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Simple ways that can improve your business profits [PODCAST]


PreneurCast is a marketing + business podcast. Each week, author and marketer Pete Williams and digital media producer Dom Goucher discuss entrepreneurship, business, internet marketing and productivity.

Dom presents another Foundation episode, this week talking about the importance of knowing who your customers are. This is put into the context of the 7 Levers of Business to show how some simple insights can help improve your profits.

Dom talks about making your business more efficient by determining who your customers are


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Episode 116:
Who Are Your Customers?

Dom Goucher:      Hello, and welcome to this week’s episode of PreneurCast. It’s just me, Dom Goucher, this week. Pete, unfortunately, has the flu. And so this week is a great opportunity for me to cover another Foundation topic that I’ve really been wanting to share with you for some time.

And this topic is really, really important, just like all the Foundation topics, just like the one I did recently about what you do and making sure you tell people what you do. This one is equally as important, which is to know who your customers are.

Now, a lot of us think we know who our customers are. But really, you need to understand how important it is to know who your customers are, to realize to what level you need to know who your customers are. Because knowing who your customers are could make your business far more efficient.

It can save you time, money, and energy in everything, from your marketing to your product. For example, this is a big part of The Marketing Symphony that Pete and I have talked about in the past. The Marketing Symphony starts with getting traffic, but it ends with defining what your product is going to be.

Whether it’s a product you’re going to source and sell, or if it’s a product you’re going to create, both of which take time and effort. So that is all about finding out who your customers are and what they will buy. Now, this really needs a framework, and the framework that I’m going to use is the 7 Levers, which won’t surprise anybody.

Obviously, it’s the framework that Pete and I talk about the most, and it makes a great framework for pretty much any business. What we’re going to be looking for is things like who are your customers, what are their interests, is there anything that defines them uniquely? Do they have a family? Are they married?

What kind of a job do they have? Who is their employer? Are they self-employed? All these things. These are all relevant. And to explain why they’re relevant and what kind of information you can use in your business, I’m going to step through the 7 Levers and show you how knowing who your clients are will affect that lever positively.

Which will make it more efficient, make it easier for you to get that 10% increase, which cumulatively, if we can just pull each one of the 7 Levers 10%, we can double our profit. So let’s start with traffic. Something that you can affect getting traffic by knowing is where are your customers.

And a really big differential with that is not just about geography, but actually, are they currently looking for things, researching things, and getting their information online or offline?

Because if they’re getting their information offline, if they read physical magazines and newspapers, then no amount of online advertising and search engine optimization is going to get you the same return on investment that finding out where those magazines are and putting a physical advert in, is going to get you.

So that’s a really big distinction, and it’s something you really ought to know. When we’re talking about advertising, knowing where to advertise by knowing where your customers are hanging out, what kind of things they do, those are really, really powerful, powerful things.

Once you know that, as I said, if you know whether they’re online or offline, then you can find out things like what magazines are they reading, or maybe what kind of things are they searching for on the search engines. All these things are really important because they will help you make much more targeted marketing, targeted advertising.

But there are other things that you can know about them, especially if they are existing customers of yours. If they’re existing customers of yours, and you have them on a mailing list (which, obviously, we recommend), then talking about the Preneur Hierarchy (which we talked about before), you know more about them already.

Because you’ve got data on them, because they’re on your mailing list, you may even know whether they’ve bought something from you or not. Which allows you to talk to them, address them directly. But even if you don’t know that, the more you know about these people, the easier it is to create targeted advertising, targeted marketing messages for them.

For example, what kind of language they might respond to, depending on what their interests are, what kind of socioeconomic group they’re in, things like that. So that’s why, and there are some very simple examples of why knowing who your customers are, knowing something about your customers, will help you getting traffic.

After traffic, we look at opt-ins. Again, you’re looking for somebody to take an action, you’re looking for somebody to give you their information or to request a quote, whatever it might be. So you need to know what they’re looking for, what is their goal.

So, therefore, what can you offer them that will get them towards that goal? For example, if you’re a service-based business, or depending on what products you sell, some people might want a free quote. They may respond to callers for a free quote as a call to action.

They may respond to a free information pack in return for their e-mail address. But it really depends on what they’re looking for, and maybe even in what format. Older people may want printed materials, younger people are happy with electronic information, people who are short on time may be interested in audio download.

