7 Steps to Identify a Target Market for Your Online Business

Imagine you’re a pretty young thing on your way to a party where you hope to mix and mingle. You’re smart, successful, and funny, so you’re confident that you’ll have no problem chatting somebody up. You got this.

But when you arrive, the party is full of other people who are just as attractive, funny, and successful. Nobody is paying any attention to you, and you spend the entire night trying to get anybody to talk to you. You go home to a pint of ice cream and a phone void of fresh digits.

Don’t worry; it’s not you — it’s them. OK, it’s kind of you.

Now, imagine going to that same party, but because of your social connections, you already know that the most charming person in the room is an avid golfer, takes pride in their extensive Star Wars knowledge, and they’ve kinda got a thing for you. You’d know exactly how to build rapport by asking about their interests.

Knowing your audience can take you from being just another face in the crowd to being the most interesting person in the room. And that’s the metaphor that Kitty Lusby, Content Manager at NeONBRAND Digital Marketing, uses for determining a target audience for your website or online business.

“In business, knowing your audience gives you the same advantage,” she says. “You know how to attract attention from the people who like companies like yours, and you can cut through all the noise and get on their radar by appealing to their unique triggers.”

Great founders and managers share the same blind spot, Lusby says. “We all overestimate the demand for our products and services, and we all grossly underestimate how hard it is to get anyone to pay attention. We’re rightfully excited about our business because we know how wonderful and useful our products are, and that makes it really difficult to empathize with the billions of people in the world who don’t know we exist.”

And since the market is absolutely packed with other phenomenal businesses, you’re going to waste your breath — and your money — begging for the wrong people to pay attention unless you can accurately identify people who are most likely to care about what you have to say.

“When I sit down with business owners, they say ‘I want to get everybody,’” says digital marketing consultant Margaret Adsit, owner of Scribe Away. “Nobody can be everything; you will always have some kind of a niche. When you take a step back and to think about what you’re actually trying to help people with, that is the core of your service or product.”

Once you’ve identified that, you can start to build the right audience for your online business or website by crafting a message, building a strategy, and talking directly to your customer effectively. To start identifying your target audience, just follow these seven steps.

Step No. 1: Define Your Target Market

The key is pinning down exactly who your target customer is — the tricky part is figuring that out. “The best place to start is by asking the who, when, how, and why of your target market,” says Elliott Brown, digital marketer and publisher of small business advice site Back Office Basics. “Even if you think the answers are obvious — or if you don’t know what they are at all — it’s worth taking a second to jot down detailed notes. You can validate your answers later.”

• First, think about basic demographics like gender, age, location, family income, and education levels. Also include information that’s relevant to your product offerings, such as hobbies, interests, and life goals.
• Second, think about when clients are likely to be looking for you, which is typically always going to be a result of some kind of external factor or seasonality.
• Next, ask yourself how they will find your business. Are they going to search for you on the internet? Ask a friend? Will it be while they’re at home or on the go?
• Finally, determine why they need you and why you’re the best solution for their needs.

“When you have all this information, you can start focusing in on your target market,” Brown says. “You might also realize that you have more than one target market.” If that’s the case, you may need to approach that audience a little differently.

If you can’t give an elevator pitch, it’s best to go back to the drawing board. “You should be able to sum up what you do and for whom in one sentence: I do ____ for ____,” says Nicole Faith, Founder at 10 Carat Creations. “If you can’t do that yet, keep stripping it down. Your target market needs to have something in common. They should share the same frustration in addition to basic demographics like gender, age, location, personality, situation, interests, emotions, or values.”

When you don’t know who your customer is, then you won’t know how to speak to them — or what to say.

“Knowing who you’re talking to isn’t just a marketing issue,” Lusby says. “It affects every area of your website, from the way you design to the language you use on your about page.”

For example, people who are older than 50 years old need bigger, higher-contrast text to comfortably read on your site, Lusby explains. So if your website is supposed to promote the AARP, you should know that Baby Boomers will be using the site and adjust your design accordingly (i.e., no small, gray text on a white background).

Knowing exactly who you’re speaking to makes it a lot easier to communicate. “It not only simplifies your messaging because you’re speaking to a specific kind of person, but it also simplifies your marketing efforts,” Faith says. “There are a million and one ways to market your business online, but if you don’t know where your ideal clients hang out, then you’ll be marketing to the air. Instead of trying out every strategy, you should focus on a few at a time.”

