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Do you confuse your brand’s TAM with your target?

Lindsay Says

Early on when articulating your brand strategy, you define the target audience. As you build and market your offering, who is the sweet spot customer? This is the person for whom you will optimize your business.

Your answer to the target customer question is vital. It is the foundation from which your business will flourish. In order to resonate, you must be decisive.

And yet – wow, does answering this question make people squirm! Common objections I hear when asked to define one’s target customer:

  • “There are so many – why would we limit ourselves?”
  • "What about so-and-so? I don’t want to turn away that business.”
  • “But a lot of our business comes from other types of people and entities, too.”

This discomfort is understandable. Few business owners relish the thought of turning away customers.

But here’s the thing – that is not the question! The question IS NOT “Which prospective customers will you turn away?” The question IS “Who is your target?”

Your target customer is not your TAM.

Your Total Addressable Market (TAM) is the entire market opportunity for your offering. It includes all of the people or entities that you might sell to -- your universe of possible customers.

Your target customer is a subset of your TAM. It is not the whole circle, but rather, it is the bullseye of the circle.

In choosing your target, you are NOT deciding to turn away customers outside your bullseye. You are simply deciding, with humility, who your business will optimize for. For whom will your offering have asymmetric appeal? To whom does your business bring disproportionate value? Which customers do you want MORE of?

It’s a trap to conflate TAM with the target customer. In trying to serve everyone equally, you serve no one well.

Answer the question of target in two steps.

If you're finding yourself cringing at the thought of selecting a target audience for your brand strategy, take heart. You are not alone. And I offer you this trick: first, define your TAM, and only THEN define your target.

1.) Who is your TAM?

What is the broadest possible market for what you offer? Do not consider only customers of direct competitors, but also of substitutes and workaround behaviors customers currently use because they are not using you.

Throw it all in there. Let this be a large, expansive, generous circle.

Let’s say you run REI’s sleeping bag business. Your TAM includes everyone who might buy a sleeping bag for any reason at all.

  • TAM: Anyone who might buy a sleeping bag.

2.) Who is your Target?

Knowing that you will draw business from across your entire TAM, who represents the bullseye? Who is in the center of the TAM circle?

This is the person to whom your business brings disproportionate value, and who brings disproportionate value back to your business. It is the person that you are going to optimize your business for. As you make decisions across the business, you prioritize this person above others in your TAM.

For REI’s sleeping bag department, the target might be people who camp frequently and with enthusiasm.

  • Target Customer: Camping enthusiasts

Be decisive so that you resonate.

Your brand is resonant only insofar as your target customer is specific. Let me say that again:

Your brand is resonant only insofar as your target customer is specific.

If your business is like most businesses, there is huge variability across your total market. But that is a truth about your TAM, not about your target customer.

When you conflate TAM and target customers, you seek to serve everyone equally and you wind up bland. A bland brand is not a beloved brand.

Your target customer has a unifying characteristic that makes your offering disproportionately compelling. REI’s expertise with sleeping bags makes their offering more compelling to a camping enthusiast than to an infrequent camper.

Beloved brands know that they cannot serve everyone equally. And so they humbly and bravely select the most important audience for their business, and they optimize their offering for that person above others. They serve the whole TAM but they overserve their target.

Who will you optimize for?

Here is an example from my life as a consumer.

I, myself, am an infrequent camper. The last time I camped was in my backyard with my kids. At most, this is a once-a-year occasion.

Last summer, I needed a sleeping bag to replace my moth-damaged one, just so that I had a sleeping bag for the odd backyard camping occasion. I had purchase intent for a sleeping bag, and therefore, I was inside of the TAM for REI’s sleeping bag business.

REI would indeed consider me in their TAM. But as a world-class brand, REI would not mistake me for their target customer.

I do not know (nor care) about the nuances of an excellent sleeping bag. I am happy for REI to optimize their sleeping bags for those who camp frequently and are discerning about sleeping bags.

By optimizing for the camping enthusiast (their target), REI actually improves sales from someone in the TAM but not in the bullseye (me).

Have your cake and eat it too.

Here’s a cool thing about this. Although I am not discerning about sleeping bags, I know that people who actually are discerning about sleeping bags buy theirs at REI. If it’s good enough for the camping enthusiast, then it is good enough for me. By optimizing for camping enthusiasts, REI won over me as well.

REI is not going to turn away business from me, just because I am an infrequent camper. Of course, they still gladly welcome business from me, as they do anyone in their TAM.

Because they selected a target audience that was a camping enthusiast, they're going to optimize the sleeping bag offerings for this person who represents disproportionate value to them. In doing so, they even create more resonance for potential customers across the TAM.

If while articulating your brand, you grimace when selecting your target audience, take heart. This is natural.

But check to see if you are conflating TAM and target. Sell to as broad of a market as you wish, but optimize your offering and messaging for the bullseye.

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