5 STEPS TO
Identifying
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 2
You know that profi ling your
target audience is the best
business practice... BUT WHY?
Even children try to identify the right audience to approach for a desired outcome, whether it’s asking soft-hearted Dad for permission to play outside for an extra 15 minutes, or asking Mum for a second piece of cake – you market yourself, or your argument, to the family member most likely to say ‘yes’!
In business, it’s no diff erent, just on a grander scale. Your goal is to get as many people as possible to say ‘yes,’ but the more people you market to, the more time, money and resources it takes – you know not everyone is going to buy, so why waste budget trying to convince them? Identifying your target audience is about focusing your sales and marketing investment on people who want to talk to you, and are likely to purchase from your company, providing a positive return on your time, money and resource investment. In short, selecting a target audience helps boost profi ts.
In this eBook we outline how to identify your target audience:
• STEP 1 – Consult your business plan
• STEP 2 – Understand your Customer Lifetime Value (CLV)
• STEP 3 – Research
• STEP 4 – Develop a customer profi le
• STEP 5 – Find out where your audience spends time
STEP 1
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 4
STEP 1 - Consult Your Business Plan
The fi rst step in identifying your target market is to analyse your own company; what products or services you off er and whether you’re restricted by location, time zones, competitive pressures, and so on. This might seem odd, but consider your industry as an example. If you sell something that is time-sensitive, your geographic reach might be impacted. You may have a global product, but if it requires 24 hour support, you need to consider the resources required to provide continuous service. If you don’t have the bandwidth, you’ll need to restrict your geographic focus to something that is manageable. Plus, it is important to understand how you diff er from your competitors, and what makes you stand out! What attracts customers to you over your competitors? For example, Virgin Atlantic have a young, hip brand and are likely to attract the 20-40 year old transatlantic fl yers, whereas British Airways is likely to attract an older, more sophisticated clientele.
Next, consider your own business goals – your sales and lead generation targets. It’s possible to calculate the required size of your target market based on the goals you want to achieve. Your required audience size will have a direct impact on the criteria included within your target profi le. For example, you may wish to concentrate on a local audience, but the volume of potential customers there won’t support your revenue goals. Therefore, you may need to expand your geography, but at the same time consider that the response rates may reduce as a result. It is
important to clearly understand what you are trying to achieve, as it impacts the target market you go after. For more information on how to calculate your revenue and lead generation goals, please download our ‘How to Use Marketing and Sales Analytics to Drive a
Return on Investment’ eBook.
STEP 2
-Understand
To calculate CLV, you need to look at metrics such as average Cost to Acquire, average Sales Revenue and average number of Repeat Transactions over a set period. This sum is then
divided by the average Cost to Acquire and Retain
these customers.
STEP 2 - Understand Your
Customer Lifetime Value
The key to identifying your target market is to not focus on who you would like to sell too, but instead consider who is looking for the product or service you off er! In our recent whitepaper,
‘Who are My Profi table Customers and How Can I Find More Just Like Them,’ we review
how many businesses simply look at revenues as an indicator of their best clients. However, these customers can often cost more to acquire, service and retain, draining your company profi ts. If you use only customers like that as the basis for your target audience criteria, you will soon be out of business!
To be successful, you need to identify who your most profi table customers are, and not simply those who spend the most money.
Identifying a profi table target audience should be driven by analysing existing customer data to understand the level of each customer’s profi tability. It is important to focus on transactional costs as well as retention and servicing costs of maintaining a relationship, in addition to the revenue generated.
STEP 3
STEP 3 - Research
When you have completed Step 2, you now have a segment of customers from whom to build your persona, allowing you to target those with similar characteristics. Using this data, the next step is to segment by key criteria that are important to your business.
A successful persona always starts with a solid demographic base. If you are a B2C company, you may want to look at age, gender, location, income, marital status, etc. If you are a B2B company, you may look at job role, industry sector, number of employees, annual turnover and again, location if you are considering export opportunities.
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 10
Ask yourself:
• Who is most likely to be aff ected by this pain-point?
• What will these individuals lose if this pain-point is not addressed?
