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Why Narrow Target Marketing Means More Sales

Why Narrow Target Marketing Means More Sales

It seems counter-intuitive, but narrow target marketing means more sales.  Here’s a great post by Tim Donnelly explaining why.

How to Narrow Your Target Market

Companies that try to be all things to all customers are sure to fail. Here’s a business guide from Inc.com on how to focus on your target market.

By Tim Donnelly

 

Inc.com Contributor@TimDonnelly

 

 

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Huge, profitable companies like Walmart and Amazon didn’t start as the all-encompassing retailers we know today. Each debuted with a very specific focus that helped them find and nurture a strong customer base. Walmart originally catered to shoppers in rural areas where there was a dearth of options for low-cost goods; Amazon famously limited itself to just books for years before expanding into selling everything from DVDs to motorcycle gear.

The process of finding a target market and narrowing your company’s focus to appeal to it directly often trips up new businesses, who find it difficult to turn down business opportunities when they arise. But trying to be all things to all people is a sure way to fail in the marketplace. Business experts offer up these tips to narrowing your target market:

The Dangers of Being Unfocused

Whatever market you’re in, you’ve likely got a lot of competition and static standing between you and the consumer. Narrowing your focus to one specific demographic or slice of the marketplace gives potential customers a reason to notice you in the rest of the fray.

“If you’re not differentiating yourself in the marketplace, what happens is the consumer looks at price as being the motivator,” says Susan Friedmann, author of the books Riches in Niches and The Complete Idiot’s Guide to Target Marketing. “And they look at the cheapest.”

If you don’t know specifically which customers you are speaking to, you are actually speaking to no one, says Tammy Lenski, a business mediation expert (https://lenski.com/) who has advised clients about successful business through target marketing.

“The big danger is that without a target market, it’s like standing in a park shouting in the wind,” she says. “When you have a target market, its like standing in a park and talking to a specific group of people.”

That means you can’t be afraid to exclude certain types of consumer from your marketing or to target your advertising at small groups. Some customers will feel left out, but those are the sacrifices necessary for a successful business, says Greg Head, founder and CEO of New Avenue, a strategic marketing firm.

“Focus requires exclusion,” he says. “If you’re selling everything, you actually mean nothing in the marketplace. Exclusion is fundamental to target markets.”‘

Dig Deeper: Why a Clear Focus is Essential to Success

Become an Expert in one Area

One way to hone in on a specific sector is to become an established resource in one area. Starbucks, for example, is able to charge premium prices for its coffee even though it also sells pastries, tea, and accessories, because it has positioned the company as an authority on good coffee.

“If you’re an expert in your field, people will pay the price tag on whatever product and service you offer,” Friedmann says.

You can build up credibility by offering information for free through your company’s website or blog: things like tips, industry information, or niche data that will help consumers think of you as a reliable expert in that area, she says.

“Your credibility comes with giving away information,” she says. “If this is the value I’m getting for free, what will I get if I pay for it?”

Entrepreneurs who do this successfully often start by following their passion, Friedmann says. She recalled a massage therapist who loved cycling and found a successful practice traveling with bike tours.

“If you can marry your passion with your profession, that’s a really strong niche market,” she says.

Dig Deeper: Taking a Niche Brand Mainstream

Do the Market Research

Experts give several methods for whittling down the vast expanse of the market to find your ideal target.

John Jantsch, creator of the Duct Tape Marketing System and Duct Tape Marketing Consulting Network, which trains and licenses small business marketing consultants, recommends a simple formula to identify who makes an ideal client: he ranks customers by profitability.

“In that step alone, they start identifying work they have taken or would take that they shouldn’t be taking,” Jantsch says.

Then he looks for clients that are already referring more business your way.

“They’re referring business to you because they’re having a great experience,” he says. “They’re happy, they’re beyond satisfied and that’s why they’re referring business.”

Friedmann says recommends looking for growth markets to identify burgeoning new areas that may not be claimed by existing businesses.

Lenski says some clients find their niche first by focusing on the areas in which they already have a strong interest, or by looking at markets that already know about you and your services. Then, look for areas of the marketplace where a gaping need exists that you can fill with your company’s services.

Dig Deeper: How to Use Internet Market Research Tools

Tweak your Marketing

As simple as it sounds, the name of your company is crucial when narrowing your market.

“I believe your name should say what you do,” Friedmann says. “Using your own personal name, unless you’re like Madonna, isn’t going to cut it. It doesn’t mean anything to anybody.”

Words such as “branding coach” or “entertainment law” in your official business title help consumers quickly understand what you’re all about.

Friedmann even created a new word to describe her focus: “nichepreneur.”

You may have to change your branding strategy or marketing efforts to clarify your mission. Once you find your target, you’ll definitely want to alter your advertising efforts to go after the places and media you use to generate new business.

