Marketing Plan Today
Chapter 1 - Target Audiences
QUESTION 1
TARGET AUDIENCES
WHO RECOGNIZES YOUR VALUE?
The one thing every company needs to survive is the financial reward from clients. That can be direct or indirect. Direct comes from customers paying money for your products or services. Indirect comes through other sources like influencers and third-party representatives. There must always be someone who finds what you do to be so valuable that they are willing to reach into their pockets. Who sees you as being so valuable?
GROUPING BASIS
A target audience is a group of people or companies that have similar characteristics that can be used to separate them from another group. Traditional companies segmented (potential) customers based on demographic, economic and/or geographic identifiers. The world has changed so much in these recent decades that all the various criteria have gotten mixed with and flow with each other. And while it is much harder to separate people or businesses into their designated categories, audience segmentation is still the foundation for marketing. It is impossible to provide individualized engagement for thousands, hundreds or even a few dozen customers. The idea behind segmentation or targeting is that you can develop a specific proposition and communication strategy that is more relevant to the one group than to the others. By focusing your product or service within one group, you can create an economy of scale. Once you have a clear picture of your target audience, you can develop strategies to reach individuals and incite dialogue. Then, they will be willing to pay for your products and services.
FOCUS AND TUNNEL VISION
Success cannot be perfectly planned. The reality is far more diverse than we can see at the beginning. There are also the unplanned events in life which we call good or bad luck. Those who focus on one target audience and one message decrease their chances of success. You end up creating your own tunnel vision and that can make you less aware of other chances for your business. Many books have been written about the success of focus. You need to have focus to stay on track and maximize efforts, but you must be careful to not create tunnel vision where you can see nothing else. The reality is, more can go wrong when you hold onto a specific thought, target audience, formula or proposition too tightly.
It is entirely possible that with only a few tiny adjustments, you can make yourself more relevant to a different target audience. That is why we advise every entrepreneur and business to think about more than one target audience for which you can create value. Then, you can offer the same product in a different form. It is still the same product, but with different communicated and relevant value. The advantage of a target audience is that you can reach them with one message that speaks to the common denominator. Example: hair color is a product anyone with hair can use. But the audiences for hair color vary. People looking to cover the grey are motivated in a different way than a blonde person who wants to try being a redhead. Same product, same process, but the value is different to each audience. Even businesses that have been around for years must periodically re-examine their target audiences. You would be amazed by the number of companies that lose sight of their target audience because of how busy they are.
RESEARCH AND BECOMING OVERLY OPTIMISTIC
Most market researchers don’t like to admit it, but research often creates more questions than answers. Seldom do the numbers from market research give a different picture than the one people already suspected, yet we keep researching. It looks better on a spreadsheet if you can put in “actual” numbers instead of estimates. The focus on research has led to a trend that we call “spreadsheet marketing.” It is so easy to put in a percent that represents the anticipated adoption of a product. But to actually make, finance, move and sell products, more is needed. Let’s take an example of a start-up that plans to make a unique Las Vegas souvenir. Half of one percent of all tourists seems like a modest goal. With a profit of fifty-cents per item, it is going to be raining money since Las Vegas gets about 40 million visitors per year. But this means that you need to make 200,000 souvenirs and arrange the logistics and sales. Even if you manage to succeed in doing those things, cash flow management is a job on its own.
A target audience needs to be of sufficient size. The exact size of your audience is not so important in the Marketingplan Today matrix. Imagine that we name tourists in Las Vegas as a target audience. Within that group is the possibility to refine and be relevant. Example: tourists from America, China and the Middle East vary greatly in terms of interest and taste.
