Knowing your target customer is one of the most important prerequisites when starting a business. When you pitch your business idea to a veteran entrepreneur, they'll likely interrupt and ask "Wait, what is your target market? Who are you selling this to?" Unless you have a crisp answer, be prepared to be waved back to the starting block. Not knowing your customer is the "do not pass go" card in the real-life game of Monopoly.
Most entrepreneurs think they know their target customers, but they're often wrong, because knowing your customers isn't as easy as it sounds. Defining your target customer requires taking a big slice of the population and systematically narrowing it now to a very specific profile.
This process is counterintuitive to entrepreneurs who are trained to dream big in every other aspect of business planning. So when drafting their business plans, some entrepreneurs make big assumptions to fill in the blanks. Without data or feedback, these assumptions amount to wild, hopeful guesses.
Correcting this mistake became incredibly important in my business when I faced the loss of a client and a corresponding dip in income. This prompted me to go back to the drawing board -- a challenge I describe in this episode of Just One Thing.
How can you shorten the learning curve in your own business? Take the time now to get as familiar as possible with your target customer. Answer the following statements with a true, false, or sort of (with a note to yourself). After you've completed the list, go back and draft a short profile of your ideal customer by writing a sentence about each.
- My customer's top concern is price. They're always looking for the least expensive option.
- Quality is essential. My customers want products/services that work better and last longer than the average.
- Brand names are important. If it doesn't have the right labor, my customer won't be interested.
- Variety is the spice of life for my customers. They want to see lots of options and love making their own combinations of products/services.
- My customer is independent and doesn't need to interact with a salesperson. They know what they want or know where to find information before they buy. No hand-holding is needed.
- My customers love to be treated well. Service and support is critically important to them before, during, and after they make a purchase.
- Price might not be the most important thing for my customers, but they love getting special offers and feeling like they're part of an exclusive group. Coupons, presales, and insider access means a lot to them.
- My customer wants beautiful packaging.The nicer we can make experience of unwrapping our product or launching our service, the happier they are.
- My customers lead busy, complex lives. Our product/service must be ultra easy to use and access. They don't read instructions. It just has to work.
- My customers want purchasing, delivery and customer service to be easy above all else.. Any purchase requiring multiple steps or going to a special location is a non-starter for them. They're not interested.
- My customers want a money back guarantee. Because of their upfront investment, they want to make sure they have a backup plan in case the product/service doesn't work the way they thought it would.
- My customers can't pay for the entire product/service at once. Flexible or layaway payment options are critical to their ability to buy.
Identifying your target customer can be difficult, especially since that target customer may change as you learn and grow in your business. If your business has been up and running for a while but you're not getting the sales you want, taking a second look and refining your ideal customer profile can be an effective way to better target your marketing efforts and reach more people. Knowing your ideal customer is one of the most important steps in getting any business successfully off the ground -- and keeping it flying high.