A lot of time is devoted in the literature to how to run your business. People talk about how to hire the right people, what branding you should do and a whole lot more. Just the other day there was even an article here about 5 digital footprint tips every small business should follow (Which I thought was a great article, by the way).
What people don’t seem to spend enough time on, however, is on who their customers will be. And that’s unfortunate, because if you don’t have anybody to sell you product to then you’re not going to be selling a great deal of product!
For that reason today I’m doing to be looking at how to figure out who your customers are.
No, you can’t. If you try to sell to everybody then you won’t engage anybody. That doesn’t mean you should forbid anybody from buying your product – who would do that? Instead it means that you need to decide who you’re going to target.
Jerry Rackley, chief analyst at marketing research and advisory firm Demand Metric Research, said, “If you can’t put your ideal customers into an identifiable segment, your business plan is a no-go,” With that he means that your market should be easy to define and therefore easy to target. After all if you can’t figure out how to reach them, how are you going to sell to them?
Just because you need a category that’s easy to define doesn’t mean you should pick a category that everybody knows about. I mean, yes, there are ways to survive in a competitive industry, but why make life hard on yourself when you can instead search for a niche that other people don’t really know about? It’s important to be creative.
The first thing is to not run with the herd. Yes, there are some cool market segments. The problem with those is that everybody is going to pile into them, which will make the competition cup throat. It’s far better to choose something less cool, but where there is still money to be made. That’s why the garbage collecting business is such a profitable racket in so many places. Everybody thinks it’s a dirty business and therefore doesn’t want to do it!
So find your neglected market, where people have money but that everybody else is ignoring for some reason.
Of course, you do have to make sure your market is actually large enough. After all, however lucrative the segment might be, if there are only ten people in it and you aren’t making a few hundred million per customer (like super yachts) then it’s going to be hard to stay afloat.
Now this seems pretty obvious, but you’d be surprised with how many people don’t do this kind of basic market research. You need to know how many people you need to sell to stay profitable, how many people there are in the market and if there is any risk of saturation if you do manage to get going. If people keep on dropping into and out of the market, there is no risk of saturation. If your product needs to be replaced regularly, again the risk of saturation is small. If, however, the market remains constant and your product stays useable, then you’ll end up going the way of Crocks.
The final piece of the puzzle is to make sure that the market has serious growth potential. The above title certainly has that, which means that even if other people figure out your niche, you’re still in a position to grow nicely, seeing as the niche will expand as well.
Even better, if you become a market leader in your new niche, you can hoover up more and more of these new customers as they enter the niche. In that case you’ll be in the enviable position of being able to suffocate new startups before they become serious competitors without running the risk of running into anti-trust cases, as it’s just a niche, not the entire market. Of course, that’s years and years down the line, but you can’t blame a guy for dreaming, right?
Norman Arvidsson is a web developer with more than three years of experience and also a contributing blogger. Interested in areas such as web design, development, motivation, eLearning, marketing, small business, startups, and self-improvement. You can contact him through his Facebook or Twitter. Image credit: www.inv8tr.com