As a small business, you may fall into the trap of treating all of your customers with a “one size fits all” approach. Beware of doing so, as you may find your business losing your most loyal customers who are made to feel special else where. As consumers, we expect to be treated well by businesses we frequent often – acknowledgement by name on checking into a hotel and being given your favourite room, a barista who knows your coffee order by heart, and your chiropractor who asks about your son’s recent birthday party. These may all seem like little things, but as a consumer, you feel special when a business goes out of its way to add a touch of personal service.
Customer segmentation is widely used by big businesses to tailor messages to individual groups based on various factors. The same, principle can also apply to small businesses, and it need not be complicated. It comes down to getting to know your existing customers a little better – and here’s how to start:
- Who is your ideal customer? This may be based on an actual customer, or a fictional one, that your business is trying to attract. The attributes of this ideal customer will vary from business to business, but may include such things as:
- Family Status
- Geographic (where they live or shop)
- Frequency of purchase / visit
- Average amount spent per purchase / visit
- Once you have a profile, you can start looking for existing customers that meat this criteria – they should be classed as your best customers, and treated like gold. In many businesses – 60% or more of your revenue may come from your top 20% of customers, so it pays to create some sort of loyalty program, or decide how you are going to make these customers feel special and appreciated.
- For customers that don’t fit into the “ideal” category, you need to loosely group them together based on common characteristics, and look at the best way to communicate with each group to convert them into an ideal customer. For example, can you get them to buy more frequently, or increase the sales amount by cross selling another product or service?
- No matter what category groups you use for your customers, always ask yourself, “what are the triggers to make this group buy”? How does your business solve a problem or need for this group. By determining the answer to these questions, you can then tailor your message and offer to this group to encourage them towards purchase.
As an example, let’s take a Hair Dressing Salon in a suburban area. Their ideal customer may be women aged 35 – 55 who come in every 6-8 weeks for a colour, cut and style, and spend an average of $150 per visit. These women are spending over $1,000 per year on hair services, and should have a wonderful experience every time they visit the salon (coffee + cake, champagne, quality magazines, invites to special events, etc). On the other end of the spectrum, a secondary customer group may be children, where parents are looking for a quick and efficient service, where kids can come in for a cut, be entertained via a TV show, and be in and out in 15 minutes. Perhaps the salon may look to offer kids cuts at the quietest time / day of the week at a special discount with a junior stylist, and have an activity corner to keep the kids amused. The lesson here, is the messaging is very different for these two groups, as is their motivation for coming into the salon in the first place.
Going through this exercise of profiling and grouping your customers may uncover some customers who are not so profitable or desirable for your business. You are better off spending money on marketing and loyalty programs to keep your best customers happy, rather than waste resources on a customer that is unlikely to buy from you again. When looking to acquire new customers, always set your sights on attracting more people that fit your ideal customer profile – they may be more expensive and harder to attract, but they will end up being far more valuable to your business over the long run.
I hope this article has been helpful – happy profiling!