When we talk about small business marketing, we always talk about starting with a sound marketing strategy before jumping into tactics. One of key elements of your marketing strategy is identifying your ideal customer – those customers in your sweet spot, the ones you can really help, and the ones who truly value your unique approach and what you bring to the table.
Most small business marketers describe their ideal customers in terms of demographics – industry, income or revenue, location (zip codes), etc. Demographic information is helpful, but most small business owners benefit from asking two questions to help them identify their ideal customers first, and then use demographic (and other) information to help them find more customers who meet their ideal customer profile. Those two questions are:
Are They Profitable?
If you can, create a spreadsheet of your customers and list the amount and type of business you do with each. You might even rank them in order from most to least business over the last three years.
Now remember, revenue is not the same as profit. Your biggest customers may not be your most profitable ones. Determine which customers are your most profitable. Which types of work or projects are the most profitable? How much work are you doing that is not profitable? This exercise can be a real eye opener.
Do They Refer You To Others?
Once you have identified your profitable customers, make a new column in your spreadsheet where you can identify the customers who are known referral sources. Consider this: Only happy clients refer and happy clients are most often happy because you or your approach is a good match for what they needed. This narrow group of profitable clients, the ones that also refer, holds the key to discovering your ideal client profile.
Now that you have identified your profitable customers who also refer you to others, learn everything you can about them that will help you find more customers just like them.
P.S. – More tips on creating your ideal customer profile and creating a marketing strategy can be found in this free small business marketing strategy guide.
Last night I attended a networking event during which I was asked what the biggest mistake I see when working with people on their marketing plans and strategy. My response was “not knowing who to say NO to”.
My response may sound just like another way of saying “you have to have a clear picture of your ideal customer” but I believe there is a significant difference. I believe that having a clear picture of who you don’t work with (and sticking to your guns) is a good indication of whether you are putting your marketing strategy into practice and just nodding along with marketing theory and platitudes you hear and read.
One of our goals in marketing, particularly B2B marketing, is to become known as the “go to” resource for a particular domain – a particular type of customer who is facing a particular type of problem. In order to achieve that goal we need abandon the “all things to all people” attitude and narrow our focus.
Knowing who to say no to will help you narrow your focus. Many business owners view their ideal customer profile as a wish list rather than as a focusing tool. They think “this is who I will keep an eye out for, but in the meantime I’ll take any work I can get”. This approach can actually make it more difficult to serve an ideal customer once they find you.
I think saying “No” becomes easier the more you believe in the value of the service you provide. Some of this has to do with a sense of mission but some of it also has to do with charging a price that is reflective of the value you provide – something I think many professionals struggle with, but that’s another post for another day.
Knowing who to say “No” to, having a plan for identifying them as well as a plan for telling them “No” (i.e. having someone to refer them to) and having the courage to follow through with the “No” is a difficult but essential part of taking your marketing and your business to the next level.
Do you know who you will be saying “No” to in 2012?
What makes a good marketing database or list? Do you tend to favor quantity or quality?
Lead generation is often viewed purely a numbers gain – the more eyeballs you reach, the greater number of leads you will acquire. This approach points to an obvious goal, build the biggest list that you can. If a list with 2,000 is good then one with 5,000 is even better.
But is it? What if, rather than focusing building a bigger funnel, we focused on getting the right people into the funnel? Personally, I believe this is a better approach for professional service firms and is one of the reasons we in Duct Tape Marketing spend so much time talking about narrowing your focus and having a well defined ideal customer profile.
I believe this approach also applies to building your referral network. If you take the “more is better” approach, then you may spend a lot of time attending various networking events, collecting lots of cards, and perhaps drinking lots of coffee. But the larger your referral list, the harder it becomes to stay in touch and build relationships with everyone on your list.
Everyone’s business is different – would yours benefit more from having a list of 1,000 potential referral partners or 20 people that really know, like, and trust you and make an effort to help you grow your business?
photo credit: Kheel Center, Cornell University on Flickr
Steve Yastrow has a nice guest post on the Tom Peters blog where he explains that your external brand can never be stronger than your internal brand.
Or, put another way, what your customers think of you will never be better than what your employees think of you. Or for soloists, what you think of yourself. As Steve says, it’s impossible to fake out your customers.
I think this is another reason why, in Duct Tape Marketing, we are always talking about the need to narrow your focus in terms of the types of clients that you serve. When we specialize in helping a specific group of people, or people with a specific problem, we gain valuable experience in that domain. That experience helps us feel better about ourselves, which customers and prospects pick up on. They, in turn, feel better about dealing with you.
Contrast that with a typical “ya, we can do that too” attitude. Internally, we may have some doubts. Or, we may complete the project, but not feel like we put our best foot forward. Either way, we don’t feel as good about our performance and our prospects and customers pick up on that as well.
I also like Steve’s post because is implies that while you cannot control your brand, you are accountable for it and can influence it by your personal actions. Both positively and negatively.
In marketing we often talk about defining our ideal customer. When I work on this exercise with my customers, it is common for the conversation to focus on who CAN be our customer versus what an IDEAL customer looks like. Be careful if this happens to you. Focusing on who can be a customer tends to lead to a very broad, very vague description. This in turn leads to a very broad, very vague, (read expensive and ineffective) marketing strategy.
If you are struggling with coming up with a laser focused description of your ideal customer, try starting out by listing the characteristics of customers you DO NOT want to work with. Drill down into the reasons why you don't like to work with those types of folks. Now, ask yourself how you will identify these folks. What behaviours do they exibit that you can see that will tell you whether they are an ideal client or not.
So, if you are stuck trying to create a clear picture of your ideal customer, start by identifying who you don't want to work with.
I’ve posted here before about the importance of defining your ideal customer and how that also means defining the group of potential customers that you don’t serve. Tim Berry does a great job of making this point in his recent post No, Starbucks, Don’t Try to Please Everybody.
I’d sure like to know the thinking behind Starbuck’s "tests" related to this $1 coffee. I’m a big fan of testing things out, failing fast, and finding out what customers really want. I could guess at reasons why this might be an idea:
- less likely to have to finish off lukewarm coffee
- smaller portions for those of us who conduct several meetings per day at Starbucks
- more convenient to try new flavors
Of course, I have no idea what the real reasons are, so I hope they share their thinking and findings with us after the test is completed.