Nuvota

Most businesses are born out of a product or service idea that the owner had, for example selling specialized bikes, providing accounting services. This results in products and services being typically sold to whoever is interested in them. However, it is crucial to know who your different customer segments (groups of customers with similar characteristics) are. This alone will allow you to target your advertising and messaging most effectively, tailor your products and services around the specific needs of your preferred customer segments and differentiate yourself clearly from the competition.

In order to get a clear understanding of your target customer base, do the following analysis based on your existing knowledge of your customers:

1. Demographics – The hard facts
Demographics include attributes such as gender, age, annual income, education level and profession. If you are targeting business clients, then you want to look at things like industry, annual revenue, number of employee and type of business.

2. Values – The soft facts
When we talk about values, we are referring to softer characteristics that are more emotional in nature. What are their goals in life? What are things they fear? What reassurances do they need when making a purchase? Are they more conservative or liberal? You typically can gather this type of information by chatting with your clients and paying attention to their other interests in life or magazines they read.

3. Buying Process – The decision making
What different type of decision-making processes do your current customers use? Is one person making the decision independently? Is the decision made spontaneously or is it based on referrals? For business clients, do they typically use an RFP (Request for Proposal) process or is the decision made in a weekly executive meeting. The more you know about the typical buying process your customer base uses, the more you can cater to it with your messaging and internal marketing processes.

4. Reach – The contact
Having the greatest product, perfectly targeted towards you customer base, is only useful if you have a way of reaching them effectively. So how do you currently reach your clients? What are some alternative methods? Are there specific trade magazines or trade associations in your field? What networking events are specifically geared towards your customers? Is there an effective way to reach them through referrals? Are there specific websites that you could leverage? Once you have the full picture of the different ways you can reach your clients, pick the most effective ones and focus on them. If you have trouble identifying the most effective ones, pick the most promising ones and test them.

5. Financial – The money
Look at your existing customer data and calculate how much money you make per client per year. How often do they purchase a product? And if you have the data available, what are the costs associated with each client and purchase. You basically want to figure out how much profit (revenue – cost) you make per client. This allows you to group your customers based on profit margin and check whether you can detect certain patterns based on the demographics, values, buying process and reach. What are the attributes that your most profitable clients have in common?

This analysis will allow you to identify your ideal customer profile. Equipped with this information you will be able to develop much more targeted marketing messaging. I will show you how to do this in my next post.