The Riches Are in the Niches: Target Market
Here’s an all-too-common conversation that makes the hair on my arms stand up: I’m talking to a business owner, trying to learn more about his / her business, and I ask who their clients are. And they reply, “Everyone.”
There aren’t many wrong answers in business. After all, one of the big jokes in b-school is that the right answer on the test is always, “It depends.” However, here’s your exception: “Everyone” is, in fact, the wrong answer to this this question.
If you’ve ever seen the Netflix series Stay Here, real estate marketing expert
Peter Lorimer says something corny and catchy
The riches are in the niches.
When you think you have your niche, niche down three more times. Be so precise that you’re not sure it’s even possible to get more precise. Here are three steps to get there… riches are in the niches
1. Examine your current business by revenue.
Pull up your revenue numbers for the past year. Break your revenue* down by by product line or customer segment – whichever is more relevant to the way that you currently have things organized.
*Bonus points if you can do this by profitability, not just revenue.
For example, we have four product lines at Ellevated Outcomes: Dreaming of a Creative Career; Launching a New Business, Taking Things to the Next Level, and the Business Manager (the last is by invite only, hence not on our website). So when I take a fresh set of eyes to this analysis each year, I look at revenue and profitability, organized by these four product lines.
2. Separate out your top product or customer segment.
Part of the reason I’m so emphatic about looking at the numbers is that many of us operate from our gut. We think that we know the answers to some of these questions, or we feel like x, y, z; but I’d suggest checking that gut and confirming if our inclinations are true. I’ve never met someone who didn’t learn – at least a little more – about his or her own customer base by going through this exercise.
Once you have this segment clearly identified, identify the most common and obvious characteristics – ones that you probably already know from your market opportunity.
3. Drill (way) down. riches are in the niches
This is where those of us who love detail and analysis get to do the happy dance. Take the “common and obvious characteristics” from step two and think about how you can break these down even further, into both tangible and intangible characteristics.
Tangible looks like things that are black and white – demographics, for example. Intangible characteristics take more insight because they sit below the surface; but they’re actually much more telling. They’re psycho-graphics and subtleties; this is how we learn about why someone is buying from you.
For example, in our current work with a Nashville-based bridal shop, our list of questions looks like…
- Did the bride buy?
- Which gown did she buy?
- From where was the gown sourced?
- From which part of the inventory pyramid is the gown?
- Did she buy accessories to go along with the gown?
- How much did she spend?
- How old is the bride?
- Who came to the appointment with her?
- Does she have a wedding planner?
- How did she find the store?
- Where is she from?
- What was her original budget?
- Any other characteristics that will help us pinpoint who your best (and not best) brides are, how/where to reach more of them?
What do these questions look like for your business?
After going through this work, the outcome that you’re looking for here is the “so what?” The goal is to take all these detailed findings about your best customers and draw a picture that illustrates, “this is my ideal client” – and be able to articulate that as your target market.
Next Steps: riches are in the niches
Go through steps one to three (I suggest creating an Excel chart to quantify how many customers have which characteristics).
Your takeaway is a qualitative statement that describes – in more detail than you’ve ever thought about before! – your target market.
Then alongside it, write down a customer name who is the absolute, ideal client and embodies all these characteristics. We’ll come back to that when we get into the marketing plan.
