Tuesday, February 23, 2010
I took a week off from writing about business planning so I could actually write a business plan (or start one, anyway) for a new project I am working on. I will be announcing the project later, but for now, I want to return to the topic of business planning for this blog post.
Today, we will explore demographics. Think of demographics as the vital statistics for your customers: where they live, what their income and education level is, what they like to do. You will want to collect as much information as possible about the people who both like AND want to buy your product or service. The more you know about who these people are, the more likely you will be able to find them when you choose your selling venues. (For those of you who missed it, the selling venue discussion may be found at this link: Selling Venues).
I remember asking myself, when I was first starting business, "How am I supposed to know who my customers are? I have no sales!"
Start with yourself. What do you like to do? Where do you live? How old are you? What is your income level? Chances are, you are providing a product or service that you enjoy (otherwise, why do it?) and, you can be certain that at least some of your future customers will be similar to you.
Ask your friends and family if they would buy your product or service--and then add them to your growing list of demographic information. Note: Friends and family are not the most reliable lot--they do not want to hurt your feelings if they secretly dislike your product or service--so they are likely to say "yes" they would buy your product regardless of how they actually feel. Take friends and family comments with a grain of salt, but, do include some of their information in your demographics. It is a baseline...you can revise it later, if needed.
Keep track of who actually does buy your product or service. Even at the beginning stages, you can start to get a feel for your true customer profile by jotting down basic information about who actually does make a purchase. It does not have to be complicated. Just start a chart in a notebook (or a spreadsheet on the computer) with headings that indicate the information you are looking for in your business. Here are some common headings: gender, location, population, age, education, ethnicity or race, income level, or whatever other information you want to track to get to know your customers better. Do not forget to include which products or services you offer that get the most attention. Are your customers drawn to particular colors or materials or sizes? Are they cost conscious or do they put quality and uniqueness of design above price? What motivates your customers to make a second purchase? What factors might turn them away? These types of questions bring your true customer to life.
Do not worry if your demographic information seems skimpy at first. Keeping asking questions and listening to what your customers are saying. The more you interact you with your customers and potential customers, the more information you will gather. You do not have to be aggressive or overt about collecting marketing data. In fact, that will generally turn off potential customers (and maybe some existing ones, too). Just talk with people. Listen to their stories. And, when they make a purchase or sign up for your newsletter, take note of their demographic information. Over time, you will begin to have a more concrete, rounder picture of who your customers really are.
I will be continuing to discuss business planning next week, though I have not decided what topic, yet!
Did you find this information helpful? Please let me know if you have further ideas or questions about demographics (or business planning in general) by leaving a comment.