Who’s Your Market?
This is one of the age old questions of business. If you have an idea for a new business, who will buy your products or services? If you have an existing business, who has actually been giving you money for your products or services? Let me say that again, who has actually paid you for your products or services…not who you would like to have you pay you for your products or services.
At times, it’s easy to get confused. When you first start your business, your market is defined as anyone who will pay you money for your products or services. After you’ve been in business for a while (whether it be a few months or a few years), you’ll have some very valuable market data. You have a list of customers who have actually parted with their money to acquire what you sell. That’s something that someone just starting out can’t claim to have no matter how much market research they do!
Marketing is inherently stooped in research. Defining first who is your market, then identifying where you can go to communicate with that market and discovering what message resonates with that market. If you do all three of these things well, you’ll have plenty of potential customers contacting your business. And if you have a good sales system, you’ll get your share of those potential customers to turn into actual paying customers.
Here are a couple of ideas for how to help you identify who exactly is your market:
1. Define what is a good customer for your business. Consider things like how often they buy from you, the actual dollar amount they spend, how quickly they pay you, etc.
2. Run a report to show sales by customer by year for the past 3-5 years. This report should be relatively easy to get with most of today’s accounting packages (e.g. QuickBooks). If you can’t figure out how to do it, ask your accountant or bookkeeper for help.
3. Analyze that sales report to try to group those customers by common characteristics and/or demographics. For examply, if you sell to businesses, try to see if there are any patterns in terms of industries where you have multiple good customers or if certain types of customers buy one particular product or service over another. If you sell to consumers, is your typical customer male or female? How old are they? Where do they live? What is their income level? Etc.
4. Interview some of those top customers to understand why they buy from you. Remember, your customers do have a choice and they have been choosing you. It’s your job to understand WHY!
Depending on the size and complexity of your business, you may already have all that information in your head. Even so, I would strongly encourage you to get it down on paper. It’s amazing how you’re able to glean new information from data once it’s on a piece of paper or on a white board and you slice and dice it in different ways. If you can confidently explain who is your market, you’ll be heads and shoulders above most of your competitors.