Analyzing Customers and Potential Customers
Your customers are those people who will be buying your products or services. If you are a product manufacturer or sell goods wholesale, you may have two groups of customers: the retailer and the end-user. For instance, if you designed wallpaper, you would probably have to satisfy the needs of interior designers as well as the needs of homeowners looking to add beauty to their homes.
If you haven’t opened your business, most of your information on customers will come from trade association sources or census data. However, you can talk with potential customers by doing surveys, holding focus groups, doing product demonstrations or even making appointments and just talking to them about their wants and needs. It is vital to get a very clear idea on exactly who will be buying your product or service, in what patterns, and how much they are willing to pay for it.
Most successful businesses can tell you exactly to whom their product will most likely appeal, and what their best sources of new customers are. If you can determine whom your product appeals to, then you must direct the look of the product, the functionality, and the marketing efforts to those individuals. Many business owners fall into the trap of believing that “everyone” could use their product or service. That may be true, but unless you can afford to do a 30 second television commercial to the Super Bowl audience or a national magazine ad, you must come to terms with the fact that it may be some time before “everyone” knows you exist. Think more focused and look at which groups of people are your first most likely customers. Putting people into groups with common characteristics and looking at those groups statistically is called demographics. Are your customers likely to be in younger or older age groups? Do they own homes or rent? Are they women or men? Are they likely to have higher incomes or lower?
Take diamond rings as an example. Jewelers know that there are two primary buyers: Young people buying engagement rings, and older, higher-income individuals with disposable income to make expensive gift or personal purchases. These are two very different demographic categories, and a jeweler would likely need a different marketing strategy to appeal to each type of buyer. The younger buyer may be very interested in something to fit a newlywed budget. The older buyer may want an interesting design or brand name (such as Tiffany) and not care as much about price.
How do you know that this demographic will buy what you have to sell? Can you prove that customers aren’t satisfied with what the market currently offers? Or can you show instead that an entirely new group of people might become customers in your industry if your product or service were to become available?
Another area to cover: when and under what circumstances do customers buy your product? Are they motivated by fear after a common disaster (earthquake kits, bottled water, flashlights) Do they make these purchases after a rise in the economic indicators (jewelry, travel, home remodeling)? Or are these essential purchases that go on regardless of other factors (groceries, repairs, school textbooks)? How can you make your product or service most accessible at the time your customers are most likely to buy?
If you run an existing business, it will be important to have primary data in this section: surveys results or testimonials from important existing clients. Find out what demographic categories your customers fall into: are they corporate buyers or individuals, large or small, in a certain geographical region, or can they be categorized another way? Ask your customers what they think is your key offering compared to your competitors. And don’t forget to ask what they would like to see you do in the future – you may get your best product development ideas here.
Real customers are the best measure of business success. A start-up business that has already lined up customers who have placed orders has the best chance of succeeding. Know who you want your first customers to be and begin the sales process as early as you can.
