That knowledge opens up new markets for you and potential business growth.
The first step is to find out who your customers are – what motivates them, what characteristics do they have in common, what are their interests, etc. There’s any number of guides to segmentation analysis freely available to use and it’s worth spending some time on this.
The second step is to find out which customer segment is “profitable” for your organisation – it is very common for businesses to discover that a large chunk of their customers actually lose them money!
Then we need to focus on understanding the value that customers perceive, i.e., why do they buy from you? Again, there are any number of tools you can use: sentiment analysis, peer analysis, surveys, etc. An often overlooked tool is a simple “what three words do you associate with us” question. It can reveal how customers feel about you.
Quick check – is the perceived value aligned with those things that make a profit? If not, there’s some thinking ahead of you: do you want to rethink your organisation so perceived value is aligned to profitable activities?
Next is looking for opportunities to diversify – you know who your customers are, you know what they value. This can lead to some interesting opportunities to deliver that value in a different way. Be careful though, for every Lucozade which managed the brand extension well, there’s a pointless “Bic for Her”…
Finally, what about the future? There is no such thing as steady state. The tools we discussed last time (PESTLE, Five Forces, etc.) will help uncover some insights into the future and some opportunities. How can you find new customers for what you do? How will your customer base evolve and grow and how will you evolve to meet new needs and opportunities? These are big questions and not easily answered. But testing your thoughts with customers or a peer group early and often is a good idea.
A final thought – be wary. Data is good but remember Boaty McBoatface. Use data wisely – an apocryphal quote from Henry Ford is: “If I’d listened to customers, I’d have built a faster horse”. Henry Ford understood that people just wanted to get from A to B but the only way they knew how was a horse. It took decades for cars to become the standard way we now fulfil the basic need of going from A to B.
If you need help with any of this and you are a sole trader or a business in the creative sector in the North of Tyne Combined Area, please get in touch Catherine.firstname.lastname@example.org