In the first post of our Small Business Growth Series, we explored brand identity, personality, and voice. Once you’ve created clarity around your brand identity and voice, the next step in customer acquisition is refining your understanding of who your target customer is. In order to get your message to the right people, you must develop a strong focus on your target market and customer segments.
Defining Your Target Market
Understanding your customer on a human level is crucial to developing your brand’s voice. If you followed along with the last post, you’ve already worked through the foundational exercise required for successful targeting — who is your ideal customer and what is his or her felt need? Now, we’re going to zoom out and develop a better understanding of your target market.
noun • a particular group of consumers at which a product or service is aimed.
Here’s a few questions that will help you begin to define your target market:
1.What problem is your business solving? Get to the heart of the real issue that your business exists to tackle by starting with a clear, concise understanding of the actual problems you are solving as a company.
2. Who will find the most value from the solution your business provides? You can also approach this question from the opposite angle – who has the most to lose from not having a solution to the problem your business solves? If you already have customers buying from you, analyzing them is a good place to start.
3. What is your market type? Who pays for your type of solution? Are you selling a product or service to businesses (B2B) or is your solution designed to be sold directly to the consumer (B2C)? More complex companies ultimately fall into both market types, but it’s important to understand who is your primary customer – the end user that gains the most value from your solution.
4. How many people are looking for your particular solution? The easiest way to get an idea of how many people need the product or service you’re providing is to do keyword research on words and phrases that describe your product or service. There are a few services that you can use to do this type of research for free, including SEO Book’s Keyword Tool and the Keywords Everywhere browser extension. These tools will show you the monthly search volume on the terms you’re researching, which will help give you a good idea of how many people are looking for a solution like yours.
Now that you have an understanding of who you are targeting, you need to refine your target market into customer segments to focus on. This is one of the most important steps in small business growth, but also one that many business overlook. For example, business leaders will often assume they can stop at “our target market is small-to-medium businesses” or “our target market is homeowners.” These are great starting points, but you still need to do more refining – and skipping this process can lead to lots of wasted time and money in sales and marketing. Here’s how to get started with market segmentation:
1.Talk to 50 people in your target market. The first step in market segmentation is to do the work of actually talking to current and potential customers. If you’re a brand new business and don’t have a customer base yet, start by looking for associations, events, or other ways to meet people in your target market. Ask them what their biggest pain points are in relation to the problem you’re solving. Some questions you can ask include:
- What is your role in your company? What is your primary focus in your role?
- How much time do you spend on [the problem your company is solving] each day/week/month? (If the person you’re talking to is not the one dealing directly with the problem you’re solving, find out who is.)
- How long does it usually take you to make a buying decision?
- What kind of information do you seek out when making a purchase (reviews, ratings, testimonials, etc.)?
- How do you imagine that [your solution] would improve your life?
If you already have a customer base, you can also create a survey and incentivize them to complete with a discount on your product/service or some type of giveaway.
2. Use your findings to group your target market into subsets with similar characteristics. The information you’ve gained from customers and prospects should give you an idea of where to start with this, but here are a few general segments to help give you some ideas as well:
If your market type is B2B:
- Industry specifics: size of company, location, whether the companies are public or private, etc.
- Purchasing patterns: how often do they buy your (or a competitor’s) products, how much do they buy, and through what purchasing channel (online, in-store, over the phone, etc.).
- Behavior patterns: are these companies innovative or are they generally risk averse? Do they rely on new technology or are they more traditional in their operations?
If your market type is B2C:
- Demographics: age, gender, location, income, education, etc.
- Psychographics: personality, beliefs, values etc. For example, “tends to prioritize family over work,” or “values aesthetic over function” would be psychographic segments.
- Purchasing behavior: brands they are loyal to and whether or not they prefer to shop online are examples of purchasing behavior segments.
The key part of market segmentation is to continue this process until you have found multiple customer segments that are accessible to you via your sales and marketing channels. For example:
Target market: young professionals
- Male between 25-35, lives in urban areas, is loyal to innovative brands like Apple and Google.
- Female in her 30s, has a masters degree, enjoys online shopping, likes to try products before buying.
The more specific you can be in describing your customer segments, the more effective you will be at creating content that will help nurture them from prospect to customer. Which is exactly what we’ll be discussing in our next post in the Small Growth Business Series!