“It’s not just an advertisement that you do. It actually has to become part of everything you do,” Head says.

Your marketing needs to highlight the specialization, which improves credibility, Head says.

“You’ve got to be perceived as the best at something,” he says.

Then, once you’ve identified that base, use it to improve the business through things like social media and interactive marketing to find out more about what the customers are looking for, Lenski says.

“You’ve got to essentially engage that market. It’s a two-way conversation,” she says. “That’s really where having a target market pays off.”

Dig Deeper: 10 Marketing Musts

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If you’d like to see more from Tammy Lenski, who is quoted above,  to go to her website at https://lenski.com/.  She has some great blog entries worth reading.

5 Steps to Finding Your Ideal Target Customer

5 Steps to Finding Your Ideal Target Customer

When you start a new business, finding your ideal target customer is one of your biggest challenges.  Here’s a great post from John Jantsch telling you how.

How to Discover Your Perfect Target Customer in 5 Steps

By John Jantsch

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One of the most important elements of a marketing strategy is the development of an ideal target customer profile. Effectively understand who makes an ideal customer allows you to build your entire business, message, product, services, sales and support around attracting and serving this narrowly defined customer group.

Image See-ming Lee SML via Flickr CC

When working with businesses that have an established customer base I can generally identify their ideal customer by finding the common characteristics found in their most profitable clients that also refer them to others. I’ve written about this kind of ideal client discovery here.

Today, however, I want to address the needs of the start-up or business with very little customer experience. Finding and serving an ideal customer is equally important for a business just getting started and establishing a focus on discovering a narrowly defined ideal client from the very beginning will save months of wandering in the dark trying to be all things to all people.

The 5 steps below can put you the path to discovering your ideal target customer.

1) Start with the Smallest Market Possible – This may feel counterintuitive to many just starting a business, but you have to find a group of customers that think what you have to offer is special. When you’re just getting started you may have very little to offer and in many cases very few resources with which to make sufficient noise in a market for generic solutions.

Your key is to find a very narrow group, with very specific demographics or a very specific problem or need and create raving fans out of this group. You can always expand your reach after you gain traction, but you can also become a big player in this smaller market as you grow.

2) Create an Initial Value Hypothesis – In the step above I mentioned the idea of finding a narrow group that finds what you have to offer special. Of course, this implies that you do indeed have something to offer that is special.

You must create a “why us” value proposition and use that as you hypothesis for why us. If this is starting to sound a little like science that’s because it is. You must always stay in test and refine mode in order to move forward.

Many people get caught up in trying to execute their business plan when the fact of the matter is the market doesn’t care about your business plan. The only thing that matters is what you discover and apply out there in the lab beyond your office.

3) Get reality in Discovery Test Sessions – Established, thriving businesses have the ability to learn a great deal every day from customer interaction. Since start-ups don’t have any customer interaction they have to create ways to test their theories initially and on the fly.

The key to both making and affirming your initial assumptions is to set-up what I call Discovery Test Sessions with prospects that might easily fit into your initial smallest market group. These are essentially staged one on one meetings.

This can be a little tricky since you have no relationship with said prospect. I often find that there are industry or trade groups that may contain your initial target market and by joining these you may have an easier time gaining access to this group.

Another possible option is to offer free sample products or beta test relationships to those willing to provide you with agreed upon feedback.

The main thing is that you start talking to prospects about what they need, what they think, what works, what doesn’t and what don’t have now. This is how you evolve your business, your features and your assumptions based on serving a narrowly defined target.

4) Draw an Ideal Customer Sketch – Once you’ve trotted out your hypothesis and tested it with your narrow group, you’ve got to go to work on discovering and defining everything you can about your ideal target group.

Some of this information will be commonly understood, such as demographics, but much of it will be discovered in your test sessions and though some additional research in more behavioral oriented places such as social media.

This is a great time to start your CRM thinking by building custom profiles that include much richer information than most people capture. I wrote about the new breed of CRM that is making this easier to do than ever.

5) Add Strategy Model Components – the final step is to apply this new ideal customer approach to other elements of your strategy.

The thing is, when you discover your initial ideal client it should impact the thinking about your basic business model and overall business strategy. All great business models are customer focused and now that you have a picture of this customer it’s time to consider how this alters the other aspects of your business.

Consider now how this discovery might impact your offerings, your revenue streams, distribution channels and even pricing.

Consider how you can reach this market, who you can partner with and what resources you either have or need to have in order to make an impact in this market.

I can tell you that my experience suggests that you’re never really done with this exercise. As your business evolves, as you learn and grow, this model will evolve as well, but perhaps the continual process of discovery is just as important as what you discover.

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