There’s a lot of noise around these days about focusing on your Core Customer. We’re told that all businesses should stop trying to be all things to all people and target a specific customer segment that’s big enough to deliver the sales we need, but not too big.
To an extent this message is not new. American author and marketing guru, Al Ries has been saying for years that if we try to stand for everything we end up standing for nothing – a brand becomes stronger when it narrows its focus. More recently Seth Godin has been preaching a similar message. We need to stand out clearly from the rest of the crowd if we’re going to be seen. Still not with me? Have a look at what happened to Gap in 2004.
But is this concept just for multinationals or is it applicable to all businesses whatever their size? To answer this question, let’s look at some of the benefits of focusing on your Core Customer:
- Marketing is about effective communication. If you want to get people really excited about your product or service, you’ll need to develop clear understanding of their needs and preferences – even their prejudices. In other words, you need to understand why they actually buy from you. (One word of caution… the real reason people buy from you on an emotional level may not be the reason they give when you ask them. So you may need to be quite subtle with your questioning.) Once you understand why people buy from you’re in a position to tailor your marketing message to appeal to your audience at an emotional level. You’ll find you’ll be able to talk their language.
- If you know exactly who you’re looking for, you’ll know a) where to find them and b) how to communicate with them. For example, suppose you’re in the baby food sector and you’ve identified your Core Customer as “young mums who are concerned about the planet and want their infants to get better nutrition.” You certainly wouldn’t target this audience by placing a macho ad in a Fast Car Magazine. But you probably wouldn’t go for a Glossy Fashion Magazine either even though the fashion magazine might be read by the same demographic as your target audience.
- When you’ve got a better understanding of the needs and preferences that are driving your Core Customers to buy from you you’ll be in a better position to develop enhanced products or services to meet those needs. So you have the opportunity to make yourself yet more attractive to them and develop an even closer relationship. You’ll also save money by not developing features and services which don’t meet their needs.
- Every business has a most valuable customer or customer group. But customers are valuable to businesses for different reasons. For one business, the most valuable customer might be the customer who’s been with it the longest; for another, it might be the one who’s currently spending the most on a monthly basis; and for yet another it might be the one who’s giving the business the most referrals. But what’s most valuable to one business won’t necessarily be valuable to another. By focusing on the reason the customer is valuable to you, you’ll be able to develop a strategy for getting more customers like them. And the good news is that there will be more customers out there who are exactly like your very best customers.
- Similarly, understanding who your most valuable customers are will help you identify customers who don’t match that profile. These customers are probably costing you money. You will then be in a position to “deselect” those customers i.e. politely suggest they take their business elsewhere. This is one of the easiest ways in business to make more money for less effort. Why wouldn’t you want to do that?
So if we accept that focusing on our Core Customer is a good idea, how do we work out who our Core Customers is? One place to start is to carry out an 80/20 analysis on our customer list. In most businesses, 80% of the profit comes from 20% of the customers, so the Core Customer will be representative of the 20%. (If you’ve never done an 80/20 analysis on your customers or don’t feel you know how, please e-mail me firstname.lastname@example.org and I’ll send you my kit on how to do it).
Once you’ve done that, identify your one or two very best customers in the 20% group and arrange to have a cup of coffee with them. And whilst your sitting down with them you can ask them lots of questions about themselves, their interests, their colleagues, their family, why they buy from you and so on. You might want to prepare a questionnaire beforehand to make sure that you gather all the information you need.
If you can’t arrange to have a cup of coffee, try a telephone call. Or, if all else fails, you could sit down and picture your Core Customer sitting on the other side of the table. And open up an imaginary dialogue with them…