STEP 4
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 12
STEP 4 - Develop a Customer Profi le
After completing your market research, it’s time to create a customer profi le. Using profi le criteria from your most profi table customers, as identifi ed by your CLV calculation, along with your research data, you should be in a position to create an in-depth description of what ideal, profi table customers look like. This is more than a brief statement based on their purchasing habits – it should also contain demographic and psychographic information, including:
• Customer information: This should include your most profi table products and solutions and the ‘need’ your off er addresses, so you can target prospects with the same profi le.
• Demographic information: B2B organizations should include vertical sector, number of employees, turnover and more importantly geographic location, which will also be infl uenced by your customer and company location and available resources. B2C companies should include age, gender, location, ethnic background, marital status, income, and more.
In summary, you are looking for demographic and psychographic patterns within your existing customer data, to help you identify your ‘typical’ customer, and profi le them in as many relevant ways as possible. The goal is to build a picture of an ideal prospect and an understanding of how and why they would do business with your company.
Once you have identifi ed your target audience, it is also important to consider their role within the decision-making process. There are often three personas to pay attention to, including:
• The decision-maker – the individual who provides fi nal sign off on the purchase
• The infl uencer – the individual who infl uences the decision-maker
• The evangelist – often an existing customer who acts as proof that your service or product can address a need or solve a problem aff ecting the decision-maker. Splitting your audience into these key personas allows you
STEP 5
91%
unsubscribe from emails86%
skip TV ads200M
on the Do Not Call list44%
of direct mail is never opened
THE OLD MARKETING PLAYBOOK IS
BROKEN
STEP 5 - Find out Where
Your Audience Spends Time
When you have completed Steps 1-4, you should now have a strong profi le of your ideal customers. However, it’s simply not enough to know who your target audience is; you also need to know where you can fi nd them!
Historically, companies advertised in the Yellow Pages or on TV. Direct mail then became the marketing tactic of choice, before being surpassed by email and telemarketing. But research by HubSpot provides compelling statistics regarding the lack of eff ectiveness of these traditional mediums; 86% of people skip TV ads, 91% unsubscribe from unsolicited emails, 44% will not open a direct mail piece and over 200 million people are on ‘Do Not Call’ preferences lists.
So, where can you fi nd your target audience? Most will be online, using Google to search for your business, or observing you on social media, maybe even while downloading another mobile app! We live in a media-driven world that no-longer restricts our communication to televisions schedules. Instead, as consumers, we expect to receive personalised product and service off ers via the medium of our choice.
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 16
In the same way that you used customer data to identify your ideal target market – you can use customer data to understand where you can fi nd your target audience and what they are searching for:
• Your customer pain-points tell you what information your target audience is searching for online to resolve those exact issues. You can use this information to create focused content, blog articles, website pages, etc. that address these problems, packing the content with keywords for search engine optimisation.
Conclusion
Even with a wealth of statistics proving that mass-marketing limits your potential for a positive return on marketing investment, many companies still struggle to identify their target audience and implement resource-draining marketing plans.
The lack of target marketing is driven by a company’s inability to leverage insight stored within their existing customer data. Successful targeting of profi table prospects is seated in your ability to use customer data to understand which of them generate the greatest yield and how they connected with your organisation.
A CRM solution can provide you with the data analytic tools required to not only identify your most profi table customers, but also track their communications journey, and replicate your most eff ective and effi cient marketing programs. A CRM solution allows you to organise and share sales and marketing information, track all interactions between you and your customers and prospects. This empowers you to manage and segment your client information, better identify new target audiences and to identify the best way to nurture new prospects through the sales funnel to the point of purchasing.
WWW.MAX.CO.UK
5 STEPS TO IDENTIFYING YOUR PROFITABLE TARGET AUDIENCE 18
Next Steps
Hopefully, this ebook has highlighted the importance of understanding and knowing your existing customers, and using that insight to identify new, profi table prospective audiences that will deliver a positive return on marketing investment. Staying on top of changing consumer purchasing habits, knowing how to calculate CLV, and a robust CRM solution that captures and tracks customer and prospect information are the tactics and tools needed to support your data-driven analytics. To better understand how to use these tools, please access further complimentary resources, including:
Additional Complimentary Resources
How to calculate and use your Customer Lifetime value eBook
How to use marketing and sales analytics to drive return on investment eBook Successfully engage prospects and recruit new customers practitioners guide.
CONNECT WITH US
HEAD OFFICE - AMERICAS
EMEA AUSTRALIA / NEW ZEALAND
