Running a successful small-to-medium business (SMB) is more challenging than ever. Emerging technologies and globalization have and are continuing to change everything. Companies and markets spring up and shrink away so very quickly.
Growth is not equal. Sales growth brings in revenue; product expansion ensures longevity; market growth expands the customer base and reduces risk. Finally, to ensure your SMB’s financial health, profits must grow faster with (or at the very least, in step with) revenue.
But one more facet needs to be addressed – customer experiences. Providing the type of customer experiences that go beyond customer expectations is necessary for sustainable growth. Personalized interactions, responsiveness, and the ability to match the customer with the right products/services are no longer the purview of companies that are highlighted in MBA case studies. They are must-haves for every single company operating today.
There is just one problem. Too many growing companies struggle with the idea that to grow, they have to shrink their target market. Many SMB’s still try to be all things to all customers. They are loathed to exclude a particular audience member or customer type to their target market. However, to profitably and sustainably grow, this is precisely what they have to do.
They have to define (and possibly shrink) their target market to grow. Being able to identify and then sell to a core customer group is a crucial step in the growth cycle. It is what propels high-growth companies beyond the $100 million and $300 million and $500 million marks.
Your target market consists of customers – core customers. They are living, breathing human beings, not statistics, and they happen to be your most valuable customers. They are not just “females between 18 and 35,” so get to know them. Describe them in a clear, vivid, precise way. Include their needs, desires, preferences, demands, and non-negotiables. Close your eyes and visualize them.
Once you have done that, reexamine your description through a new lens. Remember, your core customers are both prospects (i.e., net new customers) and repeat customers. Growth without customer retention is (in many cases) not profitable. So modify your description (if necessary) to include the people who will make an initial purchase and those who have been satisfied enough with their experience to return and purchase more.
Finally, understand that customers – like most things – evolve. And they do so quickly. If you do not want them to leave you behind, your products, services, and support must evolve as well.
Yes, you can. You can have supplemental target markets. For example, many clothing brands target female consumers with specific characteristics, but they also target husbands of those female consumers as well.
You can also have several niche markets, depending on the number of services or products you are selling and the size of those niche markets. If a niche cannot support your efforts, you might have broken your target market down too much.
One more thing to consider is how each niche market is different. For example, are there any buying behaviors or habits that are unique to female owners of poodles vs. female owners of bulldogs? Probably. If not, then maybe (again) you are breaking down your market too far.
Once you've mapped out your target market, you have some more questions to ask―questions that cannot be answered if you have only defined your target market as a statistic or demographic.
If the answer to any one of these is “no,” you need to head back to the drawing board.
The answer is two-fold. You talk to people, and you do research. Search online for secondary research and survey results, read articles and blogs that talk to your target market. Scan online forums where your core customers share their opinions and thoughts. Talk to your customers. Ask them for feedback or conduct a survey of your own.
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