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Choosing a Target Market
posted on October 30, 2005
A friend of mine forwarded a request for the Austin Business Journal’s “Ask the Experts” feature. The question posed was: “How can you find a target market that will provide your best growth opportunity?”
I’m going to answer this question two different ways. First I’ll discuss choosing a niche, second I’ll talk about finding a target market that will allow you to leverage one opportunity into the next.
Several years ago when I was still in Southern California I was at an event where the speaker was a SCORE counselor. His topic was business planning, but he didn’t spend a whole lot of time talking about writing a business plan. Instead he completely changed my concept of what a niche market is. I wish I could remember that SCORE counselor’s name, because I’d love to give him the credit he is due.
His definition of a niche market was one that was small enough that you could afford to communicate with them at least on a monthly basis. For most small business that is a VERY small number. He shared his own example of being a former PG&E employee turned financial planner. His market was all of the PG&E employees in one particular building. The total number of individuals was just under 1,000. He knew he could afford to market to these individuals at least once a month.
At first I thought the guy was a little nuts and was limiting himself. Then I understood the real power of such a tightly focused niche. He could complete dominate that niche and within a relatively brief period of time have the largest share of that market. How could any other financial services company possibly compete with him? Even the big boys wouldn’t be able to touch him. Why? Once he started working with a number of individuals it would invariably come time to make changes to their 401K plan. When people started asking around they’d get the same answer from several people: “Bob with XYZ Financial helped me out, he’s great.” Imagine the credibility he had when more than one person referred him. Plus he understood his market better than anyone else possibly could. As a former employee he was able to work with them using the PG&E memo format that they were so accustomed to.
The power of having such a narrowly defined, specific niche is incredible. The best way to ask for referrals is to be as specific as possible. With a niche that’s 100% defined this way it’s easy to ask for referrals. In ‘Bob’s’ case he could simply ask: “Frank, do you regularly have lunch with any co-workers? Would you be willing to tell them about the experience you’ve had with me?” It’s that easy.
Personally I have taken a slightly different approach. I always look to get as much leverage from my target market as possible. In all of my business ventures I have always targeted businesses that provide services to other businesses. If I can provide incredible service that is beyond the expectations of my client I know they’ll be willing to refer me. When all of their clients are made up of other businesses I have a large pool of potential clients that they can refer me to. This has always provided me with an unending source of new business, and I never have to make a cold call!
Currently I’m working to build relationships with businesses and individuals that provide marketing consulting and services to other local businesses. These relationships give us both a lot of leverage in creating a win/win strategic alliance. We are able to help these companies add more value for their clients by referring them to us, and we’re able to do the same by referring our clients to them, or by paying a referral fee.
Look at your own business. Could you get more benefit by more narrowly defining your target market? Are there ways that you could get more leverage in working with your existing target market? Spending some time thinking about these issues should prove to be a great investment of your time.
If you have any questions, or if there’s any way I can help you answer these questions please feel free to contact me. I’d love to sit down with you.
Now I just need to fit all of what I just said into just 75 words for the Business Journal. Wish me luck.
Happy networking!
Scott Ingram
NetworkInAustin.com
I’m going to answer this question two different ways. First I’ll discuss choosing a niche, second I’ll talk about finding a target market that will allow you to leverage one opportunity into the next.
Several years ago when I was still in Southern California I was at an event where the speaker was a SCORE counselor. His topic was business planning, but he didn’t spend a whole lot of time talking about writing a business plan. Instead he completely changed my concept of what a niche market is. I wish I could remember that SCORE counselor’s name, because I’d love to give him the credit he is due.
His definition of a niche market was one that was small enough that you could afford to communicate with them at least on a monthly basis. For most small business that is a VERY small number. He shared his own example of being a former PG&E employee turned financial planner. His market was all of the PG&E employees in one particular building. The total number of individuals was just under 1,000. He knew he could afford to market to these individuals at least once a month.
At first I thought the guy was a little nuts and was limiting himself. Then I understood the real power of such a tightly focused niche. He could complete dominate that niche and within a relatively brief period of time have the largest share of that market. How could any other financial services company possibly compete with him? Even the big boys wouldn’t be able to touch him. Why? Once he started working with a number of individuals it would invariably come time to make changes to their 401K plan. When people started asking around they’d get the same answer from several people: “Bob with XYZ Financial helped me out, he’s great.” Imagine the credibility he had when more than one person referred him. Plus he understood his market better than anyone else possibly could. As a former employee he was able to work with them using the PG&E memo format that they were so accustomed to.
The power of having such a narrowly defined, specific niche is incredible. The best way to ask for referrals is to be as specific as possible. With a niche that’s 100% defined this way it’s easy to ask for referrals. In ‘Bob’s’ case he could simply ask: “Frank, do you regularly have lunch with any co-workers? Would you be willing to tell them about the experience you’ve had with me?” It’s that easy.
Personally I have taken a slightly different approach. I always look to get as much leverage from my target market as possible. In all of my business ventures I have always targeted businesses that provide services to other businesses. If I can provide incredible service that is beyond the expectations of my client I know they’ll be willing to refer me. When all of their clients are made up of other businesses I have a large pool of potential clients that they can refer me to. This has always provided me with an unending source of new business, and I never have to make a cold call!
Currently I’m working to build relationships with businesses and individuals that provide marketing consulting and services to other local businesses. These relationships give us both a lot of leverage in creating a win/win strategic alliance. We are able to help these companies add more value for their clients by referring them to us, and we’re able to do the same by referring our clients to them, or by paying a referral fee.
Look at your own business. Could you get more benefit by more narrowly defining your target market? Are there ways that you could get more leverage in working with your existing target market? Spending some time thinking about these issues should prove to be a great investment of your time.
If you have any questions, or if there’s any way I can help you answer these questions please feel free to contact me. I’d love to sit down with you.
Now I just need to fit all of what I just said into just 75 words for the Business Journal. Wish me luck.
Happy networking!
Scott Ingram
NetworkInAustin.com
Author: Scott Ingram
Categories: Austin, Business Advice, Scott Ingram