One of the first things you must do with any business is to determine who the customer is that you want to serve.
The majority of business owners will say that they will sell to everyone. They feel that any other answer means they are doing themselves and their customers a disservice.
With our businesses, we get the question all the time. Oh, you must sell to this customer because they are x, y or z. Then when we say no people look at us in a strange way.
It is like we don’t know what we are doing that we really don’t understand and know the business and as such we are silly.
I mean if you think about it how can you really have everyone as your target market?
Think about your local restaurant and McDonald’s. Do they both cater for the same market? Do they have a different offering for their clientele? (Well I hope they do).
Both of their customers are hungry.
You go to your local restaurant for the food, location, atmosphere, service. Granted you may eat at both locations but you are eating there for different reasons, one is convenience and the other is for service and quality.
Trying to please everyone is like pinning a tail on the donkey. You are blinded, walking around trying to make an impression on so many people that you make a mark or impression on no one.
What determines a business’s respective pricing, positioning, advertising channels, strategy, compensation structure, training and hiring programs, competition and a host of other decisions? Their ideal target customer.
One of the hardest things to do in business is to convince someone to switch brands or companies to a new brand or company. Think about yourself. How attached are you to certain brands or companies. How hard is it for you to change?
So……
Who ideally is your target customer? Who do you want to do business with?
We all want to have as many customers as possible. We all went into business to make money and you can only do this by having sales. But don’t give away your power and say that you want to sell to anyone.
You keep your power and in fact harness and focus it when you say this is my target market.
In B2C they are male or female, age group, interests, activities etc.
B2B they are a certain size, located here, this number of employees, this turnover.
If you want to learn some more of developing the personas for your ideal customer then check out these articles:
How To Create Detailed Buyer Personas
Once you know your target market you can then really drill down and fine tune your marketing and sales efforts to attract them to your business.
You get to know their problems, issues they are facing,
If you are unclear on who your ideal customer is or what pain/problem they are trying to solve, you will waste a tremendous amount of time and money.
Ask yourself these questions;
If you could devote 100% of your time to just one type of customer, who specifically would it be?
What do they look like?
What are the 5 biggest problems/pains/issues of my ideal customers?
Where are they frustrated?
What can I do for customers that no one else is doing?
When thinking about growing and building your business you need to really be switched into who your customers are and how to target them.
Here is a handy exercise that we learnt from Dave Lavinsky (GrowThink) that will really help you clarify your different customers and how to improve your marketing efforts
First, list your products and/or services
Create a spreadsheet. In Column A type the names of each product or service you offer.
Second, list your market segments (customer groups)
In the first row of columns B, C, D, etc., write the names of the different types of customers you serve.
For example, if you have a walk-in store as well as a website set up for e-commerce, you will have at least two groups of customers –- those who come in to purchase and those who buy online.
Or you may sell to consumers and businesses.
Or you may sell to affluent consumers and less-affluent consumers. Or you might sell different products and/or services to men vs. women.
List all of these customer segments in the first row of columns B, C, D, etc.
Place an “X” in each cell in which you have a combination
To recap, in Column A you have a list of your products and services. And in the top row of the other columns, you have a list of all your customer segments.
Now, place an “X” in each cell in which you offer that product or service to that customer segment.
For example, if you sell insurance to affluent consumers, then type an “X” in the cell that intersects these two variables.
The result will be a chart with “X”s showing all your product/service and customer segment combinations.
Next, write down a list of all the combinations you found. For example, your list might include:
insurance to affluent consumers
insurance to businesses
home security to non-affluent customers
etc.
Determine your revenues and profits for each combination
For each combination, type in how much revenue and profit you generate from it.
In many cases, you will find that one combination dominates your profits. Or that one customer segment (among several products and/or services) buys the overwhelming majority of your products and services.
Importantly, in completing this exercise, you may also identify combinations you didn’t know even existed.
Sharpen your marketing focus
Most entrepreneurs and business owners place equal marketing focus on ALL their combinations of product/service and customer segments.
But, smart entrepreneurs and business owners place more emphasis on the combinations that are proven winners. Now that you know your winners (i.e., the combinations that are generating the most revenues and profits for you), focus on them.
How?
Using the example of “insurance to affluent consumers” being a winning combination for you, here’s what you should do:
1. Do more marketing to them. Figure out how can you reach more affluent consumers. Perhaps stop doing general advertising that reaches both affluent and non-affluent consumers and do more targeted advertising like direct mail or cable television. Or perhaps there’s another company serving this clientele with whom you can partner. Etc.
2. Better tailor your marketing to them. Rather than having advertisements that mention several of your products/services, create ads that solely focus on your insurance offering, since this is what generates the most revenues and profits. Likewise, since you know the specific customer segment you want (i.e., affluent individuals) use terminology and images that will specifically appeal to that segment.
Now you have the framework to segment your customers. If you implement this exercise it will help you clarify your thoughts and actions to grow your business.
Just because you have some new idea or are selling a product or service that’s faster, cheaper, lighter, longer-lasting, or tastier doesn’t mean that everyone who’s currently using the competition’s product will automatically switch to yours.
In fact, getting people to switch is one of the toughest things to do in business.
Knowing who your target customer requires clarity on exactly who you are trying to attract and exactly what problem they are trying to solve.
You can have the coolest idea and the best management on the planet, but if you are unclear who your ideal customer is or what pain/problem they are trying to solve, you will waste a tremendous amount of time and money.
Now spend some time working on your target customers and fine tuning your marketing efforts so you can improve your sales and profitability.