The following is a guest post from Novarize CEO Alon Tvina. Opinions are the author's own.
Many successful businesses are formed with a laser-sharp focus on providing value to a specific target audience.
And that's a good thing. If you don't have a clear idea of who your core target audience is, you'll likely end up pulling your organization in way too many directions, spreading your team way too thin and ultimately falling well short of your true potential.
This isn't to say, though, that your core audience is the only customer segment that should matter to your company. In fact, staying too focused on your core audience — to the point of ignoring all other potential customer bases — can be as bad for business as having no core audience at all.
Take the story of Sony missing out on its chance to own the rights to Marvel's now $20 billion empire:
In 1998, Sony wanted to purchase the rights to Spiderman, and Marvel offered its entire character catalog (including Spiderman) for $25 million. Sony, citing a supposed lack of interest in the other characters among the company's target audience, turned down the counteroffer. Marvel relented, giving up Spiderman for a smaller amount of cash — but maintaining the rights to the rest of their catalog of characters.
Flash forward to 2019, and Marvel's collection of over fifteen feature films have generated over $13 billion — and that's before Black Panther was released late last year.
Sony could have easily had at least a slice of that pie (if not the whole thing). Instead, because of the team's unwillingness to even consider the idea of taking on a new venture and focusing on new audience segments, the company lost out on billions of dollars in revenue.
This is admittedly a pretty extreme example of what can happen if you turn a blind eye toward audiences outside of your main target.
But, even when scaled down to the size of your company, the negative impact this tunnel vision can have on your business can be enough to stunt your growth for good. On the other hand, being open-minded to the idea of marketing to audiences outside of your typical "wheelhouse" can potentially lead to major growth for your company.
Stability, growth and future-proofing
Marketing to secondary audience segments needs to be an established business strategy. Neglecting it may not directly lead to a doomsday scenario, but may expose your business to instability, stunt its growth or leave it in peril in the face of unpredictable future changes.
Here, we're going to dig into the specific ways your company can benefit from catering to audience segments that may fall outside of your core customer base.
Supplementing sustainable growth efforts
Your business needs all the revenue it can generate in order to grow in an efficient and sustainable manner. If you've already maxed-out the value received from your current customer base, it simply won't be possible to generate additional revenues without migrating to a secondary audience.
But, by tapping into secondary audience segments that could benefit from your current products or services, you'll be able to generate additional revenues that can then be reinvested into your various growth-related initiatives. Your goal when seeking out these secondary customer bases is to uncover niches with low entry barriers and low ongoing investment costs that still manage to bring in substantial revenues.
Will you need to invest appropriately in marketing to and serving these tangential audience segments over time? Of course.
But, by finding the audience that offers the path of least resistance, you'll end up generating enough revenue to reinvest in your business' growth without needing to go "all-in" in catering to these new customers.
That said, there may be times when you will want to shift your focus toward a newly-discovered "secondary" audience…
Discovering lucrative opportunities
Though we've been discussing secondary customer bases in terms of being less valuable to your company than your core target audience (which, to be fair, typically is the case), there's always the chance that a previously-undiscovered audience will prove equally valuable as your original target — and possibly even more so.
In these cases, you will want to invest a bit more heavily into the potentially lucrative opportunities you uncover. If the potential is there, you should be able to move forward with your new venture confidently, knowing the investment will pay off almost immediately.
To be sure, this happens quite often in the modern world of business:
- E-commerce giant Amazon caters to a variety of audience bases through its collection of services. Amazon Web Services, for example, strayed significantly from the company's core offering and audience by supplying an on-demand cloud computing platform solution.
- Ride-sharing company Uber, seeing the potential in targeting individuals in need of a reliable food delivery service, developed its ancillary Uber Eats services.
- Though previously catering to a rather small subset of technology-loving consumers, Apple has developed its products over time to cater to pretty much everyone on the planet in some way or another.
As you surely know, these secondary ventures have led to some major gains for the above companies:
- Amazon Web Services generated $25.7 billion for the mainly retail-focused company in 2018. If the company didn't offer this service, Amazon would have "only" made about $205 billion last year (as opposed to the $232.88B it did make).
- Uber Eats is on track to represent about 10% of Uber's total revenues for 2019 — earning well over $1B in revenue for the business over the course of the year.
- The iPhone continues to be Apple's most-profitable offering, bringing in 63% of the company's revenues. Apple's services segment — with Apple Music, Apple Pay, iTunes, the App Store, iCloud and Apple Care — has become a beast of its own in recent years, accountable for $37B in sales in 2018 — 40% of non-iPhone revenue. Computers, Apple's original offering, now drive only 12% of revenues.
But the reason these tangential ventures have been so successful is they've enabled the companies in question to evolve their offerings, providing additional value to multiple new audiences and markets in the process.
Look to the future
Speaking of evolving processes and emerging markets, it's worth reiterating that your current customer base isn't going to exist forever. Your current offering will eventually become obsolete. When that happens, those who once belonged to your core audience will move on from your brand altogether...
...that is, if you remain too focused on your core audience as they originally existed, and fail to keep up with their evolving needs as time goes on.
See, all this time we've used the phrase "secondary customer segments" to refer to completely different people — those who don't belong to your core target audience.
But it's also worth noting that — though it will likely consist of the same actual human beings as your current core audience — your core audience of the future will be a completely different animal altogether.
In other words, your core audience of tomorrow should be seen as a secondary segment of today.
Think about Netflix's trajectory to the top of the entertainment industry:
Knowing that it's core audience is made up of individuals looking to watch movies in the most convenient way possible, the company first introduced its on-demand-by-mail service — which, of course, was much more convenient than braving the lines at Blockbuster on a Friday night back in 1997.
But, instead of merely catering to its then-current core audience of mail-order customers, Netflix kept its eyes on the future — in turn leading the team to develop the on-demand service its now-current core customers basically live for.
Had the company operated under the delusion that its core audience would always exist as it did in 1997, Netflix would likely have succumbed to the same fate it bestowed on Blockbuster — and it would have happened for the exact same reason.
By continually looking for — and working to cater to — additional secondary customer segments, your company will inherently be prepared to move into new territory at any time in the future, when the need or opportunity arise.