Is your marketing speaking to the right people? Here’s 5 steps you can use to identify a target audience. These people will generate the most profit for your business with the least effort!Click to tweet
Identifying your target audience makes your business more efficient and therefore more profitable.
Looking just at the marketing perspective, finding a perfect demographic to pitch your product to can reduce spend wasted on people less likely to buy. On a more business-wide scale, knowing your target audience maximizes the results of every task performed. You can then churn out more profits with less effort, giving you the cushion you need to grow and evolve.
But how do you even know what your target audience might look like? In truth, the only way to know for sure is through experimentation and trial-and-error. Even then, your target market can be a moving target as your company evolves or your industry changes.
The key to identifying your target audience is to be as specific and as visual as possible so that they recognize themselves in your marketing message.Click to tweet
Despite these challenges, there are five reliable steps you can use to narrow down your audience and discover the perfect target audience for your business.
1. Look to Your Customer Base
Your existing customer base will include your target audience 99 percent of the time. Defining customers who provide your company with the most value can help you refine your targeting parameters towards your biggest profit generators.
To start, look at your data. Each customer should have a purchase history stretching back to your first interaction. Try to identify customers who:
- Have spent the most over their lifetime
- Spent the most per quarter (or month/week/etc.) over the last two years
- Provide the most referrals
- Have the most consistently positive feedback
You can also look for more subjective traits, like who:
- Has the most measurable, positive benefits from your product?
- Does your team like interacting with the most?
- Seems to have the easiest onboarding process?
- Has the most growth potential?
- Evangelizes your brand most vocally?
If you can find a dozen to a 100 clients that share all of the above traits, then you are sitting on a gold mine of data. However, chances are that most clients fit more easily into some criteria than others. In that case, try to identify a few standout customers in each category.
Once you have identified these individuals, you can perform an analysis to discover the strongest correlating factors between them, which we will describe below.
2. Look to Your Competitors
If you lack a large enough volume of current customers — or if you just want to find inspiration — your competitors are also a great source of targeting ideas.
Chances are that you won’t have access to their data, but you can make subjective observations for all of the criteria above. You can also analyze their marketing materials and campaign approach to make educated guesses as to their target audience.
Business owners in a highly competitive market may want to use the traits of their competitors’ target audience as a counter-example so they can carve out a niche. For instance, if you provide consulting for an industry where no one pays attention to small firms, these small guys could be your niche.
Typically, there is room to grow in a given industry, so you may want to instead copy your competitors’ approach outright if this is the case.
3. Market Research
Many industries have rich troves of data from market research studies and reports. Google search within your own industry to find the highest-value customers based on statistics and data analytics.
This information may be too general to apply to your local market or niche approach, but it at least provides a benchmark.
4. Perform a Psychographic Study to Look for Similar Traits
Once you have a few sample clients from your roster and/or your competitors, you can begin to make observations.
Look for similarities in service area (if B2B) or lifestyle (if B2C) as well as income, interests and — most importantly — motivators. Motivators are things that prompt your customers to buy, and can include:
- Pain points
- Desired benefits/goals accomplished
- Features that provide a “wow!” factor
- Aspects that cause them to walk away (business “turn offs”)
- Brands/products/services they might be loyal to
If you have a social media following of 300 – 1,000 people, you may even be able to generate a report on your audience to find these things out verbatim. You can look to Facebook’s “Audience Insights” feature, for instance, to see demographics on age, gender, and other pages/brands they “like.”
5. Constructing a Target Audience Persona
Once you have identified a few key qualifying traits of your target audience, you will want to imagine a specific person — called a persona — who serves as a template for who you want your marketing to talk to.
For instance, let’s say you offer software that helps small businesses track and manage inventory. Your target market might be:
- Retail-focused businesses
- Earn <$5 million a year
- <12 locations, all within a specific region
- Have their own stock room, but can’t manage it well
- Potentially losing money on lost items, poor shelf stocking, defective stock
A related persona can be:
- Alex the business owner and/or operations manager
- 80% likely to be between 30 – 45 years old
- Likely to earn between $50k and $75k a year
- Tired of stockroom mistakes costing them money
- Hates how disorganized everything feels
- Would love a low-cost solution that puts their business on the right track
This persona serves as a vivid guideline and blueprint for all your marketing activities. It can affect digital ad targeting, the tone of your messaging and the features you choose to highlight.
In this way, measuring data and transforming it into a fully fledged (yet imaginary) human being can serve as a guiding beacon to make your marketing decisions more clear.
However, you should always test out other possible target audiences or variables to your buyer persona to see if you can discover a new or better-defined niche over time. Scrutinize your conclusions, look to the data, and think from a persona-focused perspective, and pinpointing your true target audience will be easier than you imagined!