The who, when, and why of target market selection

It’s show-me-the-money o’clock. Do you know where your targets are? Even the most amazing offering won’t get the dollars it deserves if you’re marketing it to an audience that can’t or won’t rise to the persuasion. That’s why it’s critical to strategically select your targets. And, yes, I said targets—plural. Here’s how to do that.

Three. That’s the number of target markets you should have. If you only have one target market, your business has little chance of survival if that market is compromised by internal or external factors. Imagine the uncertainty you’d be facing in today’s climate, for example, if your sole target is federal agencies. With three markets, if one comes under pressure, you can lean on the other two (ideally) to keep your business afloat until things stabilize. It’s about revenue diversification through target market diversification.

Keep in mind that choosing your three targets isn’t a set-it-and-forget-it situation. Think of it like your speed dial list (back when that was a thing). Which targets fill those slots, and in which order, will change over time based on how each is behaving. And the only way to have a clear picture of how they’re behaving is to track your key profit indicators (KPIs). Having historical data about your business will equip you to make smart decisions about when to persist, pivot, or pause what you’re doing, including what you’re offering and to whom.

In his book Choose: The Single Most Important Decision Before Starting Your Business, Ryan Levesque outlines five criteria every target market should meet to make your cut. For each of your three targets, ask yourself:

     1. It is evergreen (versus fad)? Evergreen markets maintain a consistent demand and have long-term staying power. Think clothing staples and hygiene products. Fads have a sudden flash of popularity, but likely will burn out just as fast. Think fidget spinners and (I’m guessing) the bedazzled water bottles that are popular today. Small businesses aren’t well-equipped to spend valuable resources on passing trends, so it’s best to aim for evergreen markets.

     2. Is there a high-price-tag problem? High price tag, big dollar potential. Low price tag, small dollar potential. You can’t build a sales funnel for a market without a high-price-tag problem. A plumber, for example, can’t build an effective funnel if they only handle low-price-tag problems like clogs and maintenance. But they can leverage that experience to serve high-price-tag problems like sewer-line breaks.

     3. Will there be future problems to solve? Solving finite problems isn’t great for future business. Markets with future problems give you a reason to go back to them later. Businesses in the health and wellness space, for example, can address a plethora of future problems encountered through different life stages: injury, disease, stress, etc. Markets with future problems present a wealth of opportunity (literally).

     4. Do the players have money? This one is pretty self-explanatory. It doesn’t matter how passionate your target is, how big of a problem there is to solve, or whether there’s infinite future potential if they can’t afford to pay for the value you bring. Does this mean you can’t ever offer your expertise to help those who can benefit but not afford it? Absolutely not. But that’s a favor or a passion project, not a target market.

     5. Is it an enthusiast market? Note: This is somewhat of a bonus within the five criteria. If a target meets the other four, but doesn’t qualify as an enthusiast market, it’s still considered viable.

If you’ve ever seen a dog wearing boots, a puffer vest, and a visor on the walk to get acupuncture, you’ve seen an enthusiast (the owner, not the dog). Enthusiasts are super passionate, tend to be brand loyal, and are rarely deterred by a high price tag. It’s ok if this market is your sacrificial lamb, meaning it may be part of (or even pioneer) a new way of doing something, then ultimately give way to something else. MySpace, for example, was a social revolution at the time. Then came Facebook. And, well, you know the rest.

Once you’ve chosen your three targets based on the wealth of data you’ve compiled (or will compile—starting today), you need to determine how to reallocate your time, money, and talent (aka, your resources). This is where prioritization comes in. If you try to stretch your resources evenly across all three targets, none of them will get enough attention or grow effectively. Play favorites among your niche markets (again, based on data) using the 40/40/20 ratio.

• 40% default: This target is already revenue-producing for you. You’re used to it, it’s what you make money on, and you’re confident in how to work with those clients.

• 40% stretch: This target is slightly outside of your default zone of competence. Serving this target should burn a little, but in a good way (like pulling a hammy after a tough workout, but not like being bedridden for a week).

Tip: Your stretch and default targets should be different enough that if one comes under economic pressure, the other shouldn’t. But don’t stretch so far that you feel incompetent

• 20% “hail mary”: Female founders, more so than men, need inspiration to stave off boredom and declining motivation. The “hail mary” target is meant to keep you energized and excited. If the target gets traction, great! If it doesn’t, it’s not a huge loss since it only got 20% of your resources. That’s well worth the intangible value it delivered. And guess what: your “hail mary” could end up replacing a default or stretch target, maybe slowly over time, maybe faster than you could have anticipated.

The riches, as they say, are in the niches. The more niche you are, the higher price you can charge. You might not be willing to pay a premium price to see a general practitioner for an annual physical. But you probably would pay that price to see a specialist for a serious condition. Having a specialty gives you the power to charge considerably more for services that the right target market will see as valuable and therefore pay a higher price for.

A word of caution: Do not choose your own hyper-niche (a very specific segment or subset of a market). That’s the fastest way to bring revenue to a screeching halt. Let your KPI data show you the way.

Start by downloading the Target Market Guide and map out the people who are ready, willing, and able to pay for what you offer. And if you find yourself stuck—or just want an expert eye on your strategy—book a Profitability Power-Up laser session with Nikkie. It’s the quickest way to get clarity, confidence, and cash-aligned targeting.