The importance of defining your target market

Many new business owners resist the idea of defining a target market because they want to be able to “sell to everyone”.

They might feel that such a definition would limit their audience, and they want their product or service to be available to the broadest market possible. They don’t want to reduce the number of potential customers that might walk through their door.

For WE, when we first meet with business owners under our business advice offer, we ask them, “Who is your ideal customer?” If they list off a number of different items, or say that they target ‘everyone’, we know we have an important task ahead of us.

This is one of the very first, fundamental mistakes that entrepreneurs make. In fact, the exact opposite is true. When you define your target audience correctly and precisely, you focus your marketing efforts on the people who are most likely to buy your product, and therefore using your valuable resources in the best way possible.

Determine the problem you want to solve

The best companies see a problem in their community and offer a product or service to solve that problem. They define an unmet need or under-served market, and offer a clear benefit to their potential customers.

Ask yourself what problem your company solves. As the marketing guru Cindy Schulson says: People don’t buy a product or service; they buy a solution.

Don’t define your business by what you want to sell, but by what your potential customers want to buy. You have to convince them that you are providing a product or service that they need.

And if you can offer the best solution to their problem, you’ll have people begging to buy your products.

Analysing current customers

You may think that you know who your customers are, but have you ever actually surveyed them or evaluated them scientifically? If not, you really should try to find out this information. You may be able to find research that has already been conducted in your industry, or conduct an informal questionnaire with some of your customers or clients.

And remember, it’s not about you – it’s about your customers. Your audience is not who you think they should be but who they actually are, which may not be the same at all. You might think you are targeting young single men with your product, only to find out that fathers of young children are actually the ones purchasing it.

This can make a significant difference in how you would focus your marketing dollars, so it’s critical that you understand exactly who the person is who is most likely to buy your product or service.

Evaluate competition’s customers

Determine what kind of customers your competition is targeting. Are you going after the same audience? Or are there perhaps significant differences in your product offerings, so that you are really not pursuing the same people at all?

If you are offering the same product, you may need to differentiate yourself in another way. Can you offer your product or service cheaper than the others, or faster? You must let your audience know that your company is somehow different than the competition, or they will have no reason to seek you out.

Your marketing will be more effective

Once you have your problem and solution defined and your target audience clarified, you’re more than halfway to success. Your marketing dollars will be laser-focused on those people who are already predisposed to buying your product or service – you won’t be wasting money and effort in relaying your message to people who won’t be interested. Your advertising will be easier and more efficient, and you will reach far more of your audience than you could if you were less focused.

Finn Kelly is the CEO and co-founder of award-winning Gen Y financial advisory firm, Wealth Enhancers, along with the parent company, premier private wealth management firm WE Private.