Identifying and Targeting the Right Customers
In order to have any sort of success in marketing, you must first identify the type of people who would want your product/service and tailor your marketing efforts to fit them. This may seem like a relatively simple process, but major companies spend millions of dollars to track statistics, analyze data and profile the right people for their business. But for those without these sort of resources, there are still some simple ways to identify and target your market effectively.
One of the easiest ways to locate and understand your potential customer base is to ask yourself two questions:
- Specifically, what do my customers want from me?
- What sorts of related products or services are they currently buying?
Once you understand what people would want to buy from you and what businesses they currently engage with, you will have a clearer picture of your target market. If you can identify the businesses target customers already use, you can engage these businesses and share customers through incentives, affiliate programs, and other similar arrangements.
To put it more simply– you should find businesses with the same sort of customer profile and start a relationship with those business owners that is mutually beneficial. The result should be:
- For You: A clear customer profile and target audience for your business
- For Your Partner: Added value gained through their current customer base
While this is a relatively straightforward concept, identifying businesses to partner with and understanding how beneficial these relationships are can get a bit complex. One of the best ways to understand this is a formula developed by Jay Abraham:
LV = (P x F) x N – MC
- LV: lifetime value of the customer
- P: average profit margin of each sale
- F: number of customer purchases per year
- N: number of years customer is with your business
- MC: marketing cost per customer
For those who are not particularly fond of algebra, the formula basically represents the overall effectiveness of your efforts. A higher lifetime value indicates successful marketing efforts over an extended period of time.
Although the process of identifying your target market can become complex, this technique can be broken down into three relatively simple steps.
- Identify businesses which already serve the type of customer you seek.
- Build a relationship with these businesses through incentives and mutually beneficial programs.
- Target your marketing efforts towards this group of customers and individuals with similar buying tendencies.