How to find your target audience?
Finding, defining, and getting to know your target audience intimately well makes all the difference for startups. It can make all the difference in getting funded, profitability, and how smoothly and quickly your venture will grow and achieve its mission.
So, what’s involved in this process? Why is it so critical? How do you ace this foundational step in launching a startup?
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Here is the content that we will cover in this post. Let’s get started.
- 1. What Is A Target Audience?
- 2. Think big, but start small.
- 3. Why Is Target Audience So Important?
- 4. Knowing The Problem
- 5. Mastering Product Market Fit
- 6. Marketing
- 7. Ability To Differentiate
- 8. Being Sure The Market Is Big Enough
- 9. What You Want To Know About Your Target Audience
- 10. How To Find Your Target Audience
- 11. Market Research Reports
- 12. Fresh Custom Market Research
- 13. Get Out & Talk To Your Target Audience
- 14. Marketing & Sales Tests
- 15. Summary
- 16. FULL TRANSCRIPTION OF THIS VIDEO:
What Is A Target Audience?
As a whole, your broad target audience is your potential customer base. This is likely a segment, just a percentage of a whole industry.
When Tesla released its first vehicle in 2008, the roadster, it certainly wasn’t for everyone. It wasn’t big and it wasn’t affordable. It wasn’t easy to buy.
Its target audience definitely wasn’t the whole automobile market. It was a tiny, tiny fraction of that. Of course, by 2019 that had changed a lot.
It became much easier to order one. There are certainly far more affordable models on the menu now. They offer a diverse range of vehicles from small coupes to SUVs to pickup trucks.
With charging stations in far more destinations their electric vehicles are far more usable and practical for a far greater percentage of the market.
So, you may differentiate between your expected target audience in five or 10 years down the road when you are reaching your fully realized vision, versus your immediate target audience. The small initial zoomed-in audience for your MVP, that you can most easily reach and service well.
Think big, but start small.
Learn how to find your target audience. Like Amazon became famous for books, but now outsells fashion retailers, is into groceries, and sells just about anything you could possibly want.
You may be a B2B or B2C startup. Both have target audiences. You may have a profile for your B2B customers, but in order to really make this work, you still need to know your target audience on an individual and human level.
Unless you are selling to autonomous robots and algorithms, then it is still humans which are going to be making the buying decision.
In fact, this process isn’t just about knowing your target audience on the consumer side. Ultimately you want to know your target audience for strategic business partners and investors as well.
For now, let’s focus on finding your target audience of consumers.
Why Is Target Audience So Important?
While companies in general are doing much better at trying to get to know their target audience, it is still one of the areas in which many startups and young businesses fail.
When they fail or come up short here, everything else inevitably fails. It is the very foundation, and you know what happens to buildings when the foundation is flawed.
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In fact, all of the most common reasons that startups fail can be directly traced back to this one factor. So, in turn, it only makes sense that getting this right, and doing it well will greatly de-risk your venture and dramatically increase your odds of success, and the level of success that is possible.
According to CB Insights, the top reasons startups fail are:
- No market need for their product
- Running out of cash
- Not having the right team
- Poor products
- Business models
- Poor marketing
- Ignoring customers
- Poor product timing
- Lack of focus
When fundraising outlining your target audience is essential. Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Knowing The Problem
According to the same data from CB Insights, 42% of startups fail due to not having an audience for the product they created.
Knowing the problem is the number one factor for success or failure, and often for getting your startup funded.
You can’t really know your problem unless you know how to find your target audience. Unless you really know your target audience you cannot really understand the problem.
Mastering Product Market Fit
Knowing the root problem your target audience is suffering from is the most important thing in creating a startup. Though as you dig into this you will also discover how to best curate and design everything for your target audience.
This includes tailoring:
- Product design
- The shopping experience
- Customer care and after-sales
- Who you bring on to your team to make all of this happen the right way
You don’t have to guess anything of these things. You shouldn’t be. That is just gambling. There are more fun and less risky ways to gamble if that is what you want to do.
Though if you know how to find your target audience as well as you should, and really listen to them, they will tell you exactly what you need to do.
When you nail this product-market fit most other things can take care of themselves. Such as funding, revenue, cash flow, and profits.
It also lays the groundwork to be able to scale, and quickly.
Marketing will make or break your company. Until you find your target audience you simply cannot market effectively and efficiently.
You have to know who you are marketing to. Without that, you are just firing blind, like a blindfolded child trying to hit the pinata at a birthday party. It’s just not as funny when your life’s work and savings and reputation are on the line.
Finding and knowing your target market means knowing what type of marketing you should be doing, how to reach them and nurture them through the customer journey, and optimizing it for maximum performance and ROI.
The company in your space which is best at marketing and sells most profitably and efficiently is the player that will ultimately win.
Better performing marketing also directly impacts your unit economics. This dictates your profit margins, a financial cushion, and sustainability.
Ability To Differentiate
You are only going to be able to go big and stay there and gain the backers to help you if you are able to differentiate your business, and really have something unique that you excel at.
Knowing your target audience will help you find where you need to differentiate in order to win their business. You’ll learn what they need, why they ditch your competitors, and how to differentiate where it really matters to them.
