But where do those customers come from? Over the next few weeks, we’ll look at how to establish a marketing system that:
- Brings in a steady flow of potential customers,
- Converts them to paying customers,
- And turns customers into your best salespeople.
But before we can build our ideal marketing system, we need to know who our ideal customer is and how to build a relationship with them. In this guide, we teach you how identify a target market for your small business.
Finding Your Ideal Customers
This fact may surprise you. Building relationships with customers has a lot in common with building other types of personal relationships. Let’s look at how we build personal relationships and apply that to how we build business relationships.
Forming Personal Relationships
Let’s suppose that you move to a new city, and you are trying to make new friends. You could walk down the sidewalk introducing yourself to whoever you happen to pass. Maybe you even up the ante and throw a shirt that says let’s be friends. However, people will probably think you’re weird and you won’t make many friends that way.
You will have more success if you can find people who share your interests. For instance, you might take a photography class or join a gym. Then once you were there, you might introduce yourself to a few people and strike up a conversation.
If you hit it off, you can find ways to stay connected like giving them your phone number or friending them on social media. As you engage more over time, the relationship deepens. Before you know it you’ve scored an BBQ invite.
Creating Customer Relationships
Finding customers is a surprisingly similar process. Many businesses try to reach everybody wth generic messages about their product features. This approach might yield some results, but you will waste a lot of time, money, and effort with the one size fits all approach.
Instead, you want to find smaller groups of people who share a common interest. Then you can talk about what you have in common and build a more authentic relationship with potential customers.
In marketing, we call these smaller groups of people market segments. People in a market segment will tend to have similar interests, values, and goals. As a business, you will want to focus on connecting to specific segments to get the best outcomes.
Choosing a Target Market Segment for Small Business
So that brings us to another problem. How do we choose which market segments to focus on?
The answer will depend on your overall business strategy, but here are a few points to consider.
1. Who has the problem your products solve?
Every product solves some sort of problem for a customer. Sometimes this is not obvious though. For instance, consider the problem solved by a luxury clothing brand. At first glance, it seems like it just solves the problem of what to wear, but any clothing brand could suffice for that problem.
Someone chooses a luxury clothing brand for a particular reason. Maybe they want to send a signal to the world that they have wealth. Maybe they want to fit in, or perhaps they believe that their clothes will last longer if they invest in a luxury brand. These are three distinct problems likely to affect three totally different market segments.
When choosing an audience, your product needs to actually solve their primary problem. For instance, if the customer buys your luxury clothing expecting long-lasting quality, your clothing needs to deliver on that promise or you risk harming your brand reputation.
2. How large is this market segment?
As good people, we want to treat every customer as an individual, but from a practical standpoint we can’t always send perfectly personalized marketing messages. Instead we have to strike a balance in the size of our target market.
If the segment is too large, we waste time and money on addressing people not likely to buy our products anyway and our message gets diluted. If the segment is too small, we reduce our probability of reaching someone ready to buy what we have to offer.
This risk could be offset by creating different messaging for multiple segments, but in reality most small businesses can only effectively market to one core segment because of budget and time. You want to make sure the segment will have enough potential customers to sustain you.
3. Can this market segment afford what I have to sell?
Speaking of budgets…your customers will need to pay you for your product or services to keep your business running. You need to understand the typical financial situations of your target audience to develop a pricing strategy.
If your audience has a restricted budget, you will need to have a higher volume of sales to make up for the lower prices they can afford. Whereas if your customers can afford a higher price, you can get away with a lower volume of sales and smaller audience sizes. Both strategies can be viable options, but you need to know your market.
4. What other companies are trying to reach this same market segment?
Your customer’s time and attention are limited assets, and you are only not the only one who wants to reach them. First, you may have direct competitors selling products similar to yours, but your business also competes with other businesses in industries totally unrelated to yours for attention.
This competition explains why the prices of ads spike every year at the holiday season. Only so many ad placements are available on Facebook or Google searches for everyone, and when demand is high prices go high, too.
This competition also affects your messaging and offer. If you understand the messages your audience already sees, you can plan a strategy to cut through the noise more effectively.
5. Which other market segments will be turned off by messages that appeal to this market segment?
Life is full of choices, and as a business owner, opening the door to some opportunities will shut the door to others. This tradeoff will happen whether you want it to or not. You can either consciously make the choice or let it happen to you.
Just look at Chik-fil-a. While mainstay fast-food restaurants like McDonalds are in decline, Chik-fil-a continues to grow. All this despite continuing to remain closed on Sundays and avoiding the woke policies commonplace in corporate America. They know who supports their business, and the other voices do not matter.
Getting to Know Your Target Market
Once you have narrowed down who you want to address, it is time to get to know them. In the next installment, we will look at a few important strategies for learning about your target customers. Then we’ll use that info to understand how to plan a marketing strategy.
Until next time, take care and God bless you.
