(Read Time: 9 minutes)
Have you ever felt like you’re attracting the wrong type of customers to your business … Customers who are difficult to work with, don’t appreciate what you do, and suck up hours of your time?
Too many businesses are struggling to find the right type of customers…
Customers that are easy to work with … love what you offer … and tell all their friends how much they enjoy working with you. These customers are fun to work with and profitable to work with!
How can you find customers like this?
It all comes down to knowing exactly who your ideal customer is, where to find them, and how to attract them to do business with you … instead of your competitor.
Let me show you how to find your ideal customers…
What’s an Ideal Customer?
As a business owner, you will have heard some variation of the term ‘ideal customer’ before. You may call it your customer avatar, dream client, or your target audience.
But what does that really mean?
An ideal customer is someone who is easy and profitable to work with. They get massive value from the product or service you offer … they spend more than your average customer … and they’ll happily spread the word about your business.
Knowing your ideal customer is essential if you want to grow your business.
You may well serve more than one ‘type’ of person. And that’s okay. Many business owners find they have up to 4 ideal customer profiles after completing this exercise.
But here’s the thing:
If you don’t know exactly who you’re serving, you’ll waste a ton of money marketing your business to the wrong type of prospects.
If your marketing isn’t specific, even your best prospects won’t know you’re talking to them!
Soon, I’ll share how one UK Photographer totally nailed their marketing by segmenting (or separating) their target customers into bottles and cans … and speaking specifically to them in their advertisements…
But for now, the important thing to know is that not all customers are created equal.
If you want to grow your business, you need to focus in on your ideal customers.
Who is Your Ideal Customer?
Have you ever worked with someone who was just easy to work with … someone who loved your product or service … and kept coming back for more?
This is your ideal customer.
An ideal customer will be so happy with the results they get after buying from you that they’ll become repeat buyers … and they’ll happily tell their friends about your business.
The thing is: we don’t want to trick people into buying what we sell.
Business owners who do this suffer for it … they suffer from ‘bad’ clients who are difficult to work with … and they suffer from a terrible reputation because they’re not really helping people. They’re constantly fighting an uphill battle just to stay in business.
Targeting the wrong audience can lead to:
- Wasting a ton of money marketing to people who are never going to buy what you sell
- Or worse … selling to people who won’t benefit from what you offer … and dealing with the wrath of an unsatisfied customer
- And stagnation in your business as you spend too much time ‘putting out fires’ that these bad customers create instead of growing your business
For a real-world example … let’s look at Lego.
In 2004, Lego was on the brink of bankruptcy. Why? Because they’d lost sight of their ideal customer (okay, so the story is a little more complex than that … but stay with me here).
They’d hired a team of new designers with fancy qualifications to create ‘innovative’ designs and … among other issues … they lost sight of their ideal customer.
They were far too focused on being ‘creative’ and ‘innovative’ instead of focusing on who their best customers were and what they wanted.
So, what did the CEO of Lego do? How did he turn the business around?
Lego’s CEO handed over creative direction of the company to their diehard fans.
The AFOL (Adult Fans of Lego) were Lego’s ideal customers.
And, as customers, they knew what they loved. The AFOL designers brought that deep customer knowledge into the direction of the company. Every design was created with their perfect customer in mind … and focused on what they did best … making Lego the most successful toy company on the planet!
Just like Lego, it’s essential to ask yourself “who is my ideal customer?” Then, focus on finding more people just like them.
Quality Over Quantity First
If you’ve ever looked at your wardrobe full of clothes, and thought “ugh, I have nothing I want to wear” … you’re not alone! This phenomenon is what’s known as The 80/20 Principle.
The 80/20 Principle is a cause and effect ‘rule’: 80% of the effects come from 20% of the causes.
For example, we tend to wear 20% of our clothes, 80% of the time (which is why we feel like we have ‘nothing to wear’ even when we’re staring at a closet full of clothes!)
And it also applies in business.
The idea is that the top 20% of your customers bring in the majority of your revenue.
This means you should focus on defining who those people are and why they buy from you … then go out and find more people just like them to profitably fill your business with happy customers!
This isn’t a hard and fast rule. It might look more like 85/15 or 70/30 in your business.
The problem is: many business owners make the mistake of thinking they just need more customers. But more of the wrong type of customers will suck the life, and the profit, from your business.
The 80/20 principle teaches us that the quality of our customers matters more than the quantity.
How do you apply this in your business?
This exercise is for established business owners … if your business is only new, jump into the steps in the next section.
Go into your bookkeeping software and pull up your records for the past 12 months (you can ask your accountant to help with this).
