Most businesses have several target market niches. When small business owners claim to have one market niche, it is usually because traditional marketing methods have directed them to choose a single niche. A single niche is either too narrowly defined or, worse case, too widely defined. A narrow niche probably will not contain enough people to build a business around. A wide niche tries to satisfy almost everyone. In either case, the niche segmentation becomes almost meaningless.
Defining the market niche becomes significant when you begin determining what marketing activities you are going to pursue for your business. The marketing activities you choose can directly impact your sales. Most small business owners do not realize that the marketing activities they choose must align with their target market niche to make a sale. For example, many small businesses claim their target market niche is corporate executives, yet the marketing activity they choose is attending free business networking events. This is an example of how the marketing activity is out of alignment with the target market niche, because corporate executives are typically not going to attend free business networking events because too many people approach them for jobs, instead of allowing them to do their own business networking with their peers.
I first developed my hypothesis of multiple target market niches many years ago when I was selling desktop publishing software for Xerox Corporation. Our Xerox software sales team was directed to primarily focus on pursuing large-volume corporate sales and secondarily on pulling sales through computer software dealers. Given that it can take a minimum of 18 months to make a corporate sale in a good economy, we (the regional sales managers) quickly realized that we had to rethink the plan to meet our quarterly sales objectives. In retrospect, I now realize that the approach I took was to divide the target market I was planning to pursue into three segments—top, medium, and low priority.
- Top priority (fastest sales cycle, not largest volume)—Pulling sales through computer software dealers.
This worked well for me because the main marketing activity was to conduct desktop publishing seminars. I was a good presenter and I was willing to hold seminars no matter how many prospects attended. (Note that a strategy such as this has to be weighed against one’s family responsibilities.) Today, with the price of gas in the U.S. combined with the unbillable roundtrip commute time, I would rethink my attendance criteria, especially regarding minimum numbers.
- Medium priority (relatively fast sales cycle)—Pulling sales through individual departments within both small and large companies.
I was able to make connections through seminar attendees, our user group attendees, tradeshow leads, and our smaller Value-added Resellers (VARs). In fact, one of my VARs shared with me his technique of making corporate connections by becoming active in Toastmasters Clubs, which were held on company premises but open to the public. He used this strategy to build relationships within the corporation, while he was working on his public speaking skills.
- Low priority (longer sales cycle)—Pursuing the large volume corporate sales as directed.
To be honest, I did not have as much success in this area.I would like to claim that it was simply because the sales team was not provided with enough incentives to make this worthwhile. However, I believe the reality is that you need to understand corporate politics to determine how the committee decision process works, including its key influencers. In my case, I would have needed to find a trainer or coach specializing in this area. Nonetheless, I am not complaining since exceeding my sales targets allowed me to achieve President’s Club twice, which in this case included a trip to an exotic location with fellow sales team members.
The irony of my corporate experience is that although the stated objective of our Xerox software sales managers (as with most corporate sales team managers) was large volume sales, the reality was that our quarterly bonuses were tied to short-term sales results. You do not have to be a rocket scientist to guess that the sales team was more motivated by quick money in their pockets.
I have found this irony paralleled in small business marketing. Many small business owners’ primary target market involves a longer sales cycle than they initially expect. Meanwhile, they find themselves chasing after short-term options. It would be much better if they simply honored the fact that they need both upfront.
In my opinion, this is why the real issue is traditional marketing‘s focus on a single target market niche. When you allow yourself to select and prioritize multiple target markets (preferably starting with no more than three), then you have given yourself permission to be honest about the realities of selling knowing that some target markets will deliver sales results faster than others. Multiple niches also provide a contingency marketing strategy if the primary target market does not pan out as planned.
After you define your priorities, the next step is to determine the percentage of time to spend on each priority during a day, week, or month. For example: top priority, 60%; medium priority, 30%; and low priority, 10%. In my case, this meant that I allocated time to each priority area every week.
When you, the small business owner, use the strategy of prioritizing your target market niches, you will gain clarity about the target market niches that are a better fit and are more profitable for you to pursue.
If you have an interest in learning more about this, consider attending my teleclass titled “Prioritizing Your Target Market Niches.” To register, visit my website at http://www.cheryldowning.com/prioritizeniches.htm.