When it comes to selling a product or service, small business owners can celebrate that they don’t have to appeal to every single consumer. For the overwhelming majority of products and services, specific categories of customers want or need them. These groups may be broad, such as parents, or niche, such as parents of toddlers with dry skin.
The group or groups of consumers that a company markets and sells its wares to is a target market. Your small business’s target markets are the audiences you’ll market messages to, and they will be the primary purchasers of your company’s offerings.
Why is a Target Market Important for Small Businesses?
People who know the owner or creator of a small business are generally its first customers. To expand business beyond this core group, you need to know who else may benefit from your products or services. Paradoxically, the worst answer is everyone.
Focusing your marketing and sales efforts on a target market comes with these benefits.
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It makes data and metrics more accurate. For example, a marketing campaign may drive a lot of high-dollar sales within a particular group of consumers. However, if the company gears that campaign toward every possible consumer, it will appear far less successful.
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It helps your salespeople reach potential customers more efficiently. Instead of contacting leads who have a lukewarm interest, salespeople can spend their time communicating with leads who will benefit from what your business sells.
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It stretches marketing and sales spend. When a marketing team spends $100 on social media marketing and targets consumers who are more likely to make a purchase, the return on that investment will be higher than if the team shows the social media ad to a general pool of consumers.
Additionally, Small Business BC points out that a small business that understands its target market can tailor offerings more effectively, manage customer expectations, and focus advertising efforts. In other words, identifying your target market will help your small business succeed.
How to Determine Your Target Market
Sometimes, defining a company’s target audience is easy. When that’s the case, a small business can look into subgroups within the target audience and experiment with hyper-targeted advertising.
It doesn’t matter if you already understand your target market or if you’re starting from scratch: This process will likely take experimentation and patience, and it requires excellent record-keeping.
You have a few options when it comes to researching your target markets. Consider these three, ranked by probable expense.
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Hire a marketing firm to do the heavy lifting, then refine your target audience over time based on their results and recommendations.
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Run several randomized ad campaigns to spur sales and learn where your customers come from, then review the resulting data to help determine your target audience.
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Do a lot of research and start with the data you have, then run small marketing campaigns to confirm the trends you find in the data.
Hire a Marketing Firm
A marketing firm can do research and present valuable information about your small business’s target market. The firm can find out which consumers your company should target, create personas, and offer insights into what consumers in your audience want and expect.
Small businesses that have the budget, but not the personnel, or that have a particularly difficult time reaching their customers, may consider this option the most effective way to determine their target market. However, this strategy may not be feasible for many small businesses.
Conduct Target Market Research Internally
Most small businesses will at least start the process on their own. Read on to learn how to identify the people who are most likely to buy your products and services.
Six Tips for Finding Your Small Business’s Target Market
Data and repeatability are important when researching your target market. Data points mean you’ll base the results on verifiable evidence, while repeatability eliminates outliers. Keep both in mind as you follow these steps.
1. Think about what kind of data will help you sell better.
The volume of consumer data available to businesses is overwhelming and can be excessive. Start with basic information, then update your needs as you do research, make sales, and refine your marketing and sales strategies. For example, a small business that creates hair products shouldn’t advertise to anyone with hair. The company benefits from understanding that its products best suit customers with a specific type of hair, such as 4C, a tightly curled hair texture. The business should research people with that hair type and consider them part of their primary target market. However, it won’t necessarily help the same company to know if its customers have a partner or own a home.
2. Look at why you created your product or service in the first place.
If you started your small business to help a certain group, you have an excellent starting point. For example, imagine a parent creates a lotion recipe for their toddler. It absorbs quickly, works on sensitive skin, and smells good. They start selling this lotion to other parents and notice that many of the kids benefitting from the lotion have eczema. The owner should note these important data points about who buys and benefits from their product:
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Parents of children
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Parents of children with sensitive skin
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Parents of children with eczema
3. Ask questions.
Your questions can be in an email survey after a purchase, in a poll in your Instagram Story, in person at a farmer’s market, in a pop-up on your website, or via a stamped postcard included with a shipped package. Get creative! You’re not staging an interrogation, but taking the opportunity to learn a little more about the people who use your products. Consider what you’d like to know about your customers and brainstorm questions.
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A plumber may want to know how many bathrooms a customer has or how old a customer’s house is.
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A jewelry designer may want to know if a customer bought a necklace for themselves or as a gift.
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An app developer may want to know the average age of the app’s users in order to determine if the font size needs to be larger.
For small businesses with a social media presence, start conversations with your followers and fans. Social media may be a way for your company to pique interest and educate followers, or it may be a true source of sales. It largely depends on how you use it. If you know a social channel brings in sales, you should have an idea of who those customers are. Get to know them.
4. Consult current customer data.
Check for themes and trends in your customer data. If you ship products, take note of the recipients’ addresses. With a little research, you may discover that the majority of your sales ship to cities with large universities, and further investigation may reveal that many of your customers are in college. Another small business may notice that the majority of its customers use an exclusive credit card to make purchases, which could give the company insight into its customers’ annual income and budget.
Furthermore, take note of what channels drive sales. Know which social media channel is the most popular with your customers, if email campaigns bring in substantial profits, or if in-person sales are the highest. To gather this information, integrate your business platforms or use special offer codes. For example, the code “InstaDiscount,” could help you identify purchases from Instagram users.
Your collection of customer data is invaluable, and an advanced database, such as a customer relationship management (CRM) platform, can help you analyze and report on data trends. Otherwise, you can use spreadsheets and other methods to document, organize, manage, and scrutinize your data.
5. Pull it all together.
Whatever data you have, pull insights from it. You may get an idea of a couple of different types of customers. You can summarize each type in a persona. Returning to the homemade lotion example, the company may learn that toddlers are the primary users and their parents are the primary purchasers, but also that people over 80 love the lotion and benefit from it. These are two different but important groups for the company to market to.
Test your results with various ad campaigns. If your customers have shown a preference for Twitter and you know of a thought leader who reaches an audience full of people similar to your customers, reach out to the person and consider running an influencer marketing campaign. If you have a collection of email addresses from a virtual conference, create a campaign re-introducing your company and offer a sample or demo free of charge. Look at who takes advantage of your marketing efforts and converts, and who your salespeople have the most productive conversations with. These people are members of your small business’s target market.
6. Stay curious.
Continue to get to know your customers. Learn about your competitors, see if you’re campaigning for the same target market, and analyze what they’re doing that you could mimic. If you introduce new products or services, see if they create a new market and persona for you to consider. Never lose sight of who your customers are.
Your Target Market Will Help Your Small Business Succeed
Instead of spending excessive time, money, and effort trying to sell your products and services to the general public, focus on your target market. These groups of people are more primed to buy what your small business offers, and you’ll see far more success with your marketing and sales efforts.
As your company grows and sales increase, you’ll have more customers to reach. The better you understand them, the better you can create, market, and sell to them. By getting to know your customers, you’ll breed success and further growth.
