Our target market is everyone!”
If we had a dollar for every time we heard these words from Founders here at Startups.co, we would have… okay, so we’re not quite sure. But it would be a lot of dollars.
We get it: planting your flag and defining your target market can be scary. It means taking a stand and proclaiming to the world, “This is who we are.” And, maybe just as scary and definitely just as important, “This is who we aren’t.”
But let us give it to you straight: your target market is not “everyone.” At least, not right away. And you know something else? You don’t want it to be, either.
What Is A Target Market?
In layman’s terms, a target market is a group or groups of consumers in which a product or service is intended for.
The Power of a Well-Defined Target Market
We’re not telling you to narrow your target audience because we want to put a ceiling on how high your company can fly. We really believe that, if you hone in on figuring out who your exact customer is, your whole company will be better for it.
Defining your target market solves problems all over the startup spectrum, from product design and development to messaging and marketing development.
If anyone knows the value of a well-defined, well-researched target market, it’s Scot Bryson and Jamie Petten.
Scot Bryson is the Founder of multiple startups and advertising agencies in North America. He helps brands translate their business goals into marketing plans and strategies, with a key focus on digital advertising and media planning.
Jamie Petten is CMO of L-SPARK, Canada’s largest SaaS accelerator. Since its inception in 2014, Jamie has held an integral role in developing the L-SPARK organization and programming as well as supporting, building and scaling L-SPARK’s 36 portfolio companies.
Here, Scot and Jamie to join us to talk about the importance of honing in on a well-defined target market, and how to go about finding the customers that are the perfect fit for your product.
Defining A Target Market: Everybody’s Doing It
The first thing that should clue you into the fact that there might be something to the idea of getting specific with your target market? The fact that every company you know and love has done the exact same thing.
Even companies we think of as being everywhere today initially started with a much smaller, more focused audiences.
As the completely factual, in no way dramatized nonfiction documentary The Social Network tells us, Facebook started as a social networking site specifically for students at Mark Zuckerberg’s alma mater, Harvard.
Then, it expanded to a handful of other colleges. Then, it expanded again to be open anyone with a .edu email address.
Finally, they opened Facebook to anyone over the age of 13 with a valid email address… three years after it launched.
Like a lot of startups we could name, everyone’s favorite beleaguered ride-sharing giant launched in San Francisco in 2011. And they stayed there for a while, refining their product and service, before expanding into new cities.
When they started expanding, they expanded fast, hitting 35 cities in a matter of months. But still, they started small – and they thought carefully about who they were going after every step of the way.
It may be obvious based on the examples we’ve given here, but starting your target market small doesn’t mean it has to stay that way.
“Start small,” advises Scot. “Then you expand as you need (or can, or want) to scale.”
What Does Defining Your Target Market Do For You?
So what does honing in on a specific target market do for you? Lots of things, but here are the three biggest:
#1: It focuses your product
The first and, arguably, most important thing a well-defined target market does for you? It helps you get ultra-focused on what you’re building and why. “Your company business plan revolves around having a product/service that directly addresses a need or issue that these people are having,” Scot observes.
The more well-defined your target market, the clearer your understanding of their problem – and the more directly you can calibrate your product to solve it.
#2: It clarifies your messaging
Just as a well-defined target market clarifies your thinking on the product side, it also brings clarity to your messaging, and how you go about explaining your value to your would-be customers.
The more narrowly you define who your target market is, the more focused you can get with messaging to them, because you know exactly who they are, where they hang out, what they care about – and how your product fits in.
#3: It keeps your spending in check
We understand the impulse to go broad with your marketing, believe us. But remember: brands that go big when it comes to reaching national and international target audiences through advertising pay dearly for that privilege.
That’s why, as Scot Bryson points out, even demographics we think of as being well-defined, like “men ages 18-64, may not be specific enough when it comes to keeping your marketing budgets in check. “Unless you have an advertising budget the size of Coca-Cola’s,” he adds.
Since you’re a startup, we’re willing to bet you’re not working with Mad Men-sized ad budgets. So keep whittling down your target market, and save your “I’d like to buy the world a Coke”-level creative ideas for when you’re ready for the big leagues.
Think Small. But Not Too Small
Hopefully, by now we have convinced you that “niching down” when it comes to defining your target market is the right move. But Is there such a thing as a target market that is too “niched down”?
