As marketing lovers, there are a few practices about which we are utterly fanatical. One of these? Buyer personas. But, we’ve found that many clients confuse defining their personas with defining their target market – and even use the terms interchangeably. To help you understand the differences between these concepts, why they matter and how they’re typically used in B2B vs. B2C businesses, here’s a crash course.
Target Market Terms, Explained
There are seemingly endless business acronyms to learn and master, and several of them refer to your target market. That’s because business folks are obsessed with acronyms but, more importantly, because your target market is crucial to understand. However, you may have heard the terms “Total Addressable Market” (TAM), Serviceable Addressable Market (SAM) and “Serviceable Obtainable Market” (SOM). TAM, SAM and SOM are not new team members; they are different ways of viewing your target market.
Here’s a quick breakdown of what each means:
- TAM – The total market demand for a product or service. If you sell yoga mats, for example, this would represent every person who could theoretically use a yoga mat.
- SAM – Of course, you won’t be able to actually sell your product to everyone included in your TAM due to factors like geographic limitations, specialization, etc. So your SAM is your estimate about the portion of your TAM that you could actually acquire, all limitations considered.
- SOM – And finally, the SOM. Even if your TAM represents one million people and your SAM represents 600,000, your SOM will be a smaller group. Think of it as the even more realistic little brother of TAM and SAM. This is because no business is a monopoly, so you will always have competition. Your SOM takes that into account and gives you a number that shows the portion of the market most likely to buy from you.
Defining your target market through these lenses helps you zero in on a particular audience that will be most interested in what you sell. While B2B organizations do use these to get a handle on their market potential, they are most commonly used in B2C organizations.
The 4-1-1 On Buyer Personas
So, now you know the gist of target markets. What, then, are buyer personas and how are they different? The briefest of answers is that, while target market numbers give an overview of revenue potential, personas offer a far more detailed view of the individual buyer who would purchase from you.
B2B organizations use these extensively and for good reason. They give shape to otherwise nameless, faceless companies and buyers, and help them know exactly how to message and market to them. You may also be familiar with Ideal Customer Profiles (ICPs), which B2B organizations use to provide detail at the organizational level, and then use buyer personas to provide detail at the individual level.
Personas should include as much information as possible about a buyer’s demographics, psychographics and behaviors as possible, and also shed light on who they are within a given buying committee and how their role influences purchasing decisions and other stakeholders. Personas are even more effective when you can include some insights into what motivates a buyer, and/or what goals they have. The more detailed you are, the more you know how to speak to this person and how to demonstrate that your product or service will deliver value to them.
If you’d like help nailing down your buyer personas (and/or target market), we specialize in this! Just give us a call and we can get started today.