Building a business that becomes—and then remains—successful is no easy feat. Of the many things that can go wrong along the way, some are avoidable if you simply know the right steps to take. One of the most important ways to increase your odds of business success is to take time to understand the market you’re entering into and the people you aim to sell to.
Defining your market is an essential part of developing a marketing and product strategy for a few key reasons:
Market research is a common recommendation most new entrepreneurs encounter. A lot of business owners therefore figure out the value of defining their target audience at the early stages of building a brand. Fewer business owners glean the importance of continuing to revisit and refine their market definition throughout the life of the business.
In fact, updating your market definition is a valuable step to take at least once a year.
People’s habits change. The information you collected about your audience a year ago—or worse, several years ago—will no longer provide you the accurate view of their behavior and preferences today. As an example, just think about how different your own interactions with technology were five years ago than they are now. What apps and social media sites do you use now that didn’t even exist then? How much more often do you pull out your phone now than you did then? Your audience has changed as well. You need to figure out what their current habits are.
In addition, your company changes. If you’ve made updates to your product or added new products to your offerings, that could cause a shift in who your target audience is. A new feature to your signature product could make it valuable to an all new audience you’ve been overlooking. By refining your market definition, you can capture any categories of potential customers missing from it now.
And as industries grow and new companies enter the market every day, your research into the other options available to your audience will inevitably grow stale. You need to know what the market for the kind of products you sell looks like now—not a few years ago when you started.
For your market definition to be a valuable part of your business strategy, it has to be accurate. To create a market definition based on reality, rather than assumptions, you need data. When it’s time to revisit and refine your market definition, here are four ways to bring data into the process.
1. Analyze the customer data you have.
When you first define your market, you have to make some assumptions about who’s most likely to use your product. The longer you’ve been in business, the more data you have on who actually buys your product. Check your customer data against your early assumptions. You may find you need to make some big changes to the marketing persona you had in mind.
Look for commonalities in your current customers in demographic categories like age, gender, and location. And don’t just analyze who’s buying from you, also look at what types of customers spend the most with your company and which are the most loyal. For some businesses, focusing a larger share of your resources on your most valuable customers can make more sense than trying to cast a wider net to increase the quantity of customers.
2. Check your marketing analytics.
Online marketing produces a vast wealth of data that you can learn from. Use Google Analytics to find data on who’s visiting your website. Check your email marketing software to learn about who’s opening and interacting with your emails. Online advertising platforms provide data on who interacts with your ads, and social media makes it pretty easy to find out a little about the accounts engaging with your updates.
Use the marketing data you have to figure out what kind of people are following and interacting with your brand. Do they match your initial market definition? How often are they converting? Or put another way, how closely does the audience in your marketing analytics match your customer data?
An analysis of your marketing analytics will help you gain a clearer picture of the kind of person interested in your marketing activities and the kind of messaging you present now. Combined with the rest of the data on this list, that will help you create a more accurate and useful market definition.
3. Pay attention to your competitors’ data.
The data you’re able to collect internally is rich and valuable, but it’s one small part of the overall industry landscape. For a fuller picture of who your audience is, how they behave, and the purchasing decisions they make, you need to look to your competitors.
There are some limitations in what competitor data you have access to—you can’t gain a look at the kind of customer data and marketing analytics for them that you have for your own brand. Nonetheless, there’s a lot you can learn from the information available to you. By analyzing the tact they take in their marketing campaigns, the kind of messaging they use on their own website, and the way they position their products, you can reverse engineer what they’re doing to make informed assumptions about their market research.
And by tracking changes in their marketing approach and product offerings, you can glean insights about what they’ve learned from their own analytics. All of which adds to your own knowledge about your market. Any project to refine your market definition will therefore be more complete if it includes a competitor analysis.
4. Supplement quantitative data with qualitative.
The types of data we’ve discussed so far—the numbers and figures your various tools track—is quantitative data. It’s a big part of any good analysis of your market. But it only tells part of the story. To flesh out the full picture, also seek out qualitative data with the use of customer surveys and audience interviews.
The numbers will tell you something about who’s interacting with your marketing and buying your products. But the actual people behind those numbers can tell you more. They can speak to things like the reasoning behind their decisions, and what their feelings were when they saw a particular ad. Their stories will form an important part of gaining a clear picture of your target market.
No business can succeed without customers. It’s at once an obvious statement, and an idea that can get lost in the focus on numbers, reports, and profits. Make sure you take time on a regular basis to revisit who your target audience is, what they care about, and what they respond to. That knowledge will inform your market definition, and help you keep your business plan in line with the people your product’s really for.