Tools and Techniques to Research Your Target Market

Many small-business owners know they should do market research, but often get stuck on the process. Here's how you can try to do it quickly, accurately and cheaply.
March 13, 2015

As your business grows, one of the bigger traps you may face is wanting to be all things to all people, and saying “yes” to any customer who will pay you. But this can hurt business growth more than it helps. Alternatively, a more strategic tactic to business growth is identifying and developing a relationship with a specific target market.

To identify the potential of a target market, you should answer four fundamental questions:

  1. What is the specific problem or pain your business is trying to solve? This has to be as detailed and narrow as possible. It can’t be “we help elderly people,” for example. Instead, it should be “we help elderly people who can’t go food shopping for themselves.”
  2. What does the target market do now to solve that pain? If the first reaction is that there are no current solutions to the pain, then: a) you're not looking broadly enough, or b) the pain really doesn’t exist. Any real pain is being solved, even if ineffectively, by the market today.
  3. Who has the money to solve this problem? Which demographic is going to be able to pay your company to solve that pain at a profitable price? Continuing the previous example, if you want to serve elderly people who have the financial resources to have their food delivered, you might target richer socio-economic geographies, which can be identified by county real-estate prices.
  4. What is your company's unique expertise that can help the targeted customer? Identify the specific skills of your team that can really make a difference.

Consumers can then be segmented by age, gender, location and income. Businesses can be segmented by industry, size and location. Look for similarities and differences in customer segments for targeting products or services.

Choose a Niche

What is your company "exclusively” known for, and who do you “exclusively” serve? Customers usually want to feel special and believe you talk directly to them.

ClearView Social, which helps companies share their content online, works only with lawyers. "Being a social media expert in the legal field, I felt that our competitive advantage was the ability to scale the high barrier to entry in this market to get into big law firms," says CEO Adrian Dayton. "We wanted to be great at that first.”

Track Changes to Target Customers

As your marketing evolves, new competitors enter the arena and customers' desires change, you can use these methods to track the profile of your existing customers and gain new ones.

Consistent content marketing. Publish weekly thought leadership content on your company’s blog, Facebook, LinkedIn and Twitter. Track who responds with comments and concerns to which content. On a quarterly basis, draw a socio-psychographic profile of the customers who interact with the company the most. Consumer targeted companies also should collect the types of comments customers are leaving on feedback sites such as Yelp and Trip Advisor.

Search Engine Optimization (SEO). How do prospects and customers find your company on the Web? Use Google Analytics or Moz to tune up your SEO by finding out where prospects are referred from and which specific search engine keywords are most effective. Track how this changes over time.

Pay per click advertising (PPC). Buying keywords on Google, Yahoo/Bing, Facebook, Twitter and Linkedin can be a good way to track which keywords attract prospects. “You can test targeting demographics, ages, locations and find where your best conversions are, and then focus on targeting those groups," says Matt Boaman, vice president of EZSolution. "When you have enough data and can determine your conversion ratio, then you can decide that if you spend 10 times that much on ads, you could expect so much more in leads and sales.” Offline advertising can also be tracked through dedicated phone numbers or subtle changes to mailing addresses.

Referral coupons. Nima Noori, CEO and founder of TorontoVaporizer, says his business uses coupon tracking to “analyze how effective coupon placement on different websites are and can be at reaching our target customer groups.”

These marketing research techniques aren't a one-time activity. These should be a monthly activity you constantly track in order to understand the shifting needs of your customers. You may feel your small business doesn't have the time or resources to do it all, but if you're not doing some of it, your customers may eventually leave you behind.

Read more articles about target markets.

Photo: Getty Images