The foundation of a successful business is based on a single important element: knowing your customer. After all, if there’s no one to sell to, there’s no profit – and you won’t be in business for long without income.
When planning to start a business or expand to new markets, you need to figure out who exactly is your ideal customer. After clearly identifying the very best customers for your product or service, you can then focus your marketing, advertising and sales efforts more efficiently on this customer category.
An ideal customer is someone who receives relevant value from your product or service and who, in turn, will generate revenue for your business, whether short or long-term. They might also be an excellent referral partner, sending you customers who are profitable; they might be inexpensive and easy to reach; or they might be loyal, long-term, return customers for years to come.
Despite the benefits of pinpointing the ideal customer, busy entrepreneurs often lack time to conduct research, analyze the results, and develop a plan. So, we’ll break it down into some manageable steps to help find your business’s ideal customers:
Why Customer Segmentation is Important
- If you’re an existing business, you can scale up by segmenting your current audience to help you identify potential new customer groups. The advantages to segmentation are that it allows you to prioritize the best customers; it can help you understand how they interact with your product/service so you can adjust your marketing efforts to better meet their needs and preferences; and it allows you to discover pockets of new customers you might never have thought of approaching. (See the graphic below for ideas on how you can segment your customers.)
Take your customer’s perspective
- Analyze and define your product or service from your customer’s point of view. Brian Tracy, Chairman and CEO of Brian Tracy International, suggests asking yourself the following: What does your product do for your ideal customer? What problems does your product solve for your customer? What needs of your customer does your product satisfy? How does your product improve your customer’s life or work?
Fine tune your customer knowledge
- Alternatively, define the ideal customer to whom you want to sell. Consider both demographics (i.e.: age, race, religion, gender, family size, ethnicity, income, and education) and psychographics (i.e.: personality traits, beliefs, values, attitudes, interests, and lifestyles).
Analyze the customer journey
- To help you determine both present and future customer segments, figure out how your ideal customer makes their purchases. Consider, for example, how they currently purchase a similar product/service. It’s also important to understand how they arrive at a purchasing decision, that is, the journey they take before committing to buy (e.g.: what platforms do they use to research similar products/services; are customer testimonials a key part of their decision making process; if/how they evaluate alternatives; etc.)
Being able to clearly define your ideal customer early on in the business startup or new product/service launch phase will help you build and grow strategically and efficiently since it allows you to pinpoint who is positioned to buy your product right out of the gate. The biggest advantage of conducting a customer segmentation exercise is that you’ll find additional ways of customizing your product/service, thereby increasing your revenue streams. You’ll also save a lot of resources (e.g.: sales and marketing expenditures) when you’ve narrowed down your market to the ‘right’ one.
How can you find your ideal customer? Try our Customer Persona worksheet when you sign up for a free, one-hour discovery session with one of our GrowthWheel® certified business advisors.