When is marketing to everyone versus someone a good idea? Unless you have the enormous budgets of insurance companies, the answer is never! “Spray and pray” is filled with countless problems, including wasted money, wasted time, and confusion among your customers. If you’ve been given a seemingly endless budget, we know there are firms out there that will spend it but don’t expect to be happy when the budget runs out.
Understanding your true target market is a critical component of a strong marketing strategy – very few companies have the resources (including sales, customer service, etc.) to serve everyone. The question becomes do you want to spend lots of time with leads that are only lukewarm and need many touches to get to a buying decision or would you prefer to put your time towards prospects that are in the market for your product or services? In this article, we will help you find your true target market.
The Total Addressable Market
Your TAM (Total Addressable Market) is anyone that could potentially utilize your product or services. In the example shown below, Atlanta Steaks & Seafood seem like they could serve anyone in the Atlanta Metro market, which is approximately 6 million people. The challenge with that is this is an overreach due to the name Atlanta Steaks & Seafood. What can sometimes happen with businesses that approach digital marketing firms is they try to own a large metro market on the web. This is both costly and often brings in leads that are very weak and are just starting to “kick the tires”. Your TAM should just be a starting place to understand the entire market potential and get a good feel for the competitive market.
In this case, Atlanta Steaks & Seafood provides in-person delivery to their clientele. As such, they would like to keep their footprint within a reasonable delivery zone, where they can offer exceptional service. In drawing those lines in East Cobb, North Fulton, and down to Buckhead – they have a serviceable market of about 1 million people. From a business perspective, you can begin to model this serviceable market and estimated share to see if you have a large enough market to profitably exist. Knowing that this is the case also gives them a better perspective on where to market, lowering overall costs by not spending on digital tactics in other parts of the city.
Many businesses stop at their serviceable market and have some levels of success. Yes, there is still waste, because many people they target are just not in the market for their services (think of how many roof replacement letters you get a year). The best way to move ahead is to really understand what attributes of your serviceable audience that you want to target. In this case, the ideal customers tend to be families that enjoy outdoor grilling. With just this bit of information (and you can go deeper) a marketing plan can be targeted to families in this market that enjoy grilling. For example, recent purchasers of grills, outdoor smokers, etc.
With a narrower list of target customers, you might think there isn’t enough business to engage. Instead what you find is a strong value proposition. In this case, by taking the meal preparation effort out of the way by delivering restaurant-quality meats and seafood, they can take a higher share of the target market that is looking to purchase. More money and time can now be devoted to potential customers that are looking for this service. You can also begin to learn more about these clients and truly target to their preferences (seafood lovers vs. bone-in meat lovers).
This process is the classic “Ready-Aim-Fire” approach and does take a bit of time to set up. However, the results are worth it! Just like most programs where you develop a plan versus just firing something out there and have to pick up the pieces later. If you want to talk more about our process, please reach out to me at firstname.lastname@example.org.