All these things, just a simple thing like age, can affect what you offer and what kind of a call to action you place on your opt-in. Also, again, all the things we’ve talked about in traffic are relevant in opt-ins as well, but most specifically is what language these people will respond to.

When you’re making your offer, when you’re giving them an incentive to opt-in or your call to action, again, looking at what kind of goal they have, what their perspective might be, or their age is, will affect the language that you use when you make your call to action to get the opt-in.

So that’s knowing about your customers and affecting your opt-ins. Once someone’s opted in, then the next step we’re looking for is a conversion. We’re looking to sell them something. Now, what they opted into may not be directly related to what we sold them.

If we gave them an information pack, the information pack may have been free, and it may not specifically be related to a single product or service, it may be a generic information pack about defining a problem space or whatever. But, either way, when we looked to opt-ins, we were looking at what were they looking for, what kind of a solution were they looking for, what kind of problems do they have.

And to get them to buy something, we need to have something that solves their problem. So, knowing that about that customer, whether we get it through the opt-in, they opted in for this particular piece of information, or they opted in through our free quote and therefore we got to speak to them.

The more we know about what their goal is, what problems they have, how they want their problem solved, the easier it is to get them to convert into a buyer, a paying customer. Another interesting thing about people that you maybe find out is what level of service do they need.

Some people respond to, ‘just give it to me, I’ll do it myself.’ But other people respond strongly to done-for-you kind of offers, if you’re in the service industry, or if you’re in a mixture, a business as mixture. Some people want to be left alone when they go into a store.

Some people want to be helped and educated. And knowing more about these people and what kinds of people react to what kinds of offers and what kinds of service, again, can inform your sales process, and therefore your conversions. So, there again, some simple examples of how knowing who your clients are, knowing something about your clients, can help affect conversions.

Next up, we have average item value. Now, the most basic input that we always make when we talk about average item value is that, basically, you should attempt to put your prices up. But one of the things that’s important to know about your potential clients, or your clients, is what value does the product that you sell, or the service that you sell, what value is that to them?

Because one of the biggest problems that people have, whenever we talk to people in the 7 Levers, one of the biggest problems that people have is putting their prices up. And when you struggle to put your prices up, it’s because you don’t necessarily see the value of that object, or that service, as being enough to put the price up.

But people don’t buy things solely on price. They buy things on the value of whatever that thing is going to give them. If it’s going to solve a problem, and they can afford the price, then they will pay the price.

So knowing what the value is to the people, understanding the value of what you offer from the perspective of the client, can be very, very important in helping you set a price point, or to potentially be comfortable with increasing the price of your services or items. You can even do experiments to find out what people are willing to pay.

I know some people that, when they launch a product or a service, they start out with a baseline price. And as customers come through, they experiment with increasing the price, until somebody turns around and says, “I’m not paying that, I don’t get that value back from paying that money.” That’s a way of finding out, from your customers, what people are willing to pay.

Now, you have to be quite brave to do that, but fortune favors the brave, as they say. But a lot about again, understanding your clients and understanding their problems, their goals, what problems they have, what goals they might have, and what problems they may need to solve, can help you with the average item value.

Specifically, with setting or increasing the price of the item or service that you sell. When we look at increasing the number of items per sale, then understanding, again, the goal of your client is helpful. Because one of the things we recommend with the cost of increasing the number of items for sale is what related items can you offer to a customer when they’ve already opted in for one thing.

Or they’ve put one item in their shopping basket, picked one thing up in their shopping cart online, or agreed to one particular service, a level of service, what other related items can you offer them? Well, the more you know about people and their goals and their situations and their problems, again, the more you can have an idea of what related items you might offer them.

An example that we’ve used in the past is a cyclist, someone who goes into a cycling store. And, if you can put that person into a group, let’s say it’s maybe an occasional rider, then they may want things that suit making it easy to get out and about, things that might make it less friction for them to use their bike.

You could put, maybe, an easy pack together. Make sure, for example, that they’ve got lights. If they buy a bike, then you could offer them lights at the same time, just to stop that friction of, oh, it’s gotten dark and I don’t really want to ride my bike, for example. Or reflective strips or things like that.

