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Can A Target Market Be Too Targeted?

A coach colleague asks a question about how narrow should a target market be:

“I have a client who is a Web developer.  His real love is working with arts organizations, and nonprofits in general.  However, he’s concerned that that arts organizations are not a viable target market.  Arts organizations tend to be small and strapped for cash, though there are large arts organizations such as the art museums, symphony, ballet company, larger theaters.  His question – and mine – is whether the larger market of nonprofit organizations of any kind is narrow enough, or is it too diffuse?”

Since this question is common to many people, I decided to respond via a blog post in order to share my view on this with you.

Let’s parse this idea down to three questions:

  1. How to properly define your target market?
  2. When is a target market too narrow or too broad?
  3. Should “ability to pay” be a criteria in defining a target market?

How to properly define your target market?

I define “target market” as a community of people who share interests, values and qualities, to whom I want to be the preferred provider.

An important distinction in defining your target market, that I learned from Michael Port (“Book Yourself Solid”), is focus on their qualities (who the person is) rather than their circumstances (demographics).

Using only demographics to define a target market is a mistake in my opinion because in doing so you can make too many assumptions and overlook a valuable opportunity. An extreme example that comes to mind is mobile phones. In North America we assume that people need certain financial resources to buy or rent a cell phone. But it has become a key tool in transforming the poor classes of the developing nations. (see “The Dirt Road To The Information Superhighway“, Der Spiegel 06/01/2006). And closer to home, look at other situations where a service/product provider successful went into an underserved demographic that everyone else thought not to be lucrative enough.

When I work with my clients in defining their target market, we first do the demographic thing to get it out of the system. Then we look at some other dimensions:

– their qualities and values: To create loyalty and commitment, your target market has to have something in common with you. By describing the qualities and values you are looking for in great clients, you can also see if you also have those same qualities and values. The better the match, the better you will resonate with your target market.

– a shared story: One of my mentors, Coach Dave Buck, says “You can best coach the games you have played”. Do you have experience or an affinity with the target market you wish to serve? For example, it is difficult for me, a life-long childless bachelor, to offer my services to new and expectant mothers. But if I can show that I have lots of experience with children (by being an active uncle, for example), this improves my credibility in the area of children. (In reality, this is not a target market for me because I have no story to share.)  You don’t necessarily need to have been in the specific situation of your target  market or have a long list of accomplishments in the field (although this helps a lot to build credibility). Empathy, an important element of building trust, can also be developed by sharing stories that communicate your passion for your target market and your understanding of their situation.

– their compelling desires: Go beyond just their “needs”, or the things they are lacking. Focus even more on where your target market wants to go, what they want to move forward towards. When people have to satisfy needs, they look for the least cost alternative. But when they want to fulfill desires, they will select the best option, and cost takes a back seat.

– the deep-rooted benefits your clients will experience as a result of working with you: Go beyond just their products that you deliver, and identify what your clients will experience, in four dimensions:

  • financial: how will their financial situation change for the better? (this applies no matter what you offer)
  • emotional: what positive emotions will they experience because of you?
  • physical: how will their environment change because of you (how they work, how they live, how they play, how they create)
  • spiritual: how you help them experience their core values, their mission, their vision, at a deeper level?

– their trigger point: What is the specific situation, circumstance or question they are asking themselves that will cause them to look for you as the answer? The more precisely you can zero in to the situation which is triggering their search for help, the quicker you can position yourself to be the answer. In my case, my target market is not just self-employed professionals, but specifically self-employed professionals who are already in business, have clients, and now who want to become the “go-to” resource with their target market.

Going deep in describing these dimensions of your target market will help you to discover their true motivations seek you out and work with you – and why they will make the effort to find lots of money to pay you.

When is a target market too narrow or too broad?

I think the target market is well defined when you are recognized as the sole preferred provider for that market. The market is too broad if there are others who can “compete” with you.

