Why Small Businesses Need to Identify Their Target Audience
Do you want to get the highest return on your investment when it comes to your marketing and customer communication efforts? If you answered yes, then you must have a deep understanding of your target audience.
As I was doing the keyword research for this post, I discovered (much to my chagrin) that there aren’t many searches for “how to identify your target audience.” The lack of search volume suggests that it’s not something people are thinking about. Consequently, I am confident that organizations that truly understand their target audience and provide real value to them, will have a leg up on the competition.
I hope that by the end of this blog post, I will inspire you to be fanatical about understanding your target audience, so you can position your organization to be the premier provider of the services or products your target audience is seeking.
Target audience definition
Let’s start out by defining what your target audience is. This is your ideal customer or client. If you work in sales, you may be more familiar with the term “target customer.” If you work for a philanthropic organization, your target audience represents your ideal donor. Your target audience is made up of the people who have a need for the products or services you offer. However, they may not realize that your organization is the solution to their need.
Dangers of failing to identify your target audience
It’s been my experience that many small businesses and organizations set themselves up for disappointment by neglecting the fundamental task of correctly identifying their target audience and understanding the needs, wants, barriers, fears, hopes, and dreams of their target audience members.
I recently worked with a B2B company that thought they had their target audience and their key differentiators all figured out. As we began to research the competition and customer needs to build a marketing plan, it quickly became apparent that the people they thought were in their target audience had no ability to buy the product; they didn’t have the budgetary authority to make a purchasing decision. In addition, many of their existing customers had purchased the product to fulfill a need that had not been identified by the company as a major selling point.
The company had failed to recognize what their true point of differentiation was, how their product was perceived in the marketplace, and who would ultimately make the purchasing decision. I often wonder how much more revenue this company could have generated over the past decade if they had recognized these opportunities and challenges early on.
The Lure of the Phantom Market
In one of the classes in my master’s in marketing program, we explored a case study involving a company that failed to accurately identify its target market and the subsequent demand for its product. The product launch fell short due to the company’s mistaken belief that a market existed for the product. This is what is known as a phantom market.
The phantom market is the market that everyone in an organization is confident exists, even though no one has done the research to confirm that it does. Within the organization, there is a widely accepted belief in the market potential, which leads decision makers to make uninformed business decisions. Surprisingly, even large, sophisticated organizations with extensive marketing departments can fall victim to this illusion.
This phenomenon persists for several common reasons:
1. Misreading Market Potential:
This often happens when anecdotal evidence is disproportionately emphasized. For instance, a casual comment from a client might be misconstrued as valuable insight from a knowledgeable source, when in reality, it is merely an ill-conceived notion.
2. Lack of Objectivity:
Cognitive biases can obscure sound decision-making processes. For example, succumbing to the echo chamber effect, leads one to accept a notion as fact, regardless of the validity of the claim.
3. Demand Estimates Reflect Subjective Goals:
In such circumstances, internal factions may harbor vested interests in endorsing a particular initiative for their own advantage.
4. Overlooking Disincentives Pertinent to the Prospective Customer Demographic:
The cannibalization of alternative products provided by the organization, user switching costs, and the potential need for a substantial financial commitment towards consumer education are all commonly overlooked disincentives.
Sufficient target audience research would illuminate these obstacles, enabling the organization to make more informed decisions.
Research Your Target Audience for Sales and Marketing Success
As you can see from these examples, identifying a target market and positioning your product to fulfill the target audience’s needs is paramount to your marketing success and ultimately your organization’s revenue generation. If you’re not seeing the sales and marketing success you would like, there is a good chance it’s because there is a disconnect between what your organization thinks members of you target audience want and what they really want. It’s time to buckle down and do some research on your target audience.