Marketing 101 Series, Part 2 Fine-tune your target market

Marketing 101 Series: Part 2

How do you fine-tune your target market?

by Trip Jobe, CEO, Rand Inc.

Is any lead a good lead? Unless you can and are willing to serve any lead that comes in the answer is usually no.

“Spray and Pray” is filled with countless problems, including wasted money, wasted time, and confusion among your customers. If given a seemingly endless budget, we know there are firms out there that will spend it, but don’t expect to be happy when the budget runs out.

Understanding your true target market is a critical component of a strong marketing strategy – very few companies have the resources (including sales, customer service, etc.) to serve everyone.

The question becomes do you want to spend lots of time with leads that are only lukewarm and need many touches to get to a buying decision or would you prefer to put your time towards prospects who are in the market for your product or services? In this article, we will help you find your true target market.

The Total Addressable Market

Your TAM (Total Addressable Market) is anyone who could potentially use your product or services. In the example shown on the next page, the fictional ATL Outdoor Kitchen Pros sound like they could serve anyone in the Atlanta Metro market, which is approximately six million people. The challenge is that this is an overreach due to the name ATL Outdoor Kitchen Pros.

What can sometimes happen with businesses that approach digital marketing firms is they try to own a large metro market on the web. This is both costly and often brings in leads that are very weak and are just starting to “kick the tires.” Digital marketing firms, without clear direction, may then target Search Engine Marketing tactics (SEM) that pick up on Atlanta and Atlanta Kitchens — both of which could bring in many leads, but fewer qualified ones.

Not only does this cost you real dollars in your digital marketing budget, but it starts to cost you time. Your sales team must spend valuable time working through these leads and has less time to work on qualified opportunities.

Your TAM should just be a starting place to understand the entire market potential and get a good feel for the competitive market and market potential.

Serviceable Market

In this case, ATL Outdoor Kitchen Pros provides kitchen and fireplace hardscape installation services to their residential clientele. As such, they would like to keep their footprint within a reasonable service zone where they can offer exceptional service. In drawing those lines in E. Cobb, N. Fulton, and down to Buckhead, they have a serviceable market of about one million people.

From a business perspective, you can begin to model this serviceable market and estimated share to see if you have a large enough market to profitably exist.

Knowing that this is the case also gives you a better perspective on where to market, lowering overall costs by not spending on digital tactics in other parts of the city.

Target Market

Many businesses stop at their serviceable market and have some levels of success. Yes, there is still waste, because many people they target are just not in the market for their services (think of how many roof replacement letters you get each year). The best way to move ahead is to really understand what attributes of your serviceable audience you want to target. In this case, the ideal customers tend to be households of four or more with outdoor living space. Just with this bit of information (and you can go deeper), a marketing plan can be targeted to families in this market who enjoy grilling — recent purchasers of smokers for instance.

With a narrower list of target customers, you might think there isn’t enough business to engage. What you find is with a strong value proposition - in this case making dinnertime a fun, engaging family experience - you can take a higher share of the target market that is looking to purchase. More money and time can now be devoted to potential customers who are looking for this service. You can also begin to learn more about these clients and target their preferences (entertainers who want a sitting environment vs. cooking enthusiasts).

The time investment pays off

This process is the classic “Ready-Aim-Fire” approach and does take a bit of time to set up. But the results are worth it! Just like most programs where you develop a plan versus just firing something out there and have to pick up the pieces later, the upfront time investment saves time and money in the long run.

About the author

Trip is the CEO of Rand Inc., a strategic marketing and analytics firm. Having sat in both sales and marketing leadership roles for large and small firms for 20+ years, Trip is an ambassador for driving sales and marketing alignment to fuel growth.

Email: tjobe@randinc.cc Web: randinc.cc LinkedIn: www.linkedin.com/in/tripjobe