Market Research
Your Current Customers
Now that you have a general idea who you’d like your Target Market to be, it's time to find out what's really going on in your business. We're going to analyze your customers and your prospects to find out who you are currently selling to and why.
Are you currently selling to your ideal customers, or to anyone who is willing to buy? It's an important question that's frequently dismissed by business owners. After all, if someone is buying, doesn't that automatically make them an ideal customer? Not necessarily. While you may not want to turn your back on a sale, you are clearly aware that all sales are not the same. Some are large and some are small. Some are quick and some are slow. Some are easy and some are difficult. And if you had to rank them in order, you could probably do it fairly easily. The largest, easiest, most profitable sales would come first and the smallest, hardest, least profitable sales would come last. Your goal with Target Marketing is to maximize the former and minimize the latter.
The time you spend here will be returned to you many times over. Even if you think you already know your customers well, you'll gain some insight from this process.
Market Research
To better understand your customers, you'll need to do a little research. If your business is at the point where it needs a detailed study of your customers, you can always hire a consulting firm that specializes in consumer research. On the other hand, tremendous value can still be gained from a small amount of work on your part.
If you ever find yourself wondering why you're going through all this effort, remind yourself of this simple truth.
Your most valuable marketing tool is a thorough understanding of your Target Market. The more you know about your customers, the better you can help them and the better you help them, the more loyal they will be.
Sources of Information
Following is a list of resources to find out more about your customers. You may wish to read through the entire section before doing the exercises, so you'll get a general feeling of how you should conduct your research. Some resources may be more valuable to you than others at this time, so you'll need to be aware of your options before you start.
- Internal Resources — You may already have a fair amount of information on your customers. You might have mailing lists, invoices from previous years, results from contests, feedback from comment cards, or results from a direct response marketing campaign. There's no need to reinvent the wheel. If you already have a source of useful information, you may simply need to compile it.
You can often extrapolate additional information about your customers from data you've already collected. For example, if many of your customers are accountants, you might assume that your current Target Market was detail oriented. As you compile your results, keep on the lookout for clues that might offer additional insight to your customer' buying behaviours.
What sources of information do you currently have access to and what information do they contain?
- External Resources — Demographic and Geographic Information can also be obtained from external resources. If you know where your customers live, for example, you may be able to access demographic information from the national census. Other information may also be available for sale from private firms both on and offline.
Piggyback Marketing
This is a strategy in which two or more firms share the same Target Market. For example, a produce store may find success locating themselves next to a butcher shop or bakery.
Another approach is to locate your business in close proximity to a larger “destination business” allowing you to take advantage of someone else's research and strong market pull. If you are located in a mall or in the shadow of a larger “destination business,” you may share your trading area and even your Target Market with them.
People who shop at a mall, for example, are often drawn by the mall as a whole, more so than by any one particular store.
In this case, any market research done by the mall would be valuable for you as well. If this is the case for you, check with the owners or managers of the mall. They may have market research you can buy, or possibly even have. After all, it is to their advantage to have you succeed as well.
What external resources might be useful and what information might they contain?
- Your Best Guess — A quick and easy way to gather some of your more subjective information is through your or your employees' observations. Interview those who are in direct contact with your customers to gather opinions. For example, cashiers, receptionists, sales people and bank tellers all have direct contact with the customer on a regular basis. Their opinions can be valuable.
List the information about your customers that you or your employees might make educated guesses about.
Be careful when attempting to put yourself in your customers' place. It makes the assumption that your customers think the same way you do. Viewing the world through your customers' eyes is one thing; assuming they view the world through yours is quite another. One of the reasons you are an entrepreneur is you think differently from the average person.
If you sell engagement rings, you might guess your customer is a 20- 35-year-old single male in a steady relationship with a woman of similar age. He wants to delight his girlfriend. This is his first time making this type of purchase. It represents a significant financial investment on his part. It is a highly emotional decision. He is nervous or anxious about his purchase.
- Ongoing Research — Even if you choose to start with your best guess, you might want to set up a system for collecting more accurate information for the future. For example, a lot of businesses have their sales people collect information at the point of sale. By tracking their sales and recording information about their customers in real-time, they slowly build up a database on their customers. The results may not come as quickly as with a survey, but they tend to be more accurate.
Other methods of ongoing customer research include VIP clubs, such as discount cards, that allow you to automatically track individual spending habits, business card draws and other contests that collect information as part of the ballot, comment cards that identify desired benefits, and so forth. And of course there are numerous tools to help you collect information from the internet.
List the information about your customers that you or your employees might make educated guesses about.
What are some ways you can conduct ongoing research of your customers and what type of information might you collect?
- Your Customers — This is the simplest way to find out what makes your customer tick. You can ask them in person, over the phone, online through social media or through questionnaires. You'll often find companies offering something of value, such as discount coupons, memberships in a VIP club or even cards as a reward for filling out the information. Some businesses collect this type of information by integrating a survey into their warranty cards. Consulting firms will conduct independent surveys of your customers on your behalf, but you can have your sales people or other employees collect the information for you as well.
One of the first companies to listen to their customers was Proctor and Gamble. They promoted an 800 number to serve their customers, and in doing so, they gathered a lot of extra information needed. They learned that the average household’s laundry increased from 6.4 to 7.6 loads and the average washing temperature dropped 15 degrees, due to the new fabrics introduced to the market. Based on the consumers needs, this information helped Proctor & Gamble introduce their new successful product, “All Temperature Cheer.”
