Finding your target market – that segment of the population that is best suited for your business and is most likely to buy from you – is absolutely critical to developing a plan for growth (aka a marketing plan). When I talk to small business owners, they're usually reluctant to start at the beginning, building a plan. Many small business owners think all there is marketing is getting the right ad in the paper, designing a creative direct mail piece or the perfect web site. While those things are certainly part of an effective marketing plan, none of it is going to be completely effective without a strategy to drive it.
Why a Target Market?
When small businesses spend money on advertising without knowing who they need to advertising to, what are they doing? First, they're trying to be all things to all people and this dilutes their core strengths. It makes them look and sound just like everyone else out there. Second, they're throwing a bunch of money away marketing to people who are not and never will be suitable prospects for their business. I do not know about you, but I have a limited marketing budget and spending money on people who will never buy from me – or who who I would not want to work with even if they did, is just not how I want to invest it.
So who is your target market? To answer this, let's talk about who is not.
Identifying a target market always comes up in my conversations with small business owners and marketers. "Oh, I know who my target market is!" they proclaim. I ask, "Really? Good for you! Describe your target market to me". Their answer? "Well my target market is Anyone who _______ fill in the blank": anyone who needs a new car; anyone who needs a dentist; anyone who wants to buy a house, etc. Would your answer be similar? If so, I'm sorry to tell you "Anyone Who" is not a target market. "Anyone Who" buys homes and cars or has teeth is not your target market; "Anyone Who" breathes is not necessarily the best fit for your company.
Why Not "Anyone Who"?
Let me explain: Let's say you own a dental practice in the 94533 zip code. You may think "Anyone Who" has teeth and lives in your zip code are your target market. You send out a postcard to every home – let's say 20,000 postcards of those 20,000 people, 30% do not have the dental insurance you cover. Another 15% have not been to the dentist in 10 years and are not going any time soon. Another 20% work in another city and go to dentists near their work. What does all this mean? It means that 65% of the people in your zip code are not candidates for your practice. It means that you just sent out 13,000 postcards or letters for nothing. It means you probably wasted at least $ 6000 marketing to the wrong people.
Yes, this is a very simplistic example of the danger of not identifying and marketing to your target market, and the benefits are greater than just saving money. Finding your target market also allows you to: differentiate your business; find a niche that you serve best and work only with the people or businesses that value what you do; work with the customers that are the absolute best fit for the core products or services; and work with the customers who are most profitable.
So, without your "Anyone Who" goes something like this: "Anyone Who is female, between the ages of 35 and 45, has a college degree, 2 children, a husband, owns her home, drives a 3 year old car, reads Business Week magazine, has a household income between $ 80,000 and $ 120,000 and spent $ 4000 dollars on widgets last year ", you need to do some more work on clearing your target market. But trust me – "Anyone Who" is not it!