JOHANNESBURG - German-born theoretical physicist, Albert Einstein, famously said: “Strive not to be a success, but rather to be of value” – a saying that still resonates strongly today when it comes to attracting and retaining customers, particularly in a world dominated by fast-paced, on-demand service.
It is also an important phrase for local small business owners to bear in mind, especially when defining a potential customer base. Such a process therefore requires careful planning.
Segmenting the potential market into groups of consumers by considering two important dimensions - the demographics and the psychographics of the consumer - is the first step in understanding your market. The second step is to identify the most appropriate group for your business to focus on – your target market. This group should be selected based on the size of the market, the sales potential and very importantly, your business’ ability and capacity to provide value.
A demographics analysis will inform the following questions:
Age: what what is the average range of your potential customer? Does your product appeal across the range or to a specific age?to
Gender: are your potential customers predominantly female or male or both? What marketing tactics will you need to ensure your product reaches the customer?
Marital status: knowing the proportion of families who live in your area of business determines the dominant products on your menu and how they are presented or packaged.
Education and culture: These affect style, fashion, pricing and decision making processes. For example, research on phenomenons such as “Millennials” and “Generation X and Generation Y” helps to better understand consumption preferences in your target market.
Location: Where does your potential customer live and/or work? This will affect the ease with which your customers can reach you and may influence where you locate your operational base.
The average level of personal and/or household income: Once you have identified the level of earnings that your target market should have, the location of your business should reflect where these customers work, live or play.
Psychographics can be more difficult to determine, however the following are the types of questions you should ask in determining their profile.
Hobbies: What does your customer like to do for leisure time? Are they the outdoors or indoors types?
Health: What is a potential customers’ opinion on health or environmental issues? Health conscious are known to pay particular attention to product ingredients while environmentally conscious customers may focus on the packaging.
Status: Is your customer fashion conscious? What are their spending patterns and what influences a sale for them? Does price affect their decision to buy?
Once the market segment has been defined, attracting and retaining customers is an ever-evolving process that needs to be refreshed and updated whenever the landscape evolves. Increasingly, businesses have to compete for a decreasing slice of the pie as economic conditions remain under pressure, therefore SME decision-makers must take heed of shifting trends that can either retain and attract new customers or result in customers moving on to new products or services.
Consumers are increasingly demanding, mainly due to the convenience and availability of online shopping. Small businesses can ill afford to dictate to their customers only conventional business hours, and should consider being more flexible and even being available 24/7. . Outstanding service will always be a competitive advantage and creates loyal customers. Customer service is also evolving from merely providing customer friendly solutions to engaging with clients and providing a customised client experience. Consumers are expecting more and more that their service providers deal with them in a personalised and timeous manner.
Customer service is essentially marketing for a business and by using social media and other such public platforms to engage with customers, other potential customers are able to view the way in which the business engages with its market and customers – ultimately influencing their purchasing decisions and attracting them to the business.
Ben Bierman is a managing director at Business Partners Limited