Versus, say, someone who was into sport, like Pete. Someone who’s looking at a triathlon set up, and taking it to the extreme other end. Then, that person may want things more related to the actual event itself. They may want bottle holders and water bottles, or even water systems. They may want specific types of shoes, and clips to clip the shoes to the bike.

All these really advanced things, clothing. And again, you can either offer these things when someone goes to buy the item, the core item, or you could put together packs, which you pre-build a pack that’s the triathlon pack, or the weekend warrior pack.

That when people come into your store, they can see these things pre-built. It’s almost like, as I talked about earlier, this idea of a done-for-you service. Pre-grouping these things into packs because you understand how people are potentially going to use your product, or use your services.

Pre-grouping these things, and associating them, makes that transaction really easy for people and very, very easily increases the number of items per sale. But it comes from understanding the client, and what their problems are, and how potentially they’re going to use your product or service, and what problem that will solve, or how that will progress them towards their goal.

Now, still on transactions, but this time the number of transactions in any given period. Again, a really simple suggestion that we make with regards to 7 Levers to increase the number of transactions somebody makes with you (the number of times they buy from you in a year), is literally just to contact them and just give them an update on what’s going on.

Just suggest they come back, make an offer, things like that. But just like items for sale, the more you know about them and their situation, or how they might be using your product, and things like that, the more targeted you can make that communication.

So, while it is all about what new or alternate or related things you can sell them and offer them, potentially what upgrades or what maintenance you can suggest, if you have an understanding about them and how they’re using the product, or what their goals are, then you can target your messages so that they can see what you’re offering will progress them to their goal, or enhance the product that they’ve got, or enhance the use of that product.

For example, without even getting particularly advanced, just simply having a track of who bought what, is enough to affect that message. Back to the bicycle shop, for example, knowing that someone bought into a category of product that is usually for triathlon people.

So, the more expensive bike or lightweight bike can inform the offers that you made to them versus someone who bought, maybe, a folding commuter bike. Just that little piece of information, the fact that what they bought, or just in the classification of customer that they might be, is enough to alter the messaging.

And we do talk about this, about targeting the message, about segmenting e-mailing lists and things like that. This is an example of where that becomes really, really important. If you want to encourage somebody to come back and buy from you. Again, possibly the worst thing you can do is suggest that they come back and buy the item they bought from you last week.

That’s not a particularly good idea. Whereas, if you can suggest an upgrade or maintenance for that item in a timely manner, or a complementary product that they could come, or that you’ve got an offer on complementary products, things like that. All this is good targeted messaging.

And the final lever in the 7 Levers is margins. You might think, well, what will knowing about my clients, how can knowing about my clients affect my margins? Especially as a lot of people see margins as either how much mark-up they put on their product, or how they reduce the cost of running their business.

And they see that as paying bills and things like that. But there’s a more subtle part to margins because margins is everything to do with the profitability of your business. It’s everything to do with the efficiency of your business, efficiency of the transactions.

Well, if you know your customers, the more you know about them, the more you’ll understand, for example, what is important to them. Now, that might be what products do they lean towards, so that you know whether to stock a particular product range or not.

So, whether or not you’re actually holding stock that basically is not going to sell, you know whether to invest that money in your business and have it tied up in stock or not, whether you’re going to get a turnover on that. And that’s just from a product selection point of view, back to The Marketing Symphony.

Your customers really should be telling you what they want to buy, and you should really be providing that to them. And it’s not just about physical products. It can be services, it could even be the way that you deliver those products or services. A good example of this that I came across recently is a campaign by Amazon.

Amazon.com or Amazon.co.uk or .es, or wherever you are in the world. Amazon has a new campaign which is no-hassle packaging. Across their range of products, certain products, mainly in the electronics and small electronic component areas, come in what they call no-hassle packaging.

What no-hassle packaging actually translates to is very often a cardboard envelope or a plain cardboard box, that hasn’t been color-printed, that doesn’t have jazzy anything, no plastic, no injection-molded stuff, nothing like that. It’s sufficient to ship the product to you, but they know you’re going to throw it away, so just ship it.

Now, there’s two things. One, it’s responding to a client which, like, stop giving me all this stuff I’m just going to throw away, especially if it’s a lot of plastic and cardboard, and people are interested in recycling. They’re going to say, well, why do you need all the plastic?