Step No. 2: Gather Information to Create Customer Profiles and Segments

“The more data you’re able to collect — assuming it’s the right data — the better chance for creating a customer persona that reflects the behaviors of the segment that you’re targeting,” says Josh Brown, Marketing, Sales & Orders.

Look anywhere that you’re able to collect data, including customer surveys, phone interviews, exit surveys for your website, and Google Analytics. “There’s information available about different demographic age groups and habits of theirs,” says Stephanie Lantz, Principal of Lantz Consulting: Branding & Communications. “Use those specifics to make the best connection.”

If you have the budget, Adsit recommends hiring professionals to run a focus group. You can also reach out to customers for their feedback. Ask them whether they like the products and their experience with your company to get to know them a little better and build a profile for your business. Consider the common themes that come up.

• Did some clients have the same reason for hiring you?
• Did a few people express confusion over the same topic?
• What are clients in your industry most frustrated with?

“Take cues from the trends you saw in your research and ask enough ‘why’ questions to get to the deeper reasons people want to engage with your brand,” Lusby says. “That deeper understanding will be your secret sauce as your company grows.”

Step No. 3: Review Your Competition

Take a deep dive into researching your competitors to know what you’re up against. Josh Brown suggests looking at their websites to see how they position their products or services and their messaging. Check out their social media feeds to discover the type of people that follow them. See who links to your competitors to see what industries are interested in your products or services as well as to see what personal websites are linking back, which in turn can give you a better understanding of the type of people that would be interested in what you’re offering.

“Note what you like about them and also what you hate,” Faith says. “Use them as objective examples for your own business. Copy what you like but do it better. If you find someone who has an amazing niche, break it down and identify what makes it so great.”

Browse through their online reviews and look at their social media pages and see what gets engagement and how they respond to feedback, suggests Lusby. Read the comments on their products and blog posts. Anything that a customer is saying to that brand is likely relevant to your business, too, so dig in. Seeing how they interact with their clients will give you plenty of clues.

Remember that what makes your competitors valuable is that they’ve already done a lot of the work for you. When you’re on their website, Elliott Brown recommends asking yourself four questions:

1. What’s the primary benefit they offer?
2. What are the top two or three reasons they offer to support that benefit?
3. What’s the feel of their site; is it professional, young, or mature?
4. What do they ask their audience to do?

“Getting this information lets you make some inferences about who your audience is and what they want,” he says. “Do your competitors focus on price? Do they draw attention to your location? And what words do they use to describe themselves? When you see what decisions they’ve made, you can validate your assumptions and identify opportunities — or carve out a niche you think might be underserved.”

Use a few tools and services to find out how and where they advertise, such as

SpyFu or Moat. And don’t underestimate the power of Google. Google Trends and the keyword tool in Adwords can also be helpful because they tell you how many people search for different terms each month. When you know how many people are searching for you, it helps you understand your market size, and which terms are most likely to resonate with your target market.

“Find your competition and then what sets you apart — that’s what you’re going to use in your messaging,” Lantz says. “Competition is everything because if you can’t stand out from the competition, then you won’t have space in the marketplace. A lot of people have the same types of services or products available. What makes you different and what is it that you’re going to deliver?”

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Step No. 4: Conduct Primary Research

From focus groups to surveys, there are plenty of ways to do your research. Deciding which method is best for you should be determined by the type of business you have, as well as its stage.

“Regardless of what method you’re using to conduct your primary research, it’s important to be prepared,” Josh Brown says. “This means knowing what questions you want to ask and why you’re asking them. Decide how the questions will help you meet your goal of understanding your target audience’s pain points and desires so that you can better define who your ideal customer is.”

“If you’re already open for business and want to collect data, split testing is the way to go,” Lusby says. “This is how major internet brands refine their targeting and marketing, and it’s by far one of the most useful ways your business can collect data and make changes.” Split testing, also called A/B testing, is when you target the same audience, show two different versions of whatever you’re trying to test — whether it’s a marketing message, a page design, or something else entirely — and see which version performs better.

While personal interviews can be time-consuming and hard to coordinate, Elliott Brown believes they’re the best place to start.

