How to choose a market with the biggest ROI

Good morning. Okay, we are just had breakfast, read through journal number eight in November 1997 and one of the things that I was going through here was some thoughts on target market selection. And as I was thinking about it, there's nothing as valuable as going through the process of identifying the super premium, highest value, highest probability, highest likelihood audience that can most benefit from a collaboration with you. That's the way I was thinking about it is as a collaboration, not who can we sell something to. How can you create an outcome for people? Because definitely your compensation, your, the price that you can charge is going to depend on the outcome that you can create and the confidence that people have in your ability to create it.

So often, you know, part of when I look at going into a new target audience, what I have to do with people most of the time is just close their eyes to who they've always served or the kind of clients that they're currently serving and focus more on what are their current best capabilities, who could be the very best person for them to serve. Because sometimes it's a very different thing. And since we're focused in this case on the before unit, we're going to people that don't know you yet, people that are not doing business with you, then we may as well pick the ones that are the, the most profitable for you, the ones that you can help the most.

And there's some great things, things that go into this selection process so often I'll take a complete session where we'll just go through this mindset of let's start with everyone, right? Let's start with the broadest target audience of people that you could, that you could help. And then if there are any geographic constraints or any geographic considerations, let's narrow that down first. So if you're saying if you're a local business and you're serving a local market, let's just put a bubble around Winter Haven, Florida, that that's your market. If we say within a 15 mile radius or if you're a gym or I'm just noticing some boot camp people going out here.

If you're an inherently local business, then maybe you only need a 5 mile radius of people that you serve and putting on blinders, all the other stuff. It starts with eliminating people. I would say, you know, if we are building your prospect vending machine, the two things that we need to figure out, the, the calculations on that are we need to know how much is the person that you are looking to help. But what, how much, what's the lifetime value and the transactional value of that person so that we can determine how much you would cheerfully pay to get engaged with one of those. And then on the other end of the equation, we look at how, who are the audience?

Who is the audience for this? And, you know, we know for certain that there are 8.1 billion people on the planet right now. So if we could get a message to 8 billion people, your ideal target audience is a subset of that 8.1 billion. But that's unfeasible. We can't reach everybody. So we have to narrow the focus to the most relevant, reach the highest probability target that we can, that we can find. So we start with, let's. This is an elimination process and a sorting process. We're not committing to anything yet. We're. What we're doing is we're finding the possibilities so that we can evaluate them.

So we start broad. We narrow it geographically. If we've got a, you know, something that is local, and even if it's got national potential, some of the, the best thing you can do is artificially constra yourself to a specific market so that you can crack the code. You can figure out in a, in a test market, things that you could roll out to the rest of the, the country. We learned that from Claude Hopkins. So if we have everybody, then I always ask people to exhaustively list out all the possible segments that you could choose. Who, who are all of the people, the different types of people that you could, that you could help.

And then narrowing it down, what is the most profitable segment? Like, what is the one that if you could help this person, you would have a, the best outcome? So within real estate, I always look at what's the highest, most desirable thing. So in Winter Haven, that's lakefront homes in some areas might be oceanfront homes, or it might be golf course homes or horse farms, Whatever it is, those are all valuable and valid target audiences. And so narrowing yourself kind of listing what those are will give you a good chance to see how you can point your marketing at a very specific audience. Then we want to get to a sense when you're evaluating and comparing them is how many are there?

Like, if you. One of the things that I always want to calculate is an estimated total yield for the market. So if we're comparing one market to another, we may say that in Winter Haven, there's just over 2,000 lakefront homes with a 5% turnover rate. So there's roughly plus or minus 100 transactions that are going to happen there. And let's say that they might have an average, you know, market an average commission value of 15 or $18,000 for each of those homes. So that is going to be much higher total yield than the higher turnover rate of the condos that may only have a $7,000 commission.

So you look at your audience and say, who are the ones that are the most profitable for you? And then one of the things that you want to kind of take into consideration when you're selecting a target market is how are we going to reach them? Like, are there, are there lists available? Do you have visible prospects where you can get a list and say, these are the people? Or do you have invisible prospects where people are walking around and you don't know who's who? Because in some markets, like you have both. If you're targeting chiropractors, those are visible prospects. You can get a list of chiropractors.

But if you are a chiropractor, your prospects are invisible prospects. You can't see who has back pain today or who twisted their back in the shower. So when you look at it and you kind of evaluate, are they easy to reach or how can we get to them? Then you start thinking, if I wanted to get in front of them, what do they read? What organizations do they belong to? Where do they hang out, where are they? Are they actively looking for the kind of service that I provide? What would be the first step in that? Those are all things that are this evaluation process to come to the best, best target audience that you can focus on, and then you can get to the point of what do we do to compel those people to raise their hand?

I would argue for you that there's an ideal market that you can help. And by focusing or narrowing your focus on that premium market, the one that you can have the biggest impact on, it's going to make everything downstream much more profitable for you.