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Defining your customers

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Geoff Kelly
Defining your customers
on Apr 24, 2009 at 3:01:29 pm

We're currently fine-tuning our marketing efforts and are at the point (in my mind) where we need to be defining our customers.

Who is it that we provide services to currently, who would we like to provide services to, and who do we not want to do business with?

So... We've had some ideas and some discussion and are constantly going back to "Well, I'd hate to turn any business away, so 'everyone' is a potential customer." Which is of course a marketing nightmare as you can't "target" everyone in a marketing message.

So the question for discussion is:
"How narrowly do you define your customers so as to have a starting point from which to form a marketing push?"

Geoff Kelly
Pic Two Productions

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Ron Gerber
Re: Defining your customers
on Apr 24, 2009 at 4:40:50 pm

When I meet with clients and they want to target everyone, I try to find out who are the customers that would make the biggest difference to their business and focus the message to them. To the point where your message is almost a one on one conversation with that potential client.

I usually bring up a story from years ago to help me explain to them about reaching the right people: we were doing a commercial for a restaurant. The owner had these special black angus cheeseburgers that were great, everyone loved them. So of course in the commercial we branded him the home of great cheeseburgers, you could only get them there, they were so unbelievably good, etc. His business takes off and he's selling more cheeseburgers than you can imagine.

It should be a great success story but, we never asked him if the cheeseburger crowd was going to make a difference in his business and as it turns out, his margin on cheeseburgers was very small. So small that he had to change from the black angus burgers to a different type of burger (which really wasn't very good). His business fell apart. His best margin was on seafood and all these cheeseburger folks were clogging up his restaurant and he wasn't making any money and now the cheesburgers weren't as good and the cheesburger folks found other places to go.

So, I learned from that experience that you have to find out who will make the difference and target them. If 80% of your profits come from 10% of your customers - target the type of people that make up that 10%.

Sorry for the long post but it's Friday and lunch time and I'm hungry.

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Mark Suszko
Re: Defining your customers
on Apr 25, 2009 at 1:09:45 am

Awesome example with the burgers, I'm going to steal it some day.

I'll match you with a headline from today's biz section. GM is dropping the Pontiac brand to stay afloat. Even though Pontiac was more popular and sold more units than their Buick and Cadillac lines, the difference was that, just like your cheeseburger/ seafood example, the higher volume was for a lower overall ROI, the Pontiacs didn't return as much profit per unit.

GM made Hummers and SUV's in a bad economy, with high gas prices, way beyond the time most people thought that was impractical and counter-intuitive, but GM did it because the profit margin on selling an overpriced truck or van chassis with ridonkulously excessive body work, obscenely bad mileage, and miniscule cargo area as a "sport Utility" for crazed soccer moms was the best in the company.

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Aaron Cadieux
Re: Defining your customers
on Apr 24, 2009 at 4:40:50 pm

Select clients that you know will pay you on time. Where I work, we have an army of clients that take months to pay their bills. It's disrespectful and obnoxious. In my experience, the average consumer is much better at paying bills than big corporations. Of course there's a tradeoff. Big Corps = Big money. Average Consumer = Small Money.

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Derek Fisch
Re: Defining your customers
on Apr 24, 2009 at 11:02:39 pm

If you could give some more specifics about your situation we could give more exact recommendations, but with what we have, here's a broad response:

The simplest analogy is the best in this case. Think of your customers as a target. The center circle is your perfect customer. Expanding outward, each successive ring is larger but less valuable.

Begin by aiming at the center. Determine exactly how much it will cost to reach it. Track your response and margins. Then, moving outward, calculate the cost to hit each ring. At some point you have crossover where it becomes unprofitable. Careful tracking of your ROI is essential or you'll never know what's actually working (besides having a gut feeling, which can be dead wrong). Sometimes when you aim at the center, you hit somewhere else. That's fine, but remember where your payoff is.

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Mike Cohen
Re: Defining your customers
on Apr 24, 2009 at 11:52:59 pm

Another approach is to define what YOU do best. Don't try to be all things to all people - you could fall short. Are you targeting local businesses for commercials, weddings, corporate talking heads and events? If so that's fine, but define yourself as "Your Town USA's corporate communications Specialists."

In other words let your areas of expertise dictate who your prime customers should be. If you throw a dart at the Yellow Pages you probably won't hit a good prospect. But if you hone down the total list of potential customers to those who you judge most need what you do best, you have a greater chance of hitting a bullseye.

Mike Cohen

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Chris Blair
Re: Defining your customers
on Apr 25, 2009 at 3:19:35 pm

Ok...I'm gonna buck some of the responses so far. You can throw out terms like ROI all you want, but in 13 years of running our business, and another 12 working for TV stations, production companies and as a freelancer, I've never seen a single one of them actually run any numbers to determine ROI. Nor have I seen accounting firms handling these companies' finances run one (we have one of the best in our region doing ours).

Why? Because if you have an accounting firm do it, it's expensive. Not to mention that if you don't keep meticulous records of expenses and track time relentlessly, the data you end up with will almost certainly be incorrect. And if your internal administrative people do this (probably one of the owners in a small company) they simply don't know how to accurately determine this.

Now on the subject of defining customers. This is probably one of the single most difficult things to do in our business....or any business for that matter. I'll give you an example. A woman calls us one day with 100 photographs and wants to put together a video/slide show for her daughter's wedding. We don't normally do that sort of thing, but we weren't busy at the we did it. We made virtually no money on it, but she loved it. She told her husband. He's a CEO at a large regional company. He tells his marketing director who watches the video, expecting to see some hack piece, but is duly impressed with it. He goes to our website, is further impressed and calls us to discuss some projects.

Examples like this have happened to us at least half dozen times in the last decade. We do a small project for an individual, a non-profit or an institution. Someone in the family or organization sees it, is impressed, and things roll downhill from there.

So while you probably don't want to spend marketing dollars targeting these types of clients, neither should you automatically turn them away just because it's "not what we do."

If you're not booked, then why the heck NOT do it. At the very least it will generate goodwill and possibly some good word of mouth. And quite possibly it could plant the seed for bringing a large client into the fold.

From my perspective and experience, your target market consists of people and companies that need the solutions you can provide, even if you're not currently providing those solutions. And those solutions are almost always evolving. 5 years ago we did very little compression. But we've gotten really good at it and it's becoming a bigger and bigger part of our business, so much so that we're actively marketing a web encoding and video hosting service to several of our large clients. One is already on-board, another is coming on-board after their current contract with their video hosting provider expires. It will likely add anywhere from $25-$75,000 worth of revenue to our business, with almost zero additional costs, since much of the encoding work happens overnight, rendering on our computers while we're not there.

So for us, defining customers comes down to:

1. What media related problems do corporate and retail customers need solved...and which of those companies are large enough to be pay for services such as ours?
1. Who's used us in the past.
2. Who's using us now.
3. What media based services do current clients need that we're not providing...and can we do it cheaper and better than the people they're currently getting it from?

Lastly and perhaps more importantly. Landing new clients can be a very long process. We courted a car group dealership for no less than 7 years before getting a small nugget of a project. They loved what we did on that...and a little more work came our way. They loved that and our level of service and they eventually moved all 7 dealerships to us. They're our largest client now.

So persistence....keeping your name, work and possibly your face in front of those people who need your services (and who may have turned you down repeatedly over the years) is just as critical to the marketing puzzle as any fancy brochures or slogans.

Sorry for the long post, but marketing yourself means getting out there and making contacts, knowing what problems your potential clients face, then providing information about potential solutions their problems.

Chris Blair
Magnetic Image, Inc.
Evansville, IN

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