Contractors: Identify your target market - Pro Construction Guide
Contractors: How to identify your target market

Contractors: How to identify your target market

Ready, aim, fire!

Identify your target market it’s a well-known refrain in marketing, but one that can get turned on its head in the chaotic world of running a small construction company.

Given all their other responsibilities, it’s not surprising that sole proprietors sometimes shoot  before they aim when it comes to marketing.

The truth is that they’d probably be better off not firing at all — or at least until they knew more about their targets. Whether you’re launching a new business, looking to enter a new market or eager to grow sales to existing customers, kowing how to identify your target market is essential to getting the most out of your marketing dollar.

It starts with describing your services and what you charge for them, then imagining your ideal customer, and finding that customer. Even if you end up outsourcing the last part, no one is better qualified to describe your ideal customer than you.

Let’s take the case of a carpenter who thinks there is a market in the southern suburbs of Charlotte, North Carolina for helping empty nesters convert extra bedrooms into apartments for their aging parents, boomerang kids or rental income. What would those customers look like?

Well, they’d probably be between 45 and 65 years old, have a good-sized, detached single-family home and have enough income and/or borrowing capacity to finance a major home-improvement project.

Well, that was easy! Yes, but how does our aspiring remodeler know these people exist in enough numbers and proximity to sustain a business, and how does he or she find them?

Thank you, U.S. Census Bureau

That’s where the nitty-gritty work of knowing how to identify your target market research begins. Thanks to the U.S. Census Bureau, our entrepreneur can do it for free at American FactFinder. The site allows one to gather an array of information about owner-occupied households down to what the Census Bureau calls the “county subdivision” or “township” level.

After an hour or two  on the site, our aspiring business owner would discover more than 1,100 households in an affluent suburb just south of where he or she lives (Township 5, Providence; Mecklenburg County) that appear to match their  criteria. Based on data collected for the five years ended Dec. 31, 2016, the Census Bureau estimates:

  • 2,921, or 94.3 percent, of owner-occupied homes in the area were single-family detached.
  • 2,044, or 70 percent, of those homes were built between 1980 and 1999.
  • 1,869, or 64 percent, had at least four bedrooms.
  • 1,784, or 57.6 percent, were occupied by married couples between the ages of 35 and 64.
  • 1,118, or 62.7 percent, had no children living at home.
  • 1,896 had income of $100,000 or more.
  • 620 were valued at more than $400,000, and 435 of those carried no second mortgage or home equity loan.
  • 444 were rented by people 74 or older in 2016, up from 159 in 2009.

Together, these data tell us that the area has a high concentration of affluent empty nesters with substantial equity in older four-bedroom homes. There also is growing demand for housing in the area among those 74 and older. Even if the area’s empty nesters are not considering housing their aging parents, the area is target rich from a remodeler’s standpoint.

None of this tells our would-be contractor anything about the competitive landscape, of course. Dozens of other remodelers could already be targeting the area. However, the data has provided information he or she can use to further the research and could ultimately help him or her focus and optimize his or her investment in marketing.

“One way to ensure that you spend a lot of money on marketing is to market to everyone,” notes Joseph Hughes, founder of Contractor Dynamics, which specializes in helping small building contractors market online. “We obviously don’t recommend this. Rather, we encourage you to sit down with your leadership team, do some analysis and choose one specific segment of your market to focus on.”

Tips for existing construction businesses

Contractors who have been in business for years are in the advantageous position of being able get more granular by examining sales and customer records.

Sales records reveal how much customers spend on average and how they tend to spend it depending on age, marital status and family. This can provide a map for how to market to customers depending on where they are in the cycle of life: first home, first child, third child, divorce, empty nester, caregiver, etc.

Older construction businesses can analyze web traffic and use online citations on Facebook and other social media analytics to learn more about their customers’ lifestyles, including their media habits. Their biggest advantage, of course, is that they have living, breathing customers who they can speak with or survey using an array of online survey tools.

Even if you have hundreds of customers, if you want to know how to identify your target market it doesn’t hurt to hit American FactFinder, use surveys and deploy other market research tools every so often to check your assumptions.

After all, customers are a moving target.

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