If you can do it with cardboard, then do it with cardboard. So they’ve taken that effort, and they’re responding to a customer wish. But for a margins point of view, packaging costs money. Packaging costs money to create, it costs money to design, costs money to produce, to print, to distribute to the centre where the product is put into it, it costs money to ship.

The more weight something has when you try and ship it, the more it costs to ship it. So, in responding to a customer wish of less packaging please, they’re actually saving themselves money, while giving a directly positive response to their clients. That’s an example of how you could do less or stop doing something, based upon a customer wish, which will directly affect your margins.

Other places for example, you might be able to reduce the hands-on service to the client. There are some car dealerships, for example, that don’t have people, trained salespeople, walking the car lots. They have people sat in the sales office and a big sign that says, ‘We’re not going to bother you. We’re going to let you come to us.’

Which means that they can have less staff, and they’re doing less of something that might seem counterintuitive to them, it might seem that you want more people, but they can do less. They can reduce their costs by optimizing their processes based upon their clients, what they understand about their clients, what they know about their clients, what they know their clients want or need.

So that is a really fast run-through about why it’s really, really, really important to know who your customers are, and to know about your customers. And to know things like what problems do they face? What are they looking for? What goals do they have? How are they trying to solve their problems?

But also really high-level things, really important things (and this is something that people do) like, are they people who will prefer to look for solutions or information online or offline? In this world that we live in right now, everybody’s obsessed by optimizing their online presence.

Everybody’s screaming about the importance of being on social media, or where’s your Twitter account, and all this stuff. Ironically, people are overlooking the power of offline marketing and the fact that there’s still a huge, huge, dominant portion of the world that are either offline completely, or prefer still, offline information sources.

They are, therefore, more receptive to advertising, or marketing, or just general communication offline. Or maybe they prefer printed material. Maybe they at least prefer that option. And it’s this understanding of the people that you’re trying to reach that can make you stand out.

Remember we talked a few episodes ago with the Copy Hackers team, and we talked about differentiation. Well, understanding your clients can really help you differentiate yourself, it can make your service stand out, it can make your product stand out.

It can make your traffic increase, your opt-ins increase, your conversions increase. It can enable you to increase all the 7 Levers very, very easily. Even margins, which, hopefully, that example, cleared that up because that was one that I think most people struggle with.

So, rather than leave you hanging and go, “Hey, guys, it’s really important, you should really find this stuff out. Go find out about your clients,” I thought it would be worth a bit of a summary of how you might find this stuff out. What ways you can do this.

One of the easiest ways to find things out about your customers is with surveys. Whatever kind of a survey you do, I suggest you offer some kind of an incentive for somebody to fill that survey out, or at least say why. There’s a big psychological impact to explain to people why you’re doing something, or why you want them to do something, what they are going to get from it.

So make sure you do do that. But being able to offer an incentive, which might be a discount coupon, or a free information report, or whatever. Keep it simple, offer an incentive, or at least say why you’re going to do it. Now the perfect thing to do is to ask people that are already customers of yours.

Hopefully, these are people you have on a mailing list, whether it’s an e-mail list or physical mailing list. Ask them and make it easy for them to fill it out, because your existing clients are your best source of potential repeat revenue. It’s that simple. You may not have the details of everybody.

But if you have a website, for example, you could put a survey on your website. You may notice that Pete and I use on the Preneur Marketing site, we use a tool called Wufoo, Wufoo forms. It’s a great, great tool for creating really nice-looking forms.

You can make them incredibly complicated, or incredibly simple, really quickly. It collects the data, presents it to you in a great way, so we strongly recommend Wufoo forms. Just putting that form on your site somewhere and directing people to it, in the different ways you can do that on a website, is a great way to do it.

But you could also just ask people simple questions in an offline manner. You could ask people questions, just one question, add it to a script that you use when you answer the telephone. For example, “How did you find out about us? Oh, I read an advert in this magazine,” will tell you where you’re getting your leads from.

“I got it via referral,” so asking that question. Or, if you have a physical store, you could ask people to fill out that survey in store. Do a campaign, and again, offer an incentive, or at least say why. If you ship goods, you can encourage people using some kind of insert in the packaging of your goods.

Just pop a thing in the top there. Make it into a form of competition to give them the incentive. So there are some easy, quick tips for using surveys to get information. There are other ways to find these out using the power of the internet. Some great ways, some very powerful ways, are things like Alexa.

