The term “Target Market” is a marketing term that defines a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. This is a long fancy way of defining the referral partners that are most likely to send you business.
Think of your target market tiers like an archery target you would practice shooting arrows at. In the center you have your primary referral partners, then you have your second tier surrounding the bullseye, next your third tier, and finally your fourth tier.
Let’s explore this in more detail.
Center of Influence
In the center of your target you have your “bullseye” or direct COI (Center of Influence). These are the businesses that are most likely to naturally send you business on a consistent basis. For example- if you are representing a plumbing company your bullseye target market would be business such as realtors, general contractors, property managers, and restoration companies.
These businesses are doing business with your customers on a daily basis and are consistently asked “who do you know”. They are also facing situations on a consistent basis that requires your services. They are a primary referral source because they have a high need for your type of business and become amazing referral partners.
Second Tier
Next, you have the second tier of your target. These referral partners will need you sometimes, but not necessarily every day. For example, if you are running a plumbing company these referral partners would be businesses such as; electricians, painters, roofers, etc. The reason these would be second tier is because your customer is dealing with a specific issue or service that is in the same type of industry but the business itself does not necessarily rely on you to complete their job.
Think about the last time you had a plumbing issue. Would you more likely ask your realtor, or your electrician if they know a good plumber. Its highly more likely you would call and ask your realtor. If the electrician is already in your home you might be willing to ask them if they know a good plumber, but you wouldn’t necessarily reach out to an electrician to find a good plumber. The electrician would not rely on your business in order to complete their job with the customer.
Third Tier
Then we have the third tier target market. These are businesses that might come across a need for your services, but not likely anything close to a consistent basis.
An example of the third tier target market for a plumber would include; window cleaning companies, adult day cares or retirement homes, hair stylists etc. Every business listed above could run in to the opportunity to need you once in a while, but will never likely be a consistent source of leads for you.
Fourth Tier
Last, we have the fourth tier of your target market. These are the businesses that are highly unlikely to refer you, but could have the potential need for your services every once in a while.
Examples for a plumber in this tier would include; massage studios, mortgage loan officers, title companies, etc. They will never be a consistent referral source, but may be asked by their customers during conversation “who do you know.”
Why Does this Matter?
If you understand your primary and secondary tier referral sources you can focus your energy and efforts in networking to connect, and build relationships with the referral partners that are most likely to actually send you business. Networking takes time, and effort.
So it’s extremely important to spend your time and effort wisely. Doesn’t it make sense to build relationships with businesses who are more likely to need you on a daily basis than building relationships with businesses who might need you once per year?
Take some time to write out at least your first and second tier of referral sources. When you are in a networking meeting seek to set 1-2-1s with those people out who are representing companies within your first and second tier. I also encourage you to mention needing to connect with those types of businesses when you are giving your elevator speech.
The more you teach people what you need, the more likely they are to connect you with exactly what you are looking for.
This doesn’t mean ignore everyone else who wants to set 1-2-1s with you. It simply gives you an idea of who you need to prioritize to achieve your goals.
Best of luck, and Happy Networking!