Market segmentation has been a successful strategy for years, yet many do not benefit from implementing this approach. Most individuals know they cannot be all things to all people, but their businesses models underperform because they are trying to do just that. By dividing a large population into segments, a business can then position itself to better fulfill the needs of one unique group.
Ten benefits of concentrating on one target market.
1. Less distractions. The scope of products and services a niche needs become narrowed, making it easier to grow to be a specialist, tailoring a customized offering, which improves satisfaction, retention and advocacy.
2. Efficiencies. Service offerings and operational processes can be much more refined, preventing a business from being pulled in too many directions.
3. Word of mouth. News will spread recognizing the business as “the one” to use in exclusive circles that are sometimes hard to penetrate.
4. Better business development. As the business becomes the trusted choice by others in the niche, prospects do not have to kick the tires as much, resulting in shorter sales cycles and improved conversation rates.
5. Intrinsic knowledge. Research can identify the common benefits a niche desires, allowing for more compelling marketing messages by using their own words.
6. Sniper approach. Marketing dollars are not wasted using mass marketing shotgun blasts, as specific tactics can be directed at the target audience (not the larger population.)
7. Brand strength. An organization’s image is improved within a segment, building up brand equity over time, allowing for recognized expertise and more positive publicity, which all leads to a competitive advantage.
8. Powerful partnerships. Key strategic alliances and relationships with centers of influence can be built with those focusing on the shared clientele.
9. Increased revenue. Specialty products and services can be perceived as an enhanced offering, allowing for premium fees.
10. Increased profitability. Targeting a wealthy segment results in less small clients in the future, reallocating the business to become more profitable per client.
Don’t be tied to the 80-20 rule, where 80% of profits come from only 20% of the clients. Redefine your business model, focusing on a profitable target market. Become an identified authority figure in that area and your business will become more efficient and effective.
If you need assistance defining a niche or implementing a targeted marketing strategy, contact Byrnes Consulting to increase your success.