When starting out, your target market is very small because your reputation is small. This is where you need to invest in building trust and credibility with your market. Your target market needs to look at you as the answer to their questions. They also need to know that you are empathetic to their needs, desires, values and situation, and are fully committed to serving them. As the trust builds, then others with similar needs, desires, values and situation will gravitate towards you.

The big mistake I see is people casting too wide a net, fearful of losing out on opportunities, This forces the client to make a choice, because you are no longer recognized as the sole preferred provider. Then you have to compete for the business, compromise your fees, and waste time and money. And if you don’t resonate strongly with the client, then you will lose out.

The more you can laser-focus on a target market using the descriptors above, the more you can stand out from the noise of all the other options and “dominate” that market. You want to create a situation where people talk about you and come to you, rather than you having to spend time prospecting.

As I like to say, “Create a dynamic where the client needs you more than you need them.

Should “ability to pay” be a criteria in defining a target market?

My opinion? No. For two reasons:

1. People will find a way to pay if they want you enough.

The objection “We don’t have the money” rarely means they don’t have the money, it means the level of trust is not yet high enough for them to make the commitment to work with you.

In my essay “How Do You Stash Your Cash“, I discuss the psychology of money management. Economists teach us that a dollar is a dollar is a dollar. But in real life, we assign different emotional weights to money. Money is a measure of commitment. The key is to build your trust and credibility to such a high level that they will dig into their reserves to commit to your solution.

On a practical level, especially with non-profits, help the client find a way to pay. Become an expert in understanding how arts organizations are funded, and a guide to helping the client find the funds to pay. Understand their funding cycle and time when to offer your solution (before they make the budget for the next year or apply for grants).  Sometimes the payor is a third-party, independent of the client with whom you will be working. I’m on the board of our Local Economic Development Centre (Centre local de développement de Québec) and part of our mandate is funding the business development activities of arts organizations.

2. Define your tribe by how they energize you, not by ability to pay.

As Michael Port says, “Find the people you are meant to serve, who energize and inspire you and allow you to do your best work“.  I believe when you focus on doing your best work with people who appreciate it, then ways to monetize your work will appear. Because when you are doing your best work, you shine, and people talk about you. The level of trust people have in you goes up, people’s willingness to commit to you goes up, and opportunities come your way.

When I started to focus on self-employed entrepreneurs/solopreneurs who want to make the shift “from good to great”, and purposely turning my back on the government/corporate market (which is big here where I live), people said I was nuts. “Solos don’t have the money!” they said.  As I develop my business by focusing on building trust and credibility with my target market, so many amazing opportunities are popping up that I have to start saying “no” more often to not get overwhelmed!

Become the “Linchpin“, a term described in Seth Godin’s new book, by being the indispensable go-to resource for your clients. In this specific case, look beyond being just the “web developer” for arts organizations and become their preferred partner. Coach and teach these organizations how to unlock the power of the web to get their message out and get more ticket sales and community support. Help your target market create successful experiences and they will become loyal to you. From loyalty comes commitment, and from commitment comes their willingness to pay whatever it takes… because they know they will get so much more in return.

To sum up my answer, I believe it is important to laser-focus your target market as tightly as possible. I believe that for every combination of skills, talents, passions and values that you offer, there is someone out their waiting for you to appear. By building trust and credibility with the community you most wish to serve, you can create an environment where they win, which in turn will ensure that you win now, tomorrow and in the long term.

For more information

For a deeper discussion of how people budget their money, and why if they really want what you offer, they will find a way to pay, see my post “How Do You Stash Your Cash

See the article “Six Things They Mean When They Say They Have No Money” by Naomi Dunford

This discussion directly relates to Seth Godin’s book Linchpin:
Summary and interview on Mashable.com: http://mashable.com/2010/02/14/seth-godin-linchpin/
Amazon link: http://www.amazon.ca/Linchpin-Seth-Godin/dp/1591843162

and Michael Port’s “Book Yourself Solid

Sort of related to this topic is the question of bartering your services. See my essay on this:

Image Credit: Photo by Gisela Giardino. Original link: http://www.flickr.com/photos/gi/6933867/ Use under Creative Commons 2.0 license

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