“There used to be, but not anymore,” says Scot. “Thanks to digital advertising. “You can target people on a 1 to 1 basis now if you want.”
There is one huge, neon-colored caveat that goes with that, Scot notes. “Unless you’re niche is so small that you will never sell enough product to them. For example, if you’re trying to develop a product to sell to one-legged grandmothers that live in Northern Canada. Your pool might be pretty small at that point.”
One potential workaround if you do find yourself zeroing in on target markets that are too small to move the needle from a revenue perspective? Pursue multiple target markets at the same time.
We know what you’re probably thinking: “Wait, what? You’ve spent all this time trying to convince me to think small. Now you’re telling me it’s okay to go after more than one target market?”
Yes, and the two aren’t as mutually exclusive as you might think.
Persona-lize Your Target Market(s)
The problem with chasing a large target market isn’t necessarily that it’s too many people – it’s that it’s too many people who don’t have enough in common.
So it’s completely fine to develop more than one target market at once, as long as you meet two essential criteria:
Number one: You’re not overextending your team or your product in order to meet the needs of your target markets
Number two: You have a clear understanding of each target market’s defining features, and your various target markets are distinct from one other.
It’s important not to chase more markets just for the sake of chasing more markets.Each target market should correspond to a distinct audience – and your audiences should differ from each other in clear, easy-to-explain ways.
One tried and true method for determining whether a group of would-be customers are part of the same target market? With a good, old-fashioned customer persona.
“Personas are a great way to make a target market real,’” says Scot. “They help you get into the headspace of the person that you’re trying to reach, and let your team and your partners know specifically who your customers are, and where you’re product/service fits into their life.”
“What’s A Customer Persona?”
We’re glad you asked.
Not familiar with customer personae and their role in defining your target market? Check out our Startups University session Creating Customer Personae with Julie Hamwood for a crash course.
How To Identify Your Target Market
Part I: Follow the data
At this point in this article, we’re willing to bet that some of you are nodding along and saying to yourself, “Yeah, okay, that makes perfect sense. I know exactly who my target market is.”
We’re also willing to bet others of you are saying to yourselves, “Wait… what? I still have no idea how to figure out who my target market actually is.”
Sometimes, defining your target market takes care of itself. If you’re building a B2B product for an ultra-specialized industry that only a handful of companies work in, your target market is that handful of companies.
Other times, the organizing principle that unites your target audience may be a little less clear. So how do you go about defining your target market in those cases?
“The best way to figure out who your target market is is with the power of social media,” says Scot. “Test and learn, find out who is engaging with you organically. Using tools like Google Analytics to understand who is coming to your website as a good start. Quantcast also has great tools that are free to figure out who is coming to your site.”
Part II: Talk To People
Another tried and true way to get to know who your target customers are and what matters to them: by talking to them.
In our age of big data and quantitative reasoning, we’ve all been trained to assume that data reigns supreme. But sometimes there really is no substitute for getting on a call, or even sitting across a table from them with a cup of coffee, and asking them what their pain points are.
This brings us to the one major pitfall you absolutely want to avoid: “Defining your target market without going outside of the company or team,” says Jamie. “Not investing enough in market research and customer conversations that are happening outside of the insular brainstorming bubble of the team.”
This is a trap we’ve seen startups fall in all too many times. Some Founders become so fixated on who they want their target market to be, they forget to check and confirm that that’s who their target market actually is.
And more often than not, when you go that route, what you wind up with is not a target market at all. It’s a Frankenstein fever dream of a phantom creature that you think is your target market.
Trust us: real target markets are way better than fantasy target markets. They’re a lot easier to sell to.
So I’ve Defined My Target Market. Now What?
Once you’ve defined your target market, there’s only one thing left to do: go get ‘em. From your product to your messaging to the way you introduce yourself at parties, focus everything you and your company do around your target market and the difference that you make in their lives.
If you’ve really done the work – if you’ve really pared your target market down to the lowest common denominator, the thing that unites them all and makes them all an ideal customer for your product – we’re willing to bet something amazing will happen.
We bet you’ll notice that a lot of things that used to feel really hard – like picking features or developing messaging or deciding – suddenly won’t feel so hard after all. Because once you’ve defined your target market – once you’ve planted your flag and said “this is who we are and this is who we’re for” – all of that other stuff falls into place.
So get out there – your target market is waiting for you.