A step-by-step guide to determine your target audience and niche market

Many small business owners are confused about their target audience and their niche market. Here’s an exercise I do with my Accelerator workshop students to help them find their audience for mastermind groups. It works when you’re selling any type of product or service.

The ultimate goal of this exercise is to easily get in front of the right people with a marketing message they resonate with, offering to help them achieve a goal or solve a problem that everyone in this audience shares.

We’ll start out with the biggest audience definition and narrow it down to an audience you can easily market to.

In this example, let’s pretend you are a small business marketing consultant.

Start with your Target Audience

At the broadest level is your Target Audience, the demographics and definition of your audience, with shared goals and common problems. It’s who will buy your product or service.

For example, your target audience might be “small business owners.” The purpose of defining your target market is so you can find out where they gather, and what words to use when you talk with them. If you market to small business owners, you know they attend small business conference, join local Chambers of Commerce, and read small business magazines. You know they hang out on LinkedIn and Facebook. You know which mentors they follow and what books they read. These are all clues about how you will get in front of this target market.

But we need to narrow that down. Do you serve ALL small business owners? That will take some heavy-duty marketing to get in front of all small business owners around the globe! Perhaps you only want to work with owners that have under 50 employees. Or, perhaps you only serve those in a specific industry, like restaurants or manufacturers.

Next, choose your Segments

Segments are sub-groups within your target audience who have their own unique set of needs. There might be some overlap among your segments, but there is enough of a distinction that you need to market to each segment differently or create products/services that will fit their individual needs.

As an example, within the world of “small business owners,” you can segment them based on their revenue, the number of employees they have, their location, or the problem they want to solve.

A small business with 100 employees has some needs which are different compared to a solo entrepreneur’s needs. Yes, they have some things in common (all small business owners struggle with marketing, financing, and time management) but they have significant differences: a small business owner with 100 employees worries about hiring, firing, retention, management, reporting, leadership, and team culture.

Some other ways to segment this same audience:

• Young small business owners who are under 30
• Seasoned business owners getting ready to sell their businesses.
• Small business owners within  a 25-mile radius of Cleveland, Ohio

You can divide your target audience into whichever segments make sense to you. Do you have a passion to serve a specific segment of your overall target market?

The key question to ask is: Does this segment have enough in common with each other that my marketing message will resonate with all of them?

Can you serve more than one segment?

Yes! I always encourage people to begin with just one segment, and when you become known in that segment, you can branch out to other segments.

You might start by selling LinkedIn consulting to solo entrepreneurs, and over time add bigger small businesses to your audience mix.

The mistake I see small business owners make is to go after six or seven segments at once. Unless you have unlimited marketing money, this is too daunting. Select the most lucrative segment and start there.

Finally, choose your Niche

Your Niche market is your smaller topic segment, your area of expertise. It’s not who you serve, it’s what you help them with.

If you serve small business owners and you teach them about social media marketing, that’s your niche. It’s a way of narrowing your target audience so you are helping them attain one specific goal or solve a specific set of problems. That way, you’re not marketing to the entire small business world, you’re only marketing to those people who want help with social media marketing.

You can narrow it further and say that you help people only with paid LinkedIn ads marketing. In this way, you stand out from a crowded marketplace of all social media marketing consultants. And small business owners will spread the word when one of their peers says, “Do you know anyone who can help me with my LinkedIn ads?”

You have two further ways to narrow your niche:

• You can narrow your offerings: You can offer one-on-one consulting, you can offer classes, you can offer mastermind groups, you can write a book, you can be a professional speaker, etc. You can offer two or more of these services if you don’t want to narrow your niche too much. You may find that your audience specifically wants to work one-on-one with a consultant, and isn’t interested in taking a class. If you know your audience well enough, you may find that some of them only want private consulting and some of them want classes. When you narrow your niche to those who want to purchase a specific product or service, your marketing (and delivery) become more efficient.
• You can narrow your location: You offer LinkedIn marketing consulting to owners within a 25-mile radius of Cleveland, Ohio. If your customer is the type of person who wants to meet face-to-face, they’re more likely to hire you than someone who works out of Los Angeles.

Can your niche be “too narrow”?

We are encouraged to narrow our target audience and niche as tightly as possible to get known as an expert in that field. If you are trying to make your email marketing work better, would you rather hire a general marketing consultant or one that specializes in email marketing? Or you could narrow it even further: you want to hire a marketing consultant who specializes in email copywriting or automating email campaigns.

But you can also narrow it too much. Imagine for a moment a marketing consultant who helps people with email marketing — but only restaurant owners who live in a tiny town in the middle of Kansas, and there are only two restaurants in that town. There just aren’t enough people to buy your services!

When you are narrowing your target audience and niche, always ask yourself: Is the pool of potential customers big enough?

Here’s an example from my own life:

When I first started out, I was a generalist small business consultant who worked with solo entrepreneurs and owners with less than 5 employees. I could talk with them about anything to do with their business, except legal and tax advice.

Over time, I realized that they had a common set of problems. While I could offer advice about all these problems, I felt I wanted to focus. Over time, I narrowed my niche: helping coaches and consultants design and market their services, classes and group programs.

But that wasn’t narrow enough and about 10 years ago I went deeper. Now I focus very narrowly: helping them design, market, and run mastermind groups.

At each turning point in my business, the driving factor was: How can I narrow my niche to be more specific — without over-narrowing it?

Today, most of my customers are small business owners with 5 employees or less — just like they were when I first got started all those years ago! But, as I got known for being a mastermind group expert, bigger organizations started to purchase from me, as well. I now serve three target audiences: one I selected when I first got started in business (small business owners), and two additional corporate and nonprofit audiences that “found” me along the way because of my brand awareness marketing.

When I’m working with my clients today, we talk about all the problems mastermind group facilitators have in running their small businesses, everything from marketing and pricing, and from time management to motivation. I’ve come full circle: I’m still a generalist, but with a narrow niche audience and a narrow topic.

Use this exercise for the next service or product you’re marketing. Then target your marketing to speak specifically to that audience. Amazing things will happen!

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