This article is designed to help you understand the value of target audience marketing. In the world of marketing, the possibilities are endless, the deploying ideas are tough, and the industry is so competitive. Our belief is the key to making successful strategies in marketing, branding, sales, and networking is the target market. The value of target audience marketing is in ensuring you’ve made the best investment into pointed, deliberate, granular strategies designed to attract, close, and keep your best customers. By diving into this article, we hope you’ll gain a lot of understanding of the value of target audience marketing.
So what is this target market/target audience stuff? A target market is a particular group of consumers at which a product or service is aimed. We like to call it your perfect customer. They’re the right fit for your goods/services, they have the budget to pay for it, and they’re folks you actually like working with. Sometimes you have more than one target market, sometimes just one. A target audience is the group of people that a target market campaign is aimed at. We focus all of our strategies, consulting, training, services, etc. on Target Market focus and Target Audience. We’re aimed to get you in front of your perfect customer and to get that close rate higher, at the lowest cost of acquisition possible. So, let’s talk about the value of doing that.
For the purpose of this article, we’re going to talk a lot about darts. Though we believe darts are the perfect pub game to be played in the middle of the day, over a casual business conversation, with the company of friends, room temperature lager and blackened wings, we’re going to focus on business on this one. Darts is a form of a throwing game, in which small missiles are thrown at a circular dartboard fixed to a wall. Yes, small missiles are the textbook definition as found online…we’re still giggling about that. So let’s compare the games of darts with target audience marketing. Before we do, let’s talk about how you play darts. You throw the darts (a point, barrel, shaft, and flight) at a board that hangs on a wall. The object of a typical game of darts is to score the most points. The center and smallest target on the board is worth the most points. The larger sections of the board are worthless. There are objective based games, of course, but all of them revolve around the ability to hit a specific spot on the dartboard. So let’s dive into understanding the value of target audience marketing!
Quality Clients Matter
Sure, “anybody and everybody” could be your customer, but do you really want them to be? The truth is that “anybody and everybody” really means nobody because although you’d love every person to be a part of your revenue stream, it isn’t practical and…get ready for this…it isn’t profitable. Your clients should be of good quality. They should be the right fit for your product/service. They should have the right understand of why they should do business with you. They should understand the value you offer and be prepared to spend the cost to do so. Your perfect clients spend less time before deciding to spend more money with you. Your Target Market is that perfect group of customers that will make you more money. They can also be customers you like working with. Some people are just hard to work with based on your business, personalities, etc. and your target market should reflect the ‘fun’ customers as much as the more profitable ones. Non-target customers aren’t profitable because you are spending significantly more time, money, resources, what-have-you, on acquiring them, so your ROI drops significantly.
We refer to the wall the dartboard is mounted on as the place where every potential client/buyer is located. The “anybody and everybody” is the wall. The dartboard itself is the Target Market. It is a much smaller section to hit because it contains your perfect customers, and that’s a far more specific, and smaller, group. Everything in the target is an ideal customer, the right fit for your product/service with the right budget. The closer the to the bullseye, the better the fit and budget. Also, the more they’re perfect in the sense that they’re your favorite people to work with. When the darts connect and stick, that represents a sale that you’ve landed from one of your marketing channels. This is very important because marketing is designed to improve the long-term sales of your company. Most businesses don’t make money from their first customer, they make it from the repeat business of each first customer, so you want your first customers to be good ones. Harvard Business School has done numerous studies, journals, reports, etc. on Customer Lifetime Value, which they describe as:
“…helps a marketing manager arrive at the dollar value associated with the long-term relationship with any given customer, revealing just how much a customer relationship is worth over a period of time.”
So basically, this Customer Lifetime Value is what us fancy marketers use to try and determine what money should be spent now in order to acquire first customers. We’re looking for opportunities to bring in more first customers, and get them to stay loyal repeat customers, yielding the best possible profits long-term. Marketing is all about the long-term. Sales are short term. Here and now. Marketing is long-term, about keeping the pipelines filled. Salespeople sell now, marketers predict and plan for future sales. Because of the Customer Lifetime Value, we focus on Target Market and Target Audience Marketing. We want to ensure you get more results from your investments and that those results continue long-term. We’re always aiming for the bullseye with our strategies. It’s not realistic that you’ll hit it every time, but you’ll at least be hitting the target, which is better than hitting the wall. This is the greatest discussion to have when describing the value of target audience marketing.
Marketing Budgets Aren’t Unlimited
For most of our clients, this is the absolute truth, unless you own a money tree. There’s always a budget, and although that budget can be very flexible, you can’t run a business without a budget. We just talked a ton about why quality clients matter, well that leads off right into this. You have to have a budget and you have to put that budget to good use. What you want is the best Return on Investment and we believe you get that by target audience marketing. Because there is no magic number for the cost of acquisition, we know from experience it’s still high, so your first customer should be as high a quality as possible each and every time. Every company is different. Overhead is different. Margins are different. Internal processes are different. There’s no cookie-cutter mold here to tell you exactly what you should be paying, or expect to pay, so we have to ask a lot of tough questions to uncover what strategies are best. The true cost of acquisition goes far beyond great marketing strategies. The internal processes, employee culture, and organization within the company are every bit as important and how we bring your perfect customers to you. Expect us to ask a lot of questions about that too.
