Isn’t selecting a target market Small Business 101? Yes, and no.
When you select a target market from a sales perspective, it’s much more than some demographics or defined avatars.
Have you identified who you can serve best? Great! Are those people also the ones you enjoy serving the most? Even better.
Your best clients may be some version of the people or businesses you’ve previously served or even a group you’ve defined by demographics, geographics or psychographics.
None of these are wrong, unless you haven’t asked yourself recently if that client is still your best client.
Your best client today may not be who you think it is.
What’s the Revenue Opportunity in Your Target Market?
This can be a sticky point for entrepreneurs who have an impact mission. Yes, you can still serve the group you most want to serve, but only if it also allows you to meet your own business goals.
I meet a lot of well-meaning business owners who want to serve the nonprofit community, often because they’ve been burnt out in a corporate environment and they want what they do now to matter. An admirable goal, but only if you can still turn a profit. You’re in business to pay yourself and do good with what you have to offer to the world, and you need to make a profit to do that.
So while you may want to work with the small nonprofits that are doing amazing things to make the world a better place, if they can’t pay your prices or you find yourself lowering your prices to accommodate them, is this target market really serving YOU?
I have a good friend who casually pointed out years ago that it takes the same amount of effort to win a $750 bit of business as it does a contract worth $3500.
Yes, working on an enterprise deal that will be worth hundreds of thousands of dollars will take more effort and generate more reward, but for most small businesses, the effort to attract, woo and close a new client is the same whether that work is worth hundreds of dollars or thousands of dollars.
Consider that just for a moment. If you spend 10% of your time selling and your average client engagement is $1000, just by focusing your efforts on businesses that will yield an average engagement of $2000 will double your revenues and likely increase your profit even more.
So, when you’re revising your ideal client profiles (and you should be doing this at least annually), be sure you consider your sales target market too.
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