4 key questions to ask before expanding to a new target audience
Expanding to a new audience can be an effective way to grow your business—but make sure your next target audience is worth the investment
Recently here on Novarize’s blog, we discussed the overall process of discovering new audiences to target.
There, we dug into the key things you’ll do as you go about expanding into a new market.
What we didn’t talk about is whether or not expanding into this new market will be worthwhile for your business in the long run.
To be sure, successfully expanding to a new audience doesn’t guarantee positive results for your business. In fact, expanding to the wrong audience can potentially do more harm than good to your company.
So, when looking to scale to a new target market or target segment, it’s essential that you know which new audience is right for your business.
By “right,” we mean an audience that is:
- Cost-efficient: You won’t need to substantially increase your marketing and advertising spend to acquire and retain your new customers
- Profitable: The revenues generated by your new audience make a substantial difference to your bottom line
- Empowering: Successfully expanding to this new audience will allow your business to evolve even further in due time
In this article, we’ll take a look at four key questions to ask yourself before expanding to a certain audience—allowing you to determine whether doing so will be worth it for your business.
Is the audience you're expanding to right for your business?
In expanding to a new audience, the goal isn’t simply to begin serving a different cohort of consumers. Rather, the goal is to grow your business by serving a new target audience and, in turn, receiving maximum value from them.
Simply put: If expanding your audience doesn’t lead to business growth, it’s a moot point.
That said, here are four questions you need to ask yourself when looking to expand to a new target audience.
How does this new audience connect to my current target?
When looking to target a new customer segment, you’ll typically use a combination of traits from your current audience as a starting point.
What’s important, here, is that your new audience is similar enough so as to make expansion easy—but different enough to open up new opportunities for your business.
Basically, you don’t want to be forced to reinvent the wheel every time you expand to a new audience. If catering to a new target audience requires you to change your operation in any substantial way, chances are the costs of expanding will greatly outweigh the benefits.
Now, this isn’t to say that you won’t have to make some changes. You’ll certainly have to create promotions, marketing materials, and other such campaigns to engage and nurture your new prospects.
But, in finding an audience that’s substantially similar to your primary target, you won’t need to make any cross-the-board changes to your current processes:
- When expanding to a similar audience in a new geographic location, you’ll simply be ‘doing more’ of what you currently do—not revamping your processes for each new segment
- While you will have to create additional content for a new audience, you might not need to expand to new social media channels just yet
- Though you may have to make additions to your service and support staff, you won’t have to change your processes for providing service and support to your new customers
So, before becoming dead-set on expanding to a new customer segment, make sure they share a significant amount of fundamental traits with your current audience. That way, you won’t have to make any drastic changes to your business as-is—and can ensure that any changes you do make will be well worth the effort.
How much monetary value will this new audience provide?
As we said earlier, it’s likely that your additional audiences won’t be equal to your primary audience in terms of the revenues generated by each. But, it’s still important to ensure that your new audience is valuable for your brand to target.
Remember how we talked about an overlap between your primary and new audiences? Here’s where it’s extremely important to ensure that overlap exists.
That is, your new audience persona should overlap with your current one in terms of:
- Purchasing frequency
- Average order value
Ideally, you’re able to find a new audience whose spending habits match, or at least come close to, your primary audience’s habits. That way, you’ll know with relative certainty how much value they’ll provide your business over time based on existing customer projections.
Of course, this perfect alignment might not exist—and that’s okay.
Instead, you might need to assess the trade-off between spending frequency and average order value. Perhaps your new audience doesn’t purchase as often as your current audience—but they spend a lot more when they do. On the other hand, maybe they don’t spend all that much in a given instance, but make purchases on an almost daily basis.
You also want to think about the potential future value of your new audience members, as well. In the spirit of never settling for the status quo, you want to target customers who are more open to making additional purchases from time to time. This will open the door for upselling and cross-selling opportunities—which can increase your customer’s lifetime value substantially.
To reiterate, the next audience you pursue should always be your next-most-valuable audience, period. If you aren’t laser-focused on the value your new audience will potentially provide your business, you’ll almost certainly settle for mediocre returns—while numerous opportunities slip away completely unnoticed.
How sustainable is this new audience?
To piggyback off the previous section, you also need to know with relative certainty that your new audience will exist for a long time to come.
Looking at your individual customers, you need to know that they’ll have an ongoing need for your brand’s products or services. You don’t want to attract a bunch of ‘one and done’ customers that provide immediate value to your brand, but nothing of substance in the long run.
Here, the idea is to dig beneath the surface-level needs your brand caters to and identify the deeper, more substantial value you can provide your new audience. This can allow you to build a more long-lasting and ever-evolving relationship with your customers (instead of simply watching them walk away after a handful of engagements).
Looking at your new audience as a whole, it’s essential that said audience is not merely a product of a fad, trend, or any other ephemeral “entity” that’s here today, gone tomorrow. More often than not, such an audience will dissipate in no time, with little warning—and there will be little you can do to keep them on board.
Instead of chasing after fleeting moments and trying to catch lightning in a bottle, look to the audiences built around evergreen problems that your brand can help solve on an ongoing basis. Focus on the personas that will ‘always’ exist—not the ones that come and go with the tides.
Value and sustainability go hand-in-hand: The longer you can keep a target audience engaged and in need of your services, the more value they’ll provide your business over time. While audiences built around hot and trending topics may seem like a path to quick success, there’s much more value to be gained from the longer-living, established audiences that exist in your niche.
How will this new audience allow the business to grow?
The main benefit of expanding to a new audience is a substantial increase in revenues. But, in looking for the perfect audience to expand to, you’ll want to go even one step further. In addition to considering your new audience’s purchasing habits and lifetime value, consider the indirect ways in which your new customers will allow your business to grow.
One key area to focus on is your customer’s referral potential. If your new and soon-to-be-highly-satisfied customers are more likely to refer their friends and family to your brand, their true value to your business will be much more than their on-paper LTV.
The other thing to think about here is how expanding to a given audience will allow you to expand to even more audiences in the future. Just as you used your primary audience to uncover a profitable new target market, you’ll eventually want to do the same with this new audience segment. The easier it is to branch off and tailor your operations to subsequent audiences, the more opportunities you’ll have to expand even further down the line.
The takeaway here is that realizing additional profits is just the tip of the iceberg when expanding to a new audience. While revenues certainly should be your main concern, don’t ignore the more underlying ways in which a new audience can bring value to the table and allow your business to thrive.
Instead of just asking yourself “What will my business gain by targeting this new audience?”, you should also be asking “What will succeeding with this new audience allow my business to become?”
Novarize helps you uncover the new audiences that allow your business to grow in a meaningful way. Try our audience discovery tool today!