We’ve heard some experts say that your initial cost of acquisition, for your first customers, is a 30:1 ratio, meaning you’re spending $30 for every $1 they purchase. This is likely an accurate number for many businesses and the big reason why first-time customers don’t make you money. You have to grab the best customers and keep them there. Easier said than done, right? At a 30:1 ratio, also consider your profit margins, overhead costs, etc. Now that 30:1 ration might even look scary, like very scary. It’s yet another key benefit to help understand the value of target audience marketing.
“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” – Steve Jobs, CEO of Apple, Inc. in Fortune Magazine, November 9, 1998
There Are No Guarantees in Marketing
This is the truth. What works today may not work in 6 months. As customers change, so should your tactics to both acquire them, and keep them. With each new generation comes new habits, characteristics, expectations, preferences, etc. This is why there’s so much to marketing. This is why understanding the value of target audience marketing means so much. Because you want the quality customer, you don’t (likely) have an unlimited marketing budget, and because there are no guarantees, you should be prioritizing target audience marketing. No two marketing strategies will ever be just alike, much like fingerprints. What works for Bobby B’s Real Estate Agency across the street may not work for you at John Smith’s Realty. You’re different people, with different businesses, and different teams. Just because you’re in the same industry doesn’t mean your technology and strategy should be the same. We could spend a lot more time talking here but we won’t, because this is already a long article. Knowing that there are no guarantees in marketing means you need to spend your money wisely, with more precision. This is one of our favorite reasons for understanding the value of target audience marketing.
The Value of Target Audience Marketing
So now that you know our ‘big three’ reasons when this is such a critical and valuable strategy for marketing, it’s time to look at it in a way that’s easy to understand, like the game of darts.
Less than ideal results – This is when your darts hit the wall a lot. Likely just outside of the target, but occasionally way outside. Sometimes you get lucky and hit the outer parts of the target. One in a million you hit close to the center. This is where your marketing isn’t as focused. Your target market is likely not yet discovered. You don’t have consistent branding. Your strategies aren’t in line with one another. There’s little to no target audience marketing. You’re throwing a lot of darts but you’re not hitting where you want to be hitting. This is the most frustrating place to be and often yields less revenue, lower profit margins, higher workload. Ever wonder why your sales team spends so long to close? Could be your marketing strategies are bringing in leads from the wall. Hey, at least you’re throwing darts, and we commend you for that, but you can only throw them for so long before you need more bullseyes.
Realistic Results – This is when your darts hit the wall very little. Likely, your darts are all within the target. They are spread out, sometimes together in clusters, and are covering a large portion of the board. A good majority of your leads are within your target market and your marketing strategies are focused. Your audience is being reached. Your loyalty and repeat business is improving. Your revenue is on a steady, reasonable incline and your profit margins are a big up. The workload is balanced and your sales team is spending less time closing leads and has seen a higher close rate. Your branding is consistent and your customer feedback is growing with positive feedback. Your customers are starting to refer a lot more customers, which is the lowest cost of acquisition for first customers. This is a very realistic and likely place for companies leveraging target audience marketing. In the beginning, for the short term, these are the most common and expected results. This accurately describes the value of target audience marketing.
Ideal Results – This is a lot like the Realistic Results, described above, but either finer tuned, or the yielded results after long-term target audience marketing. You have more noticeable patterns in your clusters and more of your darts are towards the center of the dartboard. This is the ‘sweet spot’. This is really the best place you can be. It doesn’t get better than being here. Your revenue is allowing for the significant growth of the company. To get to this point, you likely had to hire more help and possibly expand your operations. Your revenue is healthy quarter after quarter and your business stays consistent. Your profit margins are very good. Even though you have more overhead, you’re a more profitable company. Your sales team may even be happy at the rate of effort required to close deals. You may even be contemplating retirement, or if you can sustain more growth from here, but in the happy kind of way. This is the ultimate sweet spot when considering the value of target audience marketing.
Unrealistic Results – This is where a lot of people have expectations that target audience results are going to happen immediately and that they’re going to be yielded more results than what we know is reasonable. Given unlimited time and resources, it’s still rare to hit this level of unrealistic results. This is where you’re envisioning every dart is a bullseye and that customers bring stacks of cash to you with little to no sales effort to close. If you’re imagining that target audience marketing can make you wake up overnight a millionaire, stop, it can’t. It won’t. Like the best Scotches, target audience marketing takes time. Though there can and will be millionaires made, we aren’t promising you these results because they are so unrealistic. You are more likely to take a vacation to Florida, get struck by lightning, bit by a shark, and have a flight with 4 layovers with zero delays than you are to quickly hit this zone we call “Unrealistic Results”. Most companies will see Realistic to Ideal results which significantly improve a company’s health, reputation, and long-term stability.
We hope you’ve enjoyed this article on the value of target audience marketing, it’s certainly one of our favorite passions to talk about.