Who is Your customer?
A few days ago I was on a call with a client (Jim –not his real name) that owns a small firm and he said, “…We need to increase our monthly recurring revenue (MRR). That’s want we want to do.” To which I replied, “Got it. Tell me more”. Jim began talking about all the wonderful products/services/offerings they provide. All the different price points for these services. And all the type of customers they can serve etc. Before I go on let me share that it’s a blast to work with entrepreneurs that are passionate about their business. It gives me great energy and I love the “this can’t possibly fail” attitude that seems to be innate within entrepreneurs. Their mindset is contagious.
So I let Jim talk for about for 3-5 minutes without interrupting as he talked about his company. Then I asked, “Jim, who is your customer?” There was a palpable and uncomfortable silence on the line and then he proceeded to describe a few of his clients by name and age. His answer told me everything I needed to know…
“Who is your customer?” is not a complicated question but I’ve found that it’s a really tough question for small to medium size businesses (SMBs) to answer. Considering the primary goal of most SMBs is to drive revenue, you’d expect that they'd have a deep understanding of knowing who is their customer. Without knowing this, any subsequent tactical approaches that are executed will result in little to no return on investment. Or said plainly, without some insight as to who your customer is, most of the tactical approaches you take will result in a waste of money and not contributing to any new MRR. So here are four low cost approaches to help SMBs understand who their customer truly is:
1. Ethnography Research –Ehtnographic research is the study of people in their own environment through the use of methods such as participant observation and face-to-face interviewing. So what am I telling you? I’m encouraging you to study/observe/interview your customers. If you’re a B2B company call 5 clients and ask them if you can simply hang out in their environment so you can better understand their business. Inform them that your objective is to learn more about their business so you can produce and/or develop better services and products to meet their needs. While you’re observing them please take notes of everything you notice (e.g. how they make decisions, what they evaluate opportunities, culture, mindset, how they develop their products/offerings, the types of partners they work with, etc.). Consider all the rich information that you’ll be exposed to. What a way to get a deep understanding of your customer. Note: Make sure your conversation is not related to your business. Just get to know them and capture who they are at their core.
2. Demographic Research - I’m not telling you anything you don’t know here…especially if you work for a larger B2C company. But several B2C SMBs aren’t too certain about the demographics of their client base. For example, sometimes I receive blank stares when I ask them to share the top 3 common characteristics their entire client base. There are some very sophisticated approaches to answer this question. However, we don’t need sophisticated all the time. Sometimes we just need the data to help us make better decisions. Here are two resources that B2C SMBs can use to determine the types of clients that you serve.
3. Check your financial systems – SMBs have a wealth of data within their financial systems. Open your Quickbooks/Square Dashboard/Stripe panel/etc. and begin to look for spend trends. How much do your clientsbuy, when do they buy, how do they buy your products, what do they buy, etc. Perhaps you have limited time and/or you’re unable to spot trends. Here are a few tools that allows you to upload your data here and run simple analyses for you.
4. Talk to your customers – That’s a novel idea eh? Select a representative sample size of your customers and begin the dialogue. Engage them at a deep level. Ask them about who they are, what they like/don’t like, why they by your products, if they buy your competitors products and why, do they refer your company to others (why?/why not?). I recommend you do this in person as often as possible.
Now that you’ve observed your clients, performed secondary research (e.g. demographic study), identified trends using transaction data, and talked to your clients you start to notice that specific client archetypes will start to emerge. You’re getting closer to understand who is your customer. Pretty soon you’ll be able tell other with confidence who’s your customer. And your answer will be supported by the data that you uncovered and analyzed! With this newfound understanding of your customer, you’ll be able to design and execute better tactical plans to attract new clients and grow revenue.