You’ll need to know:
- How many customers you served
- And how much revenue those customers generated
- (total no. of customers) X 0.2 = (20% of customers)
(total revenue generated) X 0.8 = (80% of revenue)
For example: if you served 180 clients in the last 12 months and generated $470,000 revenue…
180 X 0.2 = 36
470,000 X 0.8 = $376,000
Therefore, you would expect to find that roughly $376,000 of your revenue came from your 36 best clients. Remember … this won’t be exactly 80/20. But, in this example, we can expect to see that 30-40 of our clients brought in the majority of our revenue.
Organise your list of customers based on how much they spent with you. Then look at the top 20% of your customers. Did they generate 70, 80 or even 90% of your revenue?
Why should you do this exercise?
Applying the 80/20 principle to understand which clients are generating the most revenue in your business will help you define exactly who your ideal customer is … and go out and find more of them!
How to Define Your Ideal Customers
For established business owners, I highly recommend investing the time to complete the exercise above. Having a list of real customers … whose names and characteristics you already know … is priceless!
However, if you’re business is new, never fear … this next exercise will help. We’re going to define exactly who your ideal customer is, regardless of how long you’ve been in business.
Many business owners make the mistake of creating a broad target market such as …
Males & Females, 25-55 years old, who live in Melbourne and own a dog.
This sounds specific … but it’s not specific enough. Do they own a small dog or a large dog … a poodle or a shih tzu? Those details will dramatically affect where you go looking for clients online and how you advertise to them.
So, let’s get specific.
As you ask yourself these questions, think about your best clients … the ones that you have most enjoyed working with and have paid you the most money. You may have a few different people come to mind. In that case, do this exercise 2, 3 or 4 times. Then answer these questions for each different avatar …
Who Are They?
Start with the basics … How old is your ideal customer? Are they male or female? Are they married or not?
If you’re a local business, what geographic area are your customers from?
Take a moment to think through the specifics of who your ideal customer is, and then describe them in a short paragraph.
It can help to give your customer avatar a name. Just remember that you’re creating a profile of one specific person … not your general population of customers.
What Are Their Problems?
No matter what stage of life you’re in … no matter how much money you have … you’ll still have problems. That’s why #FirstWorldProblems is the topic of so many popular memes!
The question is … what problems or challenges are they currently facing that your product or service solves?
If you’re wondering whether this is relevant in your niche or industry … just take a look at the brilliant Aussie company ‘Who Gives a Crap’.
Most toilet paper companies just put their product on the shelf and try to convince us how environmentally friendly … or soft and luxurious they are.
But ‘Who Gives a Crap’ solve a real problem with their EMERGENCY ROLL!
So ask yourself: What struggles are my clients facing in their life right now? Write your answer down.
How Can You Solve Their Problems?
After you’ve written down what your ideal customer’s problems are, you want to focus on…
How, specifically, does your product or service solve their problems and what will their life look like after buying your solution?
Why Might They Not Buy?
Now that you know what your ideal customers are struggling with, and how you help them, you need to think through the purchase decision from your customer’s point of view and ask yourself … “what would make this ‘too hard’ to buy?”
Why would they not buy from me? If what I offer really solves that problem, what would get in the way of them buying that solution?
Answering these four questions will help define who your ideal customer is and how you help them. Remember … you may need to create 2, 3 or 4 ideal customer profiles.
How to Market to Your Ideal Customers
Once you know who your ideal customers are, what they’re struggling with, and how you can help them … then you’re almost ready to market to them.
The key to success here is determining your unique selling proposition (USP).
How are you uniquely able to solve their problem? What makes you better than your competitors? If you need help with this, check out our detailed guide to creating an unforgettable USP.
Do you remember the brilliant, unique marketing example I mentioned earlier in this article?
Well, here it is. The story of a UK based Product Photographer who totally nailed their ideal customer profile.
Most business owners would think ‘Product Photography’ is targeted enough, right? Wrong.
You would waste a lot of money advertising to the general population of ‘businesses that sell physical products’.
That’s why the ‘We Shoot Bottles. We Shoot Cans’ campaign is so brilliant.
By creating two specific ideal customer profiles, Red Photography was able to call out the exact customers they want to work with.
The ‘We Shoot Bottles. We Shoot Cans’ campaign shows their two ideal customers that this photographer is uniquely able to solve their problem.
When you focus on defining your ideal customer profiles, you too will be able to create marketing campaigns that attract your best customers.
How to Get More of the Right Types of Customers
One of the biggest benefits of creating specific, targeted customer avatars is that you spend much less money on advertising