar way and you like catching them. Now you’ve got two target fish.
We need to get to the heart of your preferred target market.
This is how you’ve got to think about your business. Who are your Salmon and Trout? What types of customers do you like to deal with and would dearly love more of? Which types of customers would you like to throw back?
Let’s just step back a second to make sure we understand what we mean by target market.
A target market is a clearly identified group of people or companies within the total market who:
- Share similar characteristics or traits such as geography, buying power, demographics, and incomes;
- Need and want your products;
- Can afford to pay for your products;
- Can be reached by marketing activities;
- Are large enough in volume to warrant investing time, energy and resources to gain a return on investment.
Don’t worry, as you’ve seen with our fishing analogy you can have more than one, in fact you can have several. If you think about a department store and brand like John Lewis, you could argue that their target market is everyone, for indeed anyone can walk into one of their stores or shop on-line and buy their products. But they don’t want one customer to buy one product. They want customers to buy lots of products and keep coming back for more. Their target market is aimed at mid to high earning customers but both male and female, and different age groups. In comparison their target market is very different from Primark. John Lewis doesn’t stop the ‘non target customers’ shopping with them, they just choose not to market to them.
I like Ted Baker clothes, but I’m not their target market, their brand is aimed at an audience at least 15 years younger than me. Each season, when they design their clothes, I’m certainly not on their avatar board or in the mind of Ted’s designers. They have a very clear understanding of their target market and they stay very close to them to keep their products in tune, and hence their great success. Of course that doesn’t stop me buying their clothes but I’m not their target market, they don’t spend money marketing to me.
How To Identify Your Target Market
We need to discover who your perfect target market is and we’re going to use two tools, the Customer Identifier and the Your Perfect Customer Matrix.
The first step is to identify the types of customers you serve using the Customer Identifier. Here you’ll find two versions, one for Retail if you sell to consumers (B2C), and one for Business if you sell to companies (B2B).
B2B
If you sell B2B, this is probably going to be slightly easier for you as you’ll tend to have a list of all your customers’ names. Using the Customer Identifier B2B sheet, copy a list of your top 50 customers in column ‘Customer Names’. Your top 50 should be by spend, i.e. the top 50 customers who spent the most money. Using the column headings (Sector, Location, Size etc) work along the columns, which will help you identify the common characteristics and traits. From here you should be able to put your customers into some sort of group or groups.
B2C
If you sell B2C, this is a bit tougher. If you’ve got a list of customers, again copy and paste your list here and work across the column headers. If you haven’t got a list of customers, work with your team to create a list of customer types and group them.
On the next sheet, Your Perfect Customer Matrix, you can rate your different groups. Using the header columns score each group 1 (lowest) to 5 (highest) for the following for each:
- They want your product
- They can afford your product
- They will pay a premium for your product
- You can reach them quickly, easily and cost-effectively
- There’s enough of them to make your business successful
- Your business already has credibility with them or you can quickly gain credibility
- Their location allows them to be serviced conveniently and cost-effectively
- Their market condition, decline or growth; score 1 = rapid decline, 2 = decline, 3 = steady, 4 = growing, 5 = high growth
The higher the score the more perfect that group is for you, and ideally you’ve got groups scoring 25 and above.