Understanding your target market
One of the hardest things for someone to do when starting a new business is to clearly define their target market. We hear “well, anyone really” or “SMEs”. That isn’t defining a target market – there are 2 parts to doing this.
1. Understand how large your target market is
…and you need to be as realistic and detailed as possible!
As an example say you wanted to work with SMEs. There are 5.6 million in the UK! But we’re based in Yorkshire so realistically the market is the 419,000 SMEs based there.
That type of figure is easy to get by searching online – but you needed to go further. You might decide that businesses needed to be a certain size to get full value from your service, so further research reduces your target market to 42,000 businesses.
If your service helps SMEs grow, then so only those interested in growing would be interested. That might take some time to find, but EU statistics showed that 70% of SMEs wanted to grow. Your target market is now down to 29,400.
Your next filter might be to target businesses established for 2 or more years that would get most value from your services. Searching online showed that around 12% of SMEs fail each year, so this further reduces the 29,400 by 24% to 22,344 – a much smaller number than the 5.6 million you started with!
2. Achieve a deep understanding of the people who will buy your product or service.
To really get your new business flying, you need to really understand your customers – the people who make the decision to buy your products or services.
You need to bring them to life – so you can picture them and what their needs and feeling are – what issues do they have? What keeps them awake at night? What are their priorities?
This is important when you are launching a product or service. When you know how your prospective customers think, feel and behave it helps you build the product or service around them. It helps you decide how to promote your business – which channels to use and what key messages are important.
Knowing how customers want to do business also helps you design the right processes for your business and helps you be customer focused.
How to understand your customers – download the worksheet:
Creating customer personas or avatars are a simple way to understand your customers and really get to know them. They are simply a description of your potential decision makers which, by answering a number of questions bring your potential customers to life.
Try our customer persona template for your business.
To really bring them to life, make sure you give each one a name and a picture. Think about what challenges they face, what frustrates them, how knowledgeable they will be about what your product or service does for them. What other competing priorities do they have? What state of mind will they be in when they first come across your business – how long will they have spent searching for what you can offer?
You should have more than one customer persona or avatar. Once you have completed several templates, get colleagues or contacts to check them and add extra detail. Then start to use them in your business planning, asking questions such as – what would John need to know here? Would it be obvious to Judy what to do next? Would Ross be clear why he needs us?
Understanding your target market, defining it and creating personas helps you mentally connect and strategise your business to make sure you create the perfect customer experience. It’s hard to do right and takes time to refine – so seek expert help with your planning to accelerate the process.
Blunt advice on understanding your target market
Have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
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