At a minimum, this will help you stay focused on where you need to begin and stand out. Going back to the examples of Amazon and Tesla, it is unlikely they would exist today if they began trying to reach the whole retail or car market.
They never would have become famous for something or had enough uniqueness to get people to switch. You need this laser-sharp focus at the beginning. You can expand infinity later on.
Being Sure The Market Is Big Enough
Once you know how to find your target audience, that enables you to ensure the market is big enough. Big enough to become a real business. Big enough to meet your goals. Big enough to attract investors if you want them.
In addition to all of the mentioned above, you better your chances of funding if you have a well-researched, defined, and engaged target audience, and have compiled the data.
What You Want To Know About Your Target Audience
You first want to know how many customers are in your target audience. How much value that represents. Plus, how these numbers are trending, and how fast. This is the zoomed-out, general version.
Then you want to zoom in and get to know them deeply. Perhaps even better than they know themselves. This is where you will create customer avatars and ideal profiles.
This subject is a whole other article. In a nutshell, you want to learn and document everything you can about your target audience. Everything down to their daily screen time, favorite colors, what keeps them up at night, and what they secretly hope and dream about.
How To Find Your Target Audience
So, how do you go about finding and learning about your target audience?
Market Research Reports
A rough starting point is to begin checking out existing market research, third-party reports, and online data. This can give you some direction to explore and verify. Just make sure you validate it for yourself.
Fresh Custom Market Research
Whether it is DIY, hiring some short-term in-demand help, or leveraging your in-house team, conduct your own research. What can you glean from search engine analytics, social media data, and your network?
There are various ways to conduct fresh market research directly with your assumed audience online. Like sending polls and surveys via LinkedIn, other social networks, and via email.
If you can, in-person meetups, networking events, and similar venues can give you a chance to dig into this live in a professional or casual setting.
Having studied your targeted market, you must also learn how to show the target customers in a pitch deck when you start looking for funding.
Get Out & Talk To Your Target Audience
Probably the best method of all is to get out there, knock on doors, and talk directly to those who you assume is your target audience pool.
Ask questions, listen to them, verify the problem, define it in detail, and see what they are already searching and paying for in terms of relevant solutions.
Marketing & Sales Tests
Start marketing it. Your split tests and performance will help you hone in, work out how to find your target audience, and understand what clicks with them.
Most telling of all is running tests of sales. Likes, yeses, and nods or smiles really don’t count for anything. Not unless you are just running a popularity contest.
If this venture is going to be a business, then what matters is making real sales and bringing real dollars in. That’s the best test of being on the right track and nailing your target audience.
Start testing landing pages and ads. Test giving demos and pitches. More importantly, than the dollar amounts coming in, is that you are making real sales. It is resonating enough with your target audience that they will make the effort to buy.
Prove this, and raising funding, bringing in better talent, and securing partnerships will all be much easier.
For any entrepreneur, how to find your target audience is one of the most important things that you can do when evaluating a new startup opportunity. This is the very foundation and DNA of your venture. Everything else relies on it and will scale or fail based on it.
Understanding your target audience will make everything else easier. It will greatly de-risk the adventure ahead for you and anyone else you hope to bring along on that journey.
Check out what you should be looking to get out of this process, and how to begin finding your target audience. It will likely be a game-changer for whatever you have been trying to do up to this point. There more time you spend on this upfront the faster and more efficiently you can scale and reach your biggest goals and the vision you are embarking on making a reality.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
I cover this topic in detail in the vide below called How To Find Your Target Audience
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FULL TRANSCRIPTION OF THIS VIDEO:
Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about how to find your target audience. Before we get started, make sure that you hit that Subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.
Finding your customers, retaining them, being there, making them loyal is everything. In today’s video, we’re going to be breaking it down for you and walking you through it step by step. So without further ado, let’s get into it.
You want to start by understanding: where is your target audience? You are starting with a big vision for your business. You have a big vision. You know how you’re going to be starting, just for an example, with a store and then building it into what’s going to become a mall. But first, you need to understand what that mall is going to be, what it’s going to look like, and then how do you reverse engineer the process to where you are today? Most likely, the customers that you’re going after today are going to change over the course of time until you’re in the mall. In the mall, there are going to be all types of customers and different types of personas.
Think about it: when Tesla launched the first model back in 2008, they were more expensive; they didn’t have the charging stations that are now everywhere. Now they’re more affordable; now there are more people that can actually purchase a Tesla. They have different ways to purchase a Tesla, financing methods to purchase a Tesla. None of that was available back in 2008. So, obviously, the target audience and that persona have changed over the course of time.
The same thing, for example, with Amazon—when Amazon started, they were selling books, but they knew that they wanted to be the everything store. Now you can buy anything that you want on Amazon. But, again, things have changed for Amazon, and that profile and audience have also changed over the course of time. So you want to be very clear who is going to be most likely to buy your stuff and be interested with your stuff today and then have an idea as to how that is going to be shifting and transitioning over time as your company matures.
Why is the target audience so important? The target audience is everything. Really understanding who you’re going after and having data that validates who you’re going after is going to allow you to understand how you can make a meaningful business.
