The first strategic choice you have to make in marketing is which customers to focus on. It’s not enough for them to know that your product exists - they also need to know that your product is the right product for them. A clearly defined target audience is the first step in standing out from the crowd.
Picking the wrong target is a costly mistake, but not picking a target is worse. Choosing a target is uncomfortable, because by definition making a decision involves sacrificing other options. That’s why most founders and marketers avoid making this decision, usually until it’s too late.
To make it easier to choose a target, you should ask yourself three questions:
- What do the customers want? Take a look at the customer segment that you are considering. What is the unmet need that they have? How crucial is this need for them? How likely are they to pay for a solution?
- What do you want to achieve? Do you have the motivation and the skills to develop the right product to solve their problem? Does this customer segment align with your vision, strengths and capabilities as a company? Is this segment valuable enough to grow into a viable business?
- What does the competition look like? Can you deliver a product or service for these customers faster, cheaper and most importantly better than everybody else?
Let’s say you are a software company of four people. You have identified “Fortune 500 companies” as a valuable segment. Catering to these companies would require hiring sales teams and a patience for dealing with long sales cycles. Unless this excites you, focusing on this segment would be a distraction and a waste of your time, regardless of how great they look on paper.
Your goal should be to find the sweet spot of valuable customers whose needs align with your vision and capabilities, where you can deliver much higher value over your competition.
Once you identify your target audience, make it tangible by developing a user persona.. Using the insights from your research, write down a paragraph or two about a fictional person that paints the picture of a customer in this target segment as vividly as possible:
Who are they? Where do they live? What are their aspirations? What does their typical day look like? What magazines do they read? What words do they use to talk about the problem you’re solving? How do they solve the problem today? How do you anticipate that they will find out about you? Write it down.
In the end, you will have a concrete idea about what your ideal customer looks like, instead of a vague definition such as “millenials”. Getting targeting right forms the foundation of your marketing strategy and it is worth taking the time to do it right.