Alexa is a website, and its entire business is to give you what they call audience data for any website. Now, you have to take this with a pinch of salt, because it has to get its data from somewhere, which means that the website has to appear on the radar, as it were.

But you can go to Alexa.com and check out, for example, the demographics of people that view PreneurMarketing.com, Pete and my website for the podcast. You can put in PreneurMarketing.com, or any website you like, and it will give you — initially, it will say, this is the ranking for it in the world, and this is the ranking.

But what’s more important is you can drill down to this stuff and find out things like average age, whether there are more or less women or men, whether they are college-educated. There are huge piles of stuff, huge, huge piles of stuff in Alexa. So, even if you can’t find your own website in there, maybe you know of a website.

Because you know about your clients, you know of a website that they may also visit. Maybe a more well-known website, and you can get the demographics for those people, to get an understanding of those people. There’s very few people know about this, but another place that contains an awful lot of audience data if you know where to look, is YouTube.

And if, again, you know something about your audience, you know that they watch videos, for example, and maybe they watch your videos, or they watch a particular channel on YouTube. Then you can get similar data because YouTube, being part of Google, knows a bit about people who sign up.

So you can get geographical and age data, and age and sex and whatever data, for people that watch particular videos on YouTube. That’s not necessarily as useful or as comprehensive as an Alexa search, but again it’s another source of audience data, especially if you’re in that marketplace.

And, finally, if you do have a reasonable amount of traffic to your own website, then you can use something like Google Analytics, which is free, and you should have. If you’ve got a website, you should have it installed. You can use Google Analytics to keep an eye on how people are working with your site.

Things like what they search for to come to your site, or pages they’re looking at most, where they are in the world. All that kind of stuff, and that’s all free, by the way. So the Alexa, YouTube and Google Analytics, they’re all free, and all easy things to do as long as you know a little bit about your customers or your potential customers.

One final super, super sneaky way to do this, which my friend David (hi, David) pointed this out to me and reminded me about this. Pete’s also used this technique recently. You may be aware that advertising on Facebook is quite a powerful thing.

We talked about it in the past, and Pete’s run a couple of campaigns recently on Facebook. And one of the things that Pete tried recently was to take a list of e-mail addresses. So, if you’re collecting e-mail addresses for your clients, take a list of e-mail addresses, and this works better for the bigger lists, and you can feed it into the Facebook advertising engine.

What it will do is give you back Facebook data on that list, so it will tell you that, if those e-mails match up to Facebook accounts, it’ll tell you that on average there are X percent of these people are men or women, and they come from these parts of the world, and some of them have families, or are single, or whatever.

You don’t necessarily need to actually run advertising campaign on Facebook, but it will tell you that data. Also, by the way, on a higher level, which is really, really important, back to that where are people looking for their information.

If you feed your e-mail list into Facebook, and Facebook comes back and says, I don’t know many of these people, then that tells you that your audience currently aren’t looking on Facebook, so you can save your money.

And some of this is really that simple. It’s really that simple and straightforward. But it all starts with knowing something about your customers. So, hopefully this little Foundation lesson, which is shorter than usual (as usual, I like to keep them quick), but hopefully, this has given you some food for thought.

Given you some places you can look for more information, given you some things you can try, and given you some easy ways to start trying to implement the 7 Levers in your business and getting those 10% increases in each of the Levers. And hopefully, get yourself to double the profit in your business.

I’m going to leave it there. Pete will be back next week, hopefully. He’s on the mend, and should be back with us next week, back on track. I want to thank everybody for listening. As always, if you want to leave us a comment, or find out more about this show, get the show notes, download the audio for the show, or anything else, you can go over to PreneurMarketing.com.

You’ll find all the past shows, and show notes, and eventually over time, we update those with the transcript to the show as well. So that’s all over on PreneurMarketing.com. You can leave us a comment either below the show or an audio comment, which we love to get, with the little widget that’s on the right-hand side of the site when you visit.

Also, as always, you can leave us a comment in iTunes. We like iTunes comments because it promotes the show in iTunes, which means that people get to see us and find out more about us. We have had quite a few good rankings in the business pages of iTunes in the past. Thank you to everyone for those comments that have helped us get there. With that said, have a great week, folks, and we will see you all next week.


http://alexa.com – Website statistics service
http://wufoo.com – Quick and easy surveys and forms for your website

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