At this point, you should know that your business will contribute to your ideal life and exactly what benefits you plan to offer to your customers. So who exactly are these customers, and how will you go about reaching them?
Avoid the urge to appeal to a broad audience. In fact, you should seek to appeal to the narrowest possible audience. Yes, this does reduce the size of your potential market. On the other hand, think of this as a distillation process that will allow you to spend less on your marketing and get far better results. Think of it like fishing. If you’re after trout, you’d do well to fish where the trout live.
How much do you know about your ideal customers? Traits such as age, gender, ethnicity, income level, home ownership, profession, education and location are just a few examples of demographics. Religious or spiritual beliefs, political alignment, hobbies, interests, goals, dreams, desires, etc., are examples of psychographics. What magical combination of demographics and psychographics does your ideal customer possess?
Armed with this information, your next step is to familiarize yourself with these people as intimately as possible. Where do they live? Where do they get their information? What do they read, view, listen to? What criteria drive their buying decisions? What appeals to them? How can you use all of this information to start creating a step-by-step process that converts people to leads, prospects, customers, clients, and referral sources? Remember that marketing is the business equivalent of a courtship ritual that ideally leads to a lifelong relationship.
Now for two really challenging questions: How many ideal customers live within your service area? Out of that number, what percentage can you count on attracting? The first question is fairly easy to answer. The second one is where the guesswork truly begins. You’re going to have to make some assumptions about your ability to penetrate the marketplace and the market share you will gain. As a general rule of thumb, I recommend being as conservative as possible and then halving that number for extra safety.
There are plenty of resources for doing this market research. The US Census Bureau has lots of demographic information. Local newspapers, bulletin boards, churches, schools and more can give you a good feel for the psychographics in your area. Your local Chamber of Commerce can be an excellent resource. It’s as easy as attending meetings and listening to what business owners are saying. Parking yourself outside your competitors and checking out the people going in and out can also be amazingly effective. Here’s one method you can try: Chat up the competition. Ask questions. You’d be amazed how much information you can get simply by asking for it.
Industry associations, government agencies, universities, trade publications, conventions and more are laden with even more valuable information. Take advantage of it. Hey, if you don’t, someone else will.
All of this research is leading you to one critical question: Is your business concept viable or not? We’ll explore this concept next week. In the meantime, I reiterate what I’ve been saying all along: This series of articles is geared towards starting up a new business; however, all of these concepts are equally applicable if you are reexamining an existing business or even mulling over buying a business.