The hardest part of marketing is choosing whom you want to serve. Because choosing whom you want to serve makes you decide whom you will not serve, ultimately turning down sales.
Not natural for a small business owner.
In life, I recommend being a generalist. Based on some profound discoveries from David Epstein’s Book Range: Why Generalists Triumph in a Specialized World, I am relatively convinced that organizing your days and tasks in such a way to unlock all parts of your brain is critical to focus on the granular work required to be proficient.
However, you need more resources to reach everyone when growing your small business. Based on necessity, you need to target a particular group. But there are significant caveats.
Based on the research of Peter Field and Les Binet, following these two basic rules will help guide your strategic decisions.
Two basic principles for advertising
- Target groups when conducting sales activation tactics. (generally 40% of the budget)
- Reach as many people within the market as your budget allows within your market for brand-building activities. (typically 60% of the budget)
Sales Activation Activities: Sales activation activities are marketing activities that evoke a short-term or immediate response. Sales activation helps capture the demand that already exists.
Brand Building Activities: Any marketing activities that build the mental structures of customers to think positively about the brand slightly. Brand Building can create demand and capture much of it.
Short-term sales activities are usually highly efficient. However, the long-term brand building generates a higher rate of return in the long run.
It would be best if you had both; they usually work best at a 1:1 ratio. Why?
You can categorize your customers simply enough into two groups: out-of-market customers and in-market customers.
You usually have a better sense of your in-market customers but have yet to understand your out-of-market customers.
You have yet to determine who will be your next customer. Facebook, Instagram, social media, PPC, and display advertising don’t know either. That is why you must reach a large enough audience.
You must be in the hearts and minds of future cash buyers, even if you can’t measure it. Here is why.
By slightly changing the minds of potential customers to think positively about your brand, the moment they go from out-of-market-customer to in-market-customer, you already have a massive advantage over your competitors. Your competitors might be working the sales activation game, but since you have both functions rolling effectively, your sales activation will capture what your brand building has developed.
What happens when you build the mental structures among customers to think positively about your brand slightly?
Pricing power increases – the ability to charge more than competitors and retain a positive feeling toward your brand.
Long-term recurring sales – your runway for additional sales have increased, providing you with cash flow and further information.
Short-term sales – your short-term sales no longer have to work as hard, making them even more efficient.
Here is another dirty little advertising secret – people don’t make decisions in a vacuum. Try not to get captured and hypnotized into thinking marketers and advertisers know when customers will look, click, and buy. They may understand and can measure this further in the buying cycle; however, you will continue to run the “sales activation of death” if you solely focus on the bottom-of-funnel activities for your customers.
Okay – perhaps you are convinced to conduct some reach campaigns, but why not go all-in? Why would you need to target?
The closer the customer is to the buying point, the more valuable they are, which means advertising costs more.
BtoB Trends LinkedIn.
It would help if you spent some of your budget on sales activation. How do you go about balancing these two?
One word. Focus. By strategically focusing on a group within your market, you are better able to allocate your funds appropriately. You have less wastage and many opportunities to develop profits quicker, particularly in the sales activation end.
Equipping yourself with a target will help you make better strategic decisions resulting in more effective campaigns.
Target and reach campaigns require very different types of campaigns and messaging.
Sales activation activities or target campaigns usually are designated for “in-market-customers. At this stage, they have already identified a problem they need to solve and probably have already researched and evaluated all the options. At this point, the advertising needs to be rational and precise in its copy. Typically the sales metric is used to evaluate the effectiveness of these campaigns. The best sales activation activities are highly personalized.
For example, a parent with a baby at home is about to grow out of their size two diapers. (I got a little one at home, and it’s not difficult to figure out when we will be out of diapers. I never think to calculate it myself.) Thus, an advertiser might present an ad for size three diapers.
A brand-building or reach camping requires the ad to be highly emotional, with the broadest reach possible. These kinds of campaigns are measured through “memory metrics.” Memory metrics ask questions like – Which brand do you prefer? Do you think positively, negatively or neutrally about the following brands? Or when you have a headache, what brand comes to mind?
A common trait that both reach and target campaigns need is the ability to be distinct. Not different but distinct. Distinctive means that people know it is you when your ad is presented. You can usually tell if it’s a Nike ad versus an Adidas ad. Why? Nike has built a distinct brand that isn’t much different from Adidas; however, people know which ads and products are Nike’s compared to Adidas.
How do you choose your target audience?
Step 1: Define the profile of the strategically aligned segment
Next is to go deeper into the segment analysis you would have conducted. What makes this segment unique from the rest? Can you define other demographics? Age? Gender? Social class? Stage in sales cycle etc.
It would be best to look at the behavioural factors or the psychographics. Why do they buy the products/services you have to offer?
You are going from a view of 100,000 feet to about 10,000 feet.
Step 2: Assess the viability of this segment
Can you reach the targeted segment you have chosen? It’s one thing to identify an opportunity; it’s another to evaluate if you can take advantage of it.
What channels does this target audience operate? Can you be part of that channel? Can you purchase that channel? Ever thought of buying a list? A list of our target audience? Now might be a good time if you want the attention of your target audience.
The question here is – is it possible to reach the target audience concerning your ability to offer products they would like cost-effectively? Cost-effective advertising usually means targeting a segment that already thinks positively about your brand. Avoid changing the hearts and minds of customers if you desire to be cost-effective.
If you identified you need to change the hearts and minds of a particular segment, give up now, or go back to the reach campaign and stop thinking about being cost-effective for at least five years. You must invest in brand-building campaigns that garner a positive emotional response.
Step 3: Commit to Target Audience
You have gone through the process and know it’s feasible. The challenge is to commit and stay committed throughout the plan and year.
Jim Collins evaluates and compares good companies with great ones. He claims disciplined people, thinking, action, and built to last deliver superior results.
Once you choose a target audience, the hard part is staying focused when designing the other elements of your marketing system.
Now we must think about how to position ourselves in the hearts and minds of this target audience.
The next step is answering the following questions:
1) How are we perceived in the marketplace?
2) What do we want people to think?
3) Are these aligned?