Business Article

How to Grow Your Business

Identifying Your Ideal Customer

Is there such a thing as an ideal customer for your business? If there is are you sure the people you are putting so much time, effort and money into attracting are ideal for you? Spending some time to find out exactly who your ideal customer is could ensure you are putting your marketing efforts in the right places for the maximum return. We discuss the best methods you can use to focus on identifying the people who would be your ideal customers.

If you are presently not getting a good return on your marketing spend, are struggling to make a decent profit from your customers or are having customer service and complaint issues then the chances are you are not targeting or attracting the ideal customer for your business.

The 80/20 Rule
Who is the ideal customer? If you look at your existing customers, the chances are they follow the 80/20 rule. This rule says that in general terms 80% of your sales and profit come from 20% of your customers. The figures may vary but in most businesses this is standard. The chances are these 20% are your ideal customers.

These customers actually spend 16 times more than the customers who fall into the 80% bracket. The very fact that they only represent 20% of your customers means that you are spending 80% of your time and budget marketing to the customers who are less than ideal for your business. That is not to suggest you should be ignoring them, but you should be investing much more of your resources in finding out more about these ideal customers. Who are they? How did you attract them? How can you get more of them?

Very often the ideal customer not only spends the most with you - they are often the ones who want what you have to offer. They don't just need it, they really want it, they feel they can't live without it. With this kind of customer you will have fewer returns and fewer complaints. They will also tell just about everyone they know about you and recommend you enthusiastically. If you can find out exactly who the 20%ers are the chances are you will be earning a lot more and working a lot less.

Get Crystal Clear
Before you can even begin to think about how to attract more of them you have to get crystal clear on exactly who your ideal customers are. Your decision to focus on this will affect everything in your business from the product or service you offer to sales and marketing to your after-sales service.

Write down who you think your ideal customer is. Think about your existing ideal customers and think about what they predominantly buy from you, are they business or consumer, male or female, how old are they, are they predominantly from a certain area, do they expect a lot of after-sales care, do they buy high value items/services from you or buy low value but more frequently?

All of these types of questions are important to getting clear on the customers you want more of. Many businesses would prefer fewer, higher spending customers who put a premium on after-sales service whereas some prefer much higher volume of customers spending low value where there is little or no after-sales involved. If you don't know the answer to these questions then it would be a useful exercise to go out and ask your ideal customers.

Ask Your Ideal Customers
Pick half a dozen or so of your very best customers, the ones that if you had more of them your business would be a joy to run. Give them a call and simply ask them questions.

If you are selling to businesses ask questions such as the type of business, number of employees, their annual revenue, how long they've been in business, are they a sole-trader, partnership, limited or PLC, who and where do they primarily sell to.

If you are selling to consumers you should ask questions such as gender, age, marital status, annual income, area they live in, their profession etc.

Why They Buy
This is really useful information about your customers. However this really only tells you the who and not the why. Asking them questions about why they buy from you is really important. This will tell you exactly what they want and you can use this to attract more of these types of customer.

Why did they do business with you in the first place? Why do they continue to do business with you? What do they like most about doing business with you? What other products or services would they like you to offer? If they could have anything from your business at all what would it be?

The most important question however is what they don't like. Rather than ask a straight-out question ask them what they find most frustrating or inconvenient about your business, product or service. No matter how trivial their frustration is, it is important to get it out of them. Don't ask open-ended questions which can be answered yes and no as this won't tell you much.

You can also answer your own questions about what makes them an ideal customer? Do they use you regularly and on a recurring basis? Do they provide payment in full, are they easy to work with, do they have realistic expectations, are they demanding, do they always want the latest products or services you have to offer?

Look for Patterns
In carrying out the process of interviewing your ideal customers you are looking for patterns that will fully reveal what your ideal customers look like. Identify the top five traits that are common across all of these customers you interview and you will start to see that pattern.

Most businesses spend a great deal of time and resources attracting more customers. However if you haven't identified your ideal customer then you're attracting more of the 80%ers. They cost you more to attract, make you work 4 times harder and spend 16 times less than the ideal customers. If you have spent the time to identify your ideal customer you have outlined the key patterns of what they look like, what they want and now you can focus on specifically attracting more of that type of customer.

Look for the Right Customers
Now rather than focussing your marketing efforts on simply getting more customers, you can focus on attracting the right customers for your business. This is critical to your business success.

This process sounds time consuming and it probably will be. However this process will start you on a path that will set you apart from the competition. Once your business is matched up with your ideal customer, your business will be the outstanding choice for the customers you really want. You may think you know what your customers want but after completing this process you may find you didn't know them as well as you thought you did.

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