Target Market vs. Referral Source

  • Dec 17, 2019

I've noticed over the many years I’ve been in business helping others market theirs is that there is often lack of clarity with the terms “target market” and “referral source.” In order to market effectively, these two terms must be clearly understood, so here goes…

Target market: the group of current and potential customers that are/will be your “best” customers and on whom you should concentrate your marketing efforts. There are different ways to define what a “best” customer looks like. It can be based on: total revenues within a given period of time, how many times the customer returns, how often a customer completes a desired call-to-action. Although usually defined by revenues, if you decide that your “best” customers are all 5′ 6″ women with pink hair who eat grapes every Tuesday, then that is your prerogative, strange as it may seem to other people. Target markets are generally defined by demographic and/or psychographic similarities that allow you to put seemingly disparate people into a cohesive group that makes sense to your business model.

Referral source: the type of people who are the link between you and your target market. Although marketing directly to your primary target market is the most efficient way to go, sometimes it is difficult to find the people who fit your target market profile. In these cases, it is imperative to determine what the best profile is for people who can refer you to your target market. For instance, mental health professionals can’t generally find a direct way to appeal to their target market – people in need of these services generally don’t fall into some type of specific demographic that can be found on a mailing list provider, especially given HIPPA laws. In order to reach these people, it becomes necessary to develop relationships with (market to) the people who can make a referral when a need is seen. In the case of mental health professionals, their best marketing outreach is to physicians, the clergy, other mental health professionals with a different specialty, school counselors, human resource managers, etc…. These are the people who come into contact with individuals who are asking for help or show indications of needing help and then need qualified, reputable, trustworthy counselors to refer to.

You may find that you can effectively grow your business by identifying both your primary target market and your primary referral sources and then marketing to both. You will need to keep in mind that the message may need to be tweaked, or completely differentiated, for each of these groups.