Are you on target? Do you have a sufficient understanding of your target market to know what the center of the bull’s-eye looks like, the concerns of your target customer, the ideal solution, likes and dislikes of competing solutions, components of your offering that are of high value compared to those that might be considered a commodity, sub-segments within the target that are more price sensitive to those that are less price sensitive, etc.?
I’ve recently had multiple conversations with entrepreneurs in various industries about target markets, a very interesting conversation with a market research professional, as well as an outstanding meeting with a marketing services firm. During my corporate days, I was part of the market research team for a Fortune 500 corporation. I obviously brought a financial perspective to the position but worked on both primary and secondary research projects as well.
For those that might not be aware, secondary market research is information gathered from already published sources (government statistics or trade publications, for example) while primary market research is new research that is customized (interviews with market influencers or focus groups, for example).
While small companies don’t have Fortune 500 sized market research budgets, it has occurred to me that many could benefit from a more focused and targeted marketing approach. While most business owners understand their markets to some extent, almost all could benefit from additional insights that could be gained by a formal approach to better understanding not only the bull’s-eye of their target but also the concentric circles around their ideal target and how these might be served by a similar or related product offering.
Unfortunately, many business owners don’t have a lot of experience with the value and insights that a market research professional can bring and are therefore hesitant to make the investment. For these, it might take a “leap of faith” but it’s generally an investment that I support in my role as CFO because I have seen the benefits multiple times, in both big companies and small.
What would the value be to your business if you could deliver a more impactful message to your target audience? If you operate a $20 million dollar business and with a 10% incremental margin (a low threshold for purposes of this example) a 1% improvement in your top line would generate an additional $20,000. While improving the top line is obviously not guaranteed, it’s a relatively easy bet to justify.
Or what if you could cut out a part of your marketing dollars that are not properly targeted? I am frequently solicited for services for which I am not a good target and I always wonder how much better the return on the marketing dollars would be if more precisely deployed (either the costs would be lower or the benefit higher by putting more of the dollars against qualified candidates).
Have you and your CFO recently discussed whether you are hitting the bull’s-eye with your marketing spend?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]
The archive of these monthly newsletters is posted at the Resources section of homza.com