How Small Business Leaders Can Effectively Identify Their Target Market

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The best-laid plans of mice and small business owners often go awry.

You may have a wholly transformative service, or a product superior to everything else in your industry, but without a clear understanding of who to market to and an effective strategy for how to reach that audience, your business will flounder.

The Hubspot State of Inbound Study reports that “42% of marketers do not send targeted email messages” despite that same report also citing that “recipients are 75% more likely to click on emails from segmented campaigns than non-segmented campaigns.”

how to identify your target market

The Hubspot survey shows that customers respond better to targeted marketing. That means your small business has an enormous opportunity to break through to customers with personalized email marketing, social media marketing, and SMS marketing software.

1. Focus on a few key characteristics of your ideal target customer

A quick note on customer segments vs. personas. Think of customer segmentation as addressing who your target audience is, and customer personas as addressing what motivates customers and how best to connect with them.

While slightly different ideas, they are largely inseparable when answering the question, “How do I identify and reach my target market?” We’ll address both segmentation and personas as a larger means of effective targeting within your email marketing campaigns.

We’ve previously discussed how personas are built from the attributes and preferences associated with specific buyer segments. These attributes and preferences are defined by four major segments:

data types for well-rounded persona building

Every business will slice and dice these attributes a little bit differently, evaluating which are the best indicators of a distinct customer segment.

This data can come from a few different places. Your small business should start by analyzing your contact and customer data, looking for patterns and trends that emerge from the kind of customers you already serve.

You can also ask your customers directly. Reach out to your most consistent customers and ask them about their pain points, buying motivations, and what lead them to your company.

I spoke with Kimberly Afonso, global digital marketing consultant, about how she advises her clients as they research and construct customer personas.

“During the research phase, it is important to write down everything a typical audience may do/think/interact with. Write down everything you could think of with a specific buyer persona. Get into this person’s head,” Afonso says.

Afonso encourages her clients to consider interests, values, income, and transactional history when creating buyer personas. These well-rounded personas could look something like this:

example of a buyer persona

2. Continually monitor and analyze the success of your targeting

Successful market targeting is not a one-time effort. Your marketing team must build in the time and expectation for continuously monitoring and adapting your segmentation and personas.

As noted in a Gartner paper on enterprise segmentation, remember that people, their motivations, and their needs evolve quickly—as do provider capabilities—so what was true today may not be tomorrow. (Full research available to Gartner clients.)

Your marketing team should collaborate with sales regularly to ensure your segments accurately reflect your customers, measuring for which segments yield solid sales leads and which need minor or major adjustments.

This is where your email marketing software comes in handy. A/B testing and other comparison capabilities allow users to release two versions of their marketing material (option A and option B) to a small group of leads, and analyze the return rates, click-throughs, and other results.

 

Comparative testing capabilities demonstrated by Indicative Software

Comparative testing capabilities demonstrated by Indicative Software (Source)

When your test results and data analysis show that your target segment needs some work, don’t panic. Don’t even consider it a failure—as we pointed out earlier, markets and your customers’ needs change all the time.

There is an array of attributes that you can consider as you audit and fine-tune your segments. To ensure you don’t waste time defining attributes that may not be relevant, Gartner recommends that you look at them from three perspectives that center your segments on the persona you aim to target:

graph depicting the three evenly valued considerations to make when creating customer personas: desires, needs, and fit.

3. Add new segments when necessary

One of the common criticisms lobbed at customer segmentation is that by focusing on one or even a small handful of segments, you might miss opportunities outside the target segment.

This is a misconception, and a misrepresentation of targeted persona building.

Instead, think of your marketing team’s successful, effective personas as stones tossed into a pond.

The place where the rock hits the water is the center of your persona. Marketers should build personas to mimic their highest-converting customers; these personas should strongly reflect your most reliable customers as well as customers who share some key characteristics with your most reliable customers.

As the effects of that stone ripple outward, you will find there are customers with needs adjacent to those of your target audience. Maybe you see a surprising rise in leads from a niche podcast, or you notice a higher click-through rate on an email marketing campaign that mentioned your local professional sports team.

An uptick in these adjacent customers who don’t quite fit into the target customer segment might be an indicator that you have an opportunity to address a new segment.

The same practice of analyzing the success of your campaigns and adjusting accordingly applies to testing out new segments.

If your marketing team sees evidence of an opportunity to reach out to a new segment of customers, then it’s time to circle back to your data. Begin fleshing out how that persona interacts with the market, what their needs and pain points are, and how your good/services offer a solution.

New personas and new customers

A clear and thorough picture of your target market is important for the success of any product and service.

As you look to identify your target markets and construct your key personas within them, remember to always center around the needs, desires, and fit of your ideal customers.

Your business will need to change and adapt with the changes to your customer base as well. Frequent analytics with tools such as email marketing A/B testing will help you continually fine-tune your segments and personas, ensuring you are communicating effectively with your future customers.


Note: The information contained in this article has been obtained from sources believed to be reliable. The applications selected are examples to show a feature in context, and are not intended as endorsements or recommendations.

Looking for software? Check out Capterra's list of the best software solutions.

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About the Author

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Samantha Bonanno

Sam covers Buyer Marketing at Capterra, offering insights and thought leadership on marketing trends and best practices for small and midsize businesses. An Upstate New York native, Sam spends her free time backpacking with her dogs and holding snobby opinions on craft beer and single origin coffee.

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