The importance of targeting the right audience

From: alexhormozi

Understanding and serving the right audience is crucial for business success, often more so than the product or service itself [00:00:13]. Choosing the right people to sell to can significantly increase revenue [00:08:41].

Value Derives from the Audience [00:08:44]

The value a business receives is often determined by the inherent value of the customer, not just the quality of the service provided [00:08:49]. For example, a Conversion Rate Optimization (CRO) agency performing the same work on a $1millione-commercebusinessanda$100 million e-commerce business could generate $100,000and$10 million in increased revenue, respectively [00:09:16]. This allows the agency to charge significantly more ($3.6millionvs.$36,000) for the exact same work, simply because the client was inherently more valuable [00:09:41]. This concept is referred to as “leverage” – getting more out for what you put in [00:10:31].

The principle is that if you are not being valued, it’s often due to the people who are placing the value on you [00:12:08]. The value derived is more about who you find than necessarily what you provide [00:12:41]. A simple act, like pushing a broken-down car, yielded a mortgage payoff for a Good Samaritan because he helped a billionaire, whereas most people would only receive a thank you [00:12:48]. Therefore, actively choosing clients who provide more value and are less demanding is beneficial [00:13:41]. Being able to say “no” to problematic clients creates room for more valuable ones [00:13:48].

Characteristics of a Desirable Market [00:14:10]

When selecting a market to pursue, four key characteristics should be considered:

1. Pain [00:14:19]

   • Do they have a problem that needs solving [00:14:22]?
   • Find the “starving crowd” within a market – sub-segments that are underserved, have a strong need, and possess money [00:14:41]. Selling hot dogs outside a stadium to a drunk crowd is easier than trying to sell them in a less opportune location [00:15:19].

2. Purchasing Power [00:14:21]

   • Do they have the financial means to purchase your solution [00:14:24]?
   • An example of targeting unemployed people for resume help failed because they lacked the income to afford a consultation [00:15:52]. Transparently communicating price early on can help filter for prospects with purchasing power [00:16:32].

3. Easy to Find [00:14:25]

   • Can the target audience be easily aggregated and advertised to [00:17:10]?
   • Targeting “rich doctors” is easier than a dispersed audience because they are often found in associations, Facebook groups, and professional services, making advertising and outbound efforts more efficient [00:17:19].

4. Growing [00:14:27]

   • Is the market expanding or shrinking [00:14:28]?
   • As Warren Buffett noted, it’s better to be in a growing “boat” (market) even with the same effort, because the market itself can dictate success [00:18:02]. A great manager in a declining market (like newspapers) will struggle, whereas someone in a growing market will experience default growth [00:19:57].

By strategically targeting the right people and markets, businesses can significantly improve their outcomes, increase profitability, and stack the deck in their favor [00:20:08]. This proactive approach to audience selection ensures that efforts are directed toward those who are most likely to value and benefit from the offering, leading to a more rewarding business experience [00:33:51].