Who Is Your Customer?

Identify and market to who you want as customers

Has anyone ever asked you who is your customer? What has been your response?

Years ago when I was helping out a new business owner in Oregon, he asked me this question. Who is your customer? Who do you market to? Well everyone, I said.

I continued to advise and help him with some challenges he was having. After an over two hour conversation, I hung up and began to reflect on that question he asked me. Who is your customer?

You know the expression, you never know when or who you will learn something from? This was definitely one of those moments.

The reason he asked me that question is because I was giving him some help and ideas on marketing and targeting certain demographics. But what I realized is I wasn’t really doing a deep enough targeted marketing program. I was trying to appeal towards too large of a market and knew we could do better.

Sales people and business owners will often say that everyone is their customer. That just isn’t true. Your product may be available to everyone and anyone can purchase it but every business has its certain market or demographic it appeals to and sells the most to.

Focusing your time, energy and money in the wrong places can have consequences. It detracts your focus from the right places.

It took me a few years to fully understand this but I’m grateful for that conversation. Here is my thought process.

Applying the 80/20 Principle (Pareto Principle)

The Pareto Principle, named after economist Vilfredo Pareto, specifies that 80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs. This is also known as the 80/20 principle.

The 80/20 principle is the subject of a great book entitled, The 80/20 Principle: The Secret to Achieving More with Less. By Richard Koch. He does a masterful job detailing how this can be applied practically to your lives, careers and businesses.

Applying the 80/20 principle to your business can clearly illustrate where your productivity, time and money should be spent. I used this principle to review past sales, revenues and the makeup of my current customer base. What could applying the principles tell me about how to identify the type of customers I wanted? Here are some examples of the 80/20 principle being applied to a business.

• 80% of the work we accomplish comes from 20% of the time

• 80% of your time is spent on 20% of your customers

• 80% of your revenue comes from 20% of your customers

• 80% of your sales are made by 20% of the sales team

• 80% of sales are produced by 20% of a company’s product or service

As you can see the 20% is the key. Identifying that 20% and building and expanding off of that will give you the insight you need to make the proper decisions moving forward.

Apply this to all aspects of your business. Marketing, current customers, products, projects, sales and service teams.

Focusing on the A customers

Once I’ve identified my 20% of customers, which I labeled the A customers, I could formulate a plan to focus on them.

I realized I needed to market to the A customers and be sure they were getting the best service, advice and experience possible. Two of the most applicable 80/20 principles that I always go back to are;

• 80% of your complaints, problems and time are spent on 20% of your customers

• 80% of your revenue comes from 20% of your customers.

By applying these principles I realized that we were going to have to give up some C customers to provide better commitment and attention to an A customer. The 80% of problems, complaints and time that 20% of customers caused was not worth our time. It was taking our time away from our best customers. It wasn’t fair to them.

You can’t be everything to everyone if you want to offer a truly exceptional experience. Certain clients do not fit. Always remember, quality of business over quantity of business.

Is your marketing speaking to the customers you want?

If you’ve applied the 80/20 principle to your business and now identified your A customers it’s time to customize your marketing to speak to them.

Identifying the proper customer segment for your marketing is vital. This will allow you to stand out and be remembered by those perspective customers.

What does that customer segment look like? This is where you use your data to design how you want to market to this group of people. Ways to customize and speak to this group is by marital status, age bracket, industry/occupation, location, income level, education, home value etc.

Find a niche and grow with it. Research the history and early days of Apple and Uber. They began by appealing to a very limited number of customers.

Identify your targeted customer demographics and speak to them through your marketing and advertising. Trying to appeal to everyone isn’t going to allow you to stand out to anyone.

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