Can you pick out your customer?

Identifying your customer is vital when embarking on a new business venture. And while it might sound straightforward, many businesses fail because they didn’t understand who their customer was – and, just as importantly, how to look after them.

It doesn’t matter whether you’re able to launch a one man band or a business you hope will become a multi-million dollar enterprise, you must identify who will do business with you.

The single most important reason to take the time to understand who your customers are is so that you can creative an effective marketing campaign, says Tom Donald, planning director of Sydney advertising agency The Works.

“If you’re considering embarking on a start-up business and you don’t know who your customers are, then don’t start a business.

“The quickest way to fail is to start a business in an area you know nothing about trying to service customers that you don’t understand,” Donald says.

Marketing expert Erik Bigalk agrees. The founder of Sydney marketing and PR firm Smart Solutions says market research to discover who makes up your customer base is vital.

“If you’re slightly off with who your target market is, you can spend a lot of time, energy and money trying to reach them without much success,” Bigalk says.

“But, luckily, we are living in a time where we have access to more and more tools and strategies for finding out what our customers want and whether we are actually talking to the right people and trying to turn them into customers,” he says.

The early steps

The first step is to be really clear about what your business offers. What is its proposition? What problem does it solve? How does this differ from your competitors? This should all be covered off in your business plan.

Next, consider all the different groups of people who would be interested in your offering, says Janeece Keller, the president of the Australasian Association of Lean Six Sigma Practitioners, which is the industry association for business improvement professionals.

“Once your value proposition is clear, talk to as many different people in your network as possible about it, because you never know who will take an interest,” Keller says.

Be sure that you spend time talking to your current customers, she says.

“Ask them what they like and don’t like about the products/services you sell, and also ask them what it is you could be doing better.

“That way you’ll always have a customer-centric message for communications and the development of your product or service range,” she says.

It’s also important that start-ups establish a system to track customer purchasing habits, with even a basic customer database providing revealing data about who your customers are, Keller says.

Other tools include Roy Morgan customer profiles. Or you could tap into some of the numerous Federal Government research or reports within your particular field, says Marcus Tarrant, founder of Business Planning HQ.

“Once you start to build a profile of who your customer is, you can work out the best ways to reach out to them,” he says.

Focus groups could also work for you. Ask lots of questions of those who agree to give their opinion on your business and work out who it appeals to, and why.

Online tools

There are a variety of online tools to help you identify your customer. Social media can provide a revealing picture of your customers for minimal outlay.