When clients ask me about the first step in starting a business, I always say start with strategy first. One of the main elements of a great marketing strategy is to define your target market or your niche.
Norman Vincent Peale once said “Shoot for the moon. Even if you miss, you'll land among the stars.” Astronauts and their teams are heavily prepared with a plan and contingencies before they actually "shoot for the moon."
Shoot for the moon in your business, but don't blindly shoot because you'll likely end up in the darkest corners of the universe.
You must define your target market as part of your strategy. Defining your target market lets you:
Here are the critical elements we'll cover in this article:
Let's jump to it!
Everyone is not your customer. - Seth Godin
Let me ask you,
"Who is your ideal client?"
If your answer is EVERYONE, then I've got some good and bad news for you. The bad news is it's a common and expensive mistake made by many small business owners. The good news is you are not alone.
It's normal to think that everyone who is willing to pay you is an ideal client, but this is just not the case.
Creating buyer personas is the best way to define your ideal client.
A buyer persona, aka an ideal client profile or avatar, is a description of the type of client your company is looking to serve. Most businesses have two or three buyer personas.
Always remember, in attempting to help everyone, you’ll end up helping NO ONE!
To identify your ideal client, here are questions you need to ask yourself NOW:
What types of clients do you want to work with? What are they like? What industries are they in?
Defining who you want to serve helps you to:
In the world of business, not everyone will see value in your offer. Not everyone will care about your products or services, even if they're the best.
If you can't add value to a customer's life, it's meaningless to them.
Can you uniquely solve a critical challenge or problem for people in a specific industry?
Once you've identified who you want to serve and if you can add value to them, the last thing you need to determine is if they can afford to pay you.
Obviously, people who can't afford to pay you won't be great clients.
When you clearly communicate how you can solve a core problem your ideal clients have, they will buy from you.
Problems cause pain for people, and they will buy to avoid the pain they are experiencing. Your job is to identify the most significant challenge your target market faces and how you can solve it.
And don't forget, you need to make sure the problem you solve is one people are willing to pay for a solution.
Word to the wise, if your clients in your niche are difficult to find, then it may not be a good market to pursue. Ideally, you want them to be reasonably easy to find and reach.
Here are some common places to see how easy your target market will be to reach.
Social media can be a great place to reach potential clients as long as you can find them. For example, a lot of businesses selling in the B2B space use Linkedin to reach their ideal clients. With the extensive search capabilities, you can hone in on specific attributes to find who you are looking for.
Are there social media channels that your ideal clients frequent where you can reach them?
Are there forums where your target market spends time networking and asking questions? What about Facebook or Linkedin groups?
If the answer is "yes," these can be great places for you to spend time adding value and connecting with potential clients.
Did you know:
81% of trade show attendees have buying authority.
If your industry has trade shows, they can be an excellent opportunity to connect with potential clients. You can not only meet your ideal clients, but there's a considerable chance of getting buying clients at trade shows.
Are there industry associations you can join to get in front of your ideal clients?
Finding associations and getting involved can be an awesome opportunity to put yourself front and center with your ideal clients.
Knowledge is power!
To define your target market, it helps to have industry knowledge and experience.
Is it absolutely necessary? No, but if you don't have the knowledge, it's important to know how long it will take you to learn the industry. The longer it will take you to understand the industry, the higher the risk for your business.
Prior experience will help you get up to speed much quicker.
Focusing on a specific market or niche will give you a distinct advantage over your competition, but the market must be big enough to accommodate sustained growth.
Focusing on a market that is too small will stunt the growth of your business. Here's an exercise to help you determine if your market is big enough.
You can use publicly available sources like yellow pages, online business directories, or company profiles with a similar niche to estimate the number of target customers.
Many local libraries have access to research information that can help with this too.
Penetration rate is the percentage of your target market you can reach and do business within a given period, which will lead you to the next step...
Here are the formulas you need:
Market volume = Number of target customers × Penetration rate
Market value = Market volume × Average value
Based on the information you've gathered, is the market large enough to build your business?
Remember this is not an exact science. However, there are techniques on how to maximize the effectiveness of this activity:
I'm pretty sure there are other ways to determine the value of your target market, but the activity above is an excellent place to start.
And that's it! Those are the secrets on how to define your target market or niche. Was that a long reveal?
Well, I want to make sure that defining your niche will be like a walk in the park.
Do you have additional questions? Feel free to comment below.
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Creating a solid marketing strategy is a must for effective marketing? Check out our Ultimate Guide to Marketing Strategy to learn more.
Header image courtesy of Pexels.com
Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we help local service-based businesses eliminate the confusion of marketing. As a marketing partner, we help clients put in place and manage a simple marketing plan so they can grow. Marketing your business shouldn't be a challenge. We can help.