To whom are you selling? This is one of the most basic, albeit crucial, questions you must answer when developing your go-to-market strategy. The answer will determine your target market, a group of potential customers who you intend to be the recipients of your marketing efforts. These customers are the people or organizations that have pain points your product or service is trying to address.
Below are a few strategies to help you to identify your most profitable audience:
Identifying Your Target Market
Identifying your target market will likely require a deep understanding of your customer and their needs. This knowledge can be obtained by collecting data through primary and secondary market research.
Primary market research is completed using surveys and speaking directly to customers–tasks that are often referred to as customer discovery. Secondary market research is accomplished by leveraging existing research that’s been collected from reports and studies by government agencies, trade associations or other businesses.
Finding your niche can be tough, but it is vital to your success. This video, by Customer Development Labs, illustrates a strategy that helps narrow down a larger customer segment into a more focused target segment. In addition, Chuck Cohn’s Steps To Identify Your Target Market provides additional insight and strategies for success in this arena.
Keep it Focused! Expand On Success, Don’t Contract On Failure
Early-stage companies are often ambitious and tend to make the mistake of thinking that “everyone is our customer” or “anyone with a smartphone is our customer.” This is not a great strategy considering startups are strapped for money, time and other resources. It requires a lot of these resources for a company to try to attract “everybody” as their customer.
Instead, young companies should seek to dominate a smaller market, then expand to a larger market rather than failing to reach a larger market and then being forced to refocus on a smaller segment.
A minimum viable segment (MVS) is a market that is focused enough that your product or service can dominate by meeting the common needs of the customers in the segment. MVS methodology allows you to quickly and cheaply validate potential markets. If the assumed target customer isn’t a good fit, the company will have likely saved enough marketing resources to shift marketing efforts toward a different segment.
Developing Customer Personas
Buyer personas are fictional, generalized representations of the customers that you are trying to attract. By creating fake characters like “Attorney Anthony” or “Manager Molly,” you can make it easier to see your customers as real people.
For example, let’s say your ideal customer is someone you name Manager Molly. A handful of the many characteristics that you could assign to her might include:
- She is in her 30s with a college degree
- She hasn’t been in a management role for more than two years
- She is ambitious and wants to capture the attention of senior management
Imagining Manager Molly as a real person who embodies each of the above attributes can help you to consider her deepest needs and how to effectively market to her. Want to give persona creation a try? HubSpot offers an excellent template for creating detailed buyer personas.
Understanding Multiple Audiences
Sometimes a business will have two or more very different types of potential customer markets and will need to decide which group to target first. For example, Google has two types of customers, the first being individuals that use the search engine and the second being the companies who pay to advertise to those individuals.
You should thoroughly examine each unique potential target market, then aim your immediate efforts toward the market that you determine to have the greatest pain point that your solution can solve.
If you go after multiple target markets, measure how each market compares in regards to sales revenue, customer acquisition costs, length of sales cycle, buying habits and market penetration rate. With this information, you will afford yourself the opportunity to make data-driven decisions concerning your target markets’ profitability, thus positioning your business for future success.
For more useful tips on getting your venture started the right way, check out JumpStart’s Entrepreneur Toolkit, which includes an in-depth Go-To-Market Strategy Tool and Go-To-Market Strategy Worksheet.
And don’t forget to sign up for JumpStart for Entrepreneurs, our monthly newsletter giving you more helpful advice along with local success stories and lists of local funding/networking opportunities.