“You’ll find that you don’t need to do too many to get strong directional information,” he says. “Make sure you interview people from different backgrounds to get different perspectives. From these interviews, you should have a narrower sense of how you think you’ll define your target audience. More qualitative data like surveys can help you verify your assumptions. You can survey existing customers or contacts if you have them. Or you can buy responses through a panel service like SurveyMonkey Audience or Google Consumer Research. This research can cost several hundred to several thousand dollars if you get a few hundred responses. It can cost a lot more if your market is more narrowly defined. Survey research is meant to validate and provide additional insight to how you’re defining your target audience, so spend about half the survey on understanding who the respondents are and the other half understanding the customer journey when they look for someone like you.”

Step No. 5: Apply This Research to Your Online Business

Once you’ve done some digging and know who your client base is, it’s time to take action. Identify what will and won’t work for your audience, and what’s missing. “You can fine-tune your product or service, the way your write copy, how you segment your email lists, and so on specifically to your customers’ needs, making them feel as if you’ve created your product or service just for them,” Josh Brown says.

Use this information to assess the best way to reach out to your client base and develop a relationship with them. For example, consider if LinkedIn, Facebook, Twitter or YouTube is the best way to generate potential customers, suggests Lantz. “We have to take into consideration in our messaging what that looks like in terms of where you’re found, your keywords and SEO,” she says.

Related: 10 Easy Social Media Tips for Your Hard-Working Small Business

To get the most out of that fact-finding work, use the results to be as specific as possible.

• Can you use language and humor that relates better to your market?
• Can you design better products that address problems your competitors are ignoring?
• Can you design your site so that it’s more accessible?

“The real differentiating factor is how you allow your target audience to drive your brand strategy,” Lusby says. “As you continue building and growing your business, work hard to keep those actual people who shop from your online store at the forefront of your mind. It’s too easy to overlook them in all the stress and excitement of running a company, but without them, you wouldn’t have a company at all.”

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Step No. 6: Evaluate and Test Your Decisions

Once you’ve decided on a plan of action, make sure it’s actually working. “Every business is relative, so it can be hard to objectively evaluate and test your decisions,” Elliott Brown says. “If you do have any baseline metrics, you should expect to see them jump in the right direction as you make a more nuanced effort to target your market. If you don’t have a baseline, you should seek some external validation because it’s hard to get critical distance when you get deep into your business.”

After you implement your market research, run it by a few members of your target market to get more objective feedback.

You can also go back to A/B testing once again to ensure your marketing strategy is working, and as long as you set it up properly, Google Analytics can do the work for you. Metrics like conversion rate and bounce rate will also show if you’re headed in the right direction.

If you need to switch it up, it’s not as hard as you might think. “Don’t feel stuck — everything is temporary and changeable,” Faith says. “If you choose a target market that doesn’t line up with your business as well as you hoped, just change it! Some early entrepreneurs have this fear of being locked into a decision or design forever before they even start. You can’t go too narrow, but you can go too wide.”

Step No. 7: Avoid Common Pitfalls

No matter who your audience is, there are a few rookie mistakes to be aware of. First, skip the jargon and insider lingo. Even the most complex services need a simple description. Make sure the language you use on your site is appropriate for your customer base.

“For small to medium businesses who don’t have the budget to hire people to write blog posts or Instagram captions, I teach my clients to imagine that when you’re writing for your customer base, pretend you are sitting across the table from them having coffee,” Adsit says. “How would you talk to them? It’s a weird thing that happens when they write like no one ever talks. Don’t lose the fact that we are humans and communicate in a specific way. What would you say to your customers to help build that relationship? That’s how you should talk to them on the web.”

Related: 7 Tips for Writing Winning Calls to Action for Your Website

Another thing to keep in mind is that customers are savvier than they’ve ever been, so they can sniff out fakes or businesses that aren’t really trying to help or serve them. That’s an additional reason to write copy that reads like you’re talking to another person — not just a jumble of SEO keywords. Authenticity is the future of marketing.

Though there might be shortcuts to win people over right away, remember that you’re in business for the long haul, so act accordingly. If you don’t have returning customers, you’re exhausting your marketing budget, so invest in the long term.

“Research is not the same thing as results,” Lusby says. “Lots of meticulous, careful, intelligent founders spend so long on research that they lose sight of their original vision. Find the right balance between staying true to yourself and your brand and bending to accommodate your audience.”

Don’t be afraid if it takes a while to nail down exactly who your base is. “A target market is just a person with real problems,” Faith says. “Your perfect target market is out there. While there’s no matchmaking service for experts and target markets, it might take a bad match or two to find your sweet spot. And that’s okay!”