There is a great report that CB Insights, which is a research company, came out with that they pointed out several factors that triggered failure of a business and what some of those ingredients were that repeated over the course of time over and over when startups failed. Based on the data and that research, some of those factors were the following:
- No market need for their product
- Running out of cash
- Not having the right team
- Poor Products
- Business models
- Poor Marketing
- Ignoring Customers
- Poor Product Timing
- Lack of focus
As you see, not having the target audience in place is going to be an incredible trigger. By knowing who you’re going after, you’re going to ultimately risk the execution that you have in front of you for the next 18 to 24 months, which is what you want to do here.
According to the same research from CB Insights, over 42% of companies that failed did so because they brought a product to market where there was no need. That’s why, more than anything, you want to be familiar with what that problem is that your customers or your potential customers are experiencing. Again, if there’s no need for your product or your service, nobody is going to buy it. So be very clear as to what exactly is the gap in the market that you’re covering by bringing your product or your service to market.
Product/market fit is absolutely essential. Product/market fit happens when your product or your service are flying off the shelves. You can’t keep up with customer support or with people opening accounts. It’s just skyrocketing, and that’s when you’ve really hit a nerve in the market. Some of the key things that come into place here when determining the product/market fit and knowing the success could be any of the following:
- Product Design
- The Shopping Experience
- Customer Care and After-Sales
- Who you bring onto your team to make all this happen the right way
If you find your target audience and you listen to them, you’re going to be able to get to product/market fit. And if you want to know whether or not you have product/market fit, it’s very simple: ask your customers, “If you could no longer use our product or service, would you be 1) very disappointed, 2) a little bit disappointed, or 3) you wouldn’t care?
If you don’t get over 65% of people responding, they will be extremely disappointed, that means you don’t have product/market fit, and you need to go back to the drawing board. Again, over 65% of people would be extremely disappointed if they could no longer use your product or service.
Marketing: marketing is another one. When you are able to nail it in the marketing, when you put $1 in and take $2 or $3 out. You know your customer acquisition cost, your lifetime value, all of these different metrics that make a big difference, that is going to give you even more data. It’s going to help you understand: where are your customers? Where does the audience ultimately live?
As an example, if you are using apps on places like Facebook, it even breaks down for you: what is the age? Are they female or male? Where do they live? Do they have a degree? Do they have a Master’s degree? What is that, and what is their level of education? They give you all that data so that you can spend on ads, and the more that you get to optimize the people that you’re going to go after.
Really nailing it on the marketing, understanding your funnel, understanding who you’re going after, and tweaking and iterating on that is ultimately going to allow you to achieve perfection when it comes to nailing it on your target audience.
Knowing your target audience is also going to allow you to differentiate yourself from competitors. Again, ask your customers who do they use and why? What do they like about them? What don’t they like about them? Understanding some of the gaps that your competitors are leaving and how you’re able to address your customers by giving them exactly what they’re missing from other players is going to help you stand out from everyone else and to find your Blue Ocean Strategy, which is where can you swim where nobody else is swimming?
You also want to know if your market is big enough. You want to get out there and see how many people you can target. If your market is not $1 billion or more, most likely big investors like venture capital firms are not going to want to even touch it because that means that is going to limit the potential returns that investors are going to get, and also, you should think about return on time. You should go after people and markets that are big enough for you to do something great about it.
How do you find your target audience? What are some of those tactics that you could use? You definitely should go online; you should research. There are probably great reports, great studies that have been published. Some of those studies and reports may cost you an arm and a leg, but there’s no need to invest a lot of money on this. You can actually do some research and find some of those studies and some of those numbers that are published on Google and publicly available to everyone, so there’s no need to spend a lot of money here.
But some of those reports and studies are going to allow you to understand how big this is going to be, who you’re going after, any data points that are going to help you understand who you are going after, how you can market to them, how you can put yourself in front of them, and how you can ultimately optimize the product and the service that you want to launch in the market.
Again, you want to do a lot of tests. You want to market out there. You want to put together the landing page where you’re sending and driving traffic to it, and you can see how people are reacting with it. You can actually put some plugins and some different tools that you could use like Dropyard, to see what they think and how people are navigating through your stuff. You can also use funnels. On the pixel that you install from Facebook, you can see where they are in the funnel, where the drop off is, and how that onboarding works.
You can also use other tools like Kissmetrics, where you can see throughout the flow of onboarding, purchasing, and retaining them how the customer is behaving. You want to be able to use that because that’s going to help you in knowing whether that audience is the right one, or perhaps there’s a different audience that you should be going after.
Your target audience is ultimately going to define the DNA of your business. Without a doubt, it is critical to direct your advertising, your marketing, the input, and the output that you’re able to get for all the hard work. So it’s all about working smart so that you can get better results. So get out there and get your own customers.
Hopefully, you like this video. Hit a Like and leave a comment underneath and let me know what you’re up to. And Subscribe to the channel so that you don’t miss out on all the videos that we’re rolling out every week. If you’re raising capital, send me an email at [email protected]. I would love to help out with your fundraising efforts. Thank you so much for watching.