FOUR AUDIENCES
The model begins with the selection of four target audiences; no more, no less. With four audiences, you have the diversification that increases your chances for success and reduces the risk. For small businesses, having more than four audiences can cause them to lose focus and, as a result, engage in less powerful activities that generate a lower sales energy per audience. Having less than four audiences makes the base too small and increases the chances that a wrong estimation could have negative consequences. An audience can generate a direct income stream, but that is not always necessary. In the example of the Las Vegas souvenir company, the providers of information to tourists (indirect) are hugely important. Think about concierges in hotels, tourist information centers and even apps for tourists. The fourth audience in your plan can be an indirect audience. A specialist in scar removal worked with Marketingplan Today. In addition to the types of customers or patients the specialist could help, it became clear that healthcare professionals have an influence on the success of the specialist’s business. For that reason, medical professionals are identified as a separate audience. The added value does not just go in one direction, the business that can remove scars brings a value to other medical professionals as well. Indirect for the patients and direct as a source of information thorough which the doctor can communicate easier and better about how they will look in the future. Just like every other audience, the medical professionals get their own action plan in the following steps.
KEEP CURRENT CUSTOMER HONOR
When using the Marketingplan Today model, it can be tempting to focus on the acquisition of new customers from the existing segments. But experience teaches us that increasing revenues by getting new customers goes slower than increasing revenue within current customers. The client pyramid from Jay Curry is a good starting point for a strategy that grows revenue from existing customers. Curry uses the 80/20 rule from Pareto: 20 percent of the customers create 80 percent of the revenue.
To go after that, split your current customers into four segments; A, B, C and D. Label the clients that generate the most revenue as the A customer. The D customers are on the opposite end of the spectrum: they have not generated any recent revenue and it is unsure if they will in the future. We all know the customers that cost more energy than the revenue they bring. Decide what you want from the A, B and C clients: keeping the revenue as is, stimulating growth or accepting the loss of revenue because you cannot focus your sales efforts.
Curry’s model is optimized for the business market (B2B), but the principle is adaptable for general audiences. His credo is “get them and move them up.” With one hand, pick your new customers and with the other, sell your existing customers more products. Looking at it a different way: create more revenue with the same products/services or with additional products/services.
If one of the audiences in your matrix is already a customer, then revenue growth can be within arm’s reach, or at least easier to reach than by going after a completely new audience.
Inspiration words TARGET AUDIENCES
TARGET AUDIENCES
ACCORDING TO JEROEN GORT
SEGMENTATION IS THE FOUNDATION OF MARKETING AND SALES
30 years ago, my marketing teacher constantly hammered “If you don’t segment, then you are not doing your job as a marketer.” I don’t know what the secret is to a successful business case, but in every case it is not wanting everybody as a client, unless you are Coca-Cola.
As a young entrepreneur, I made the classic mistake by offering my training programs to everyone in the same way. At every network event, I communicated my generic pitch to anyone who would listen. If a potential client was interested, I had to make my programs to order. It worked well, but it cost much too much energy and it created absolutely no leverage. With a library full of my programs, I had no idea who the trainings were actually for.
I was guilty of the ‘Department Store Syndrome.’ Everything is for sale in the department store, but specialized stores offered better quality, a wider and deeper assortment, with more knowledge and service targeted to a specific segment. No wonder so many department stores are out of business. If you want to be for everybody, then you are eventually for nobody.
Think about which customer you don’t want. That is healthy business thinking. With full conviction, choose for a very specific, clearly defined target audience or market segment. You begin as a piece of iron. Polarize the molecules and the same piece of iron becomes a magnet that attracts and repels. When you direct your energy as a magnet, suddenly you attract the right people and clients. That is simply a law of nature. Others won’t recognize themselves in your service offering and that is fine. Another business can serve their needs better. Dare to choose your target segments. Because if you don’t choose, you also won’t get chosen.
JEROEN GORT | PERFORMANCE COACH, TRAINER AND SPEAKER IN MARKETING, SALES, CULTURAL DEVELOPMENT AND ENTREPRENEURSHIP
Albert Zeeman
Author
Albert is the creator and author of the Marketingplan Today method for creating a marketing plan within 1 hour. Albert helps organizations from startups to small businesses and corporations (re)discover their added value and then translate that into success.
Robb Selander
Co-author
Small business specialist, serial entrepreneur, and Red OnX co-founder, Robb has worked with companies ranging from multinational organizations like Cisco Systems, Nestle, Microsoft, and Shell Oil, to one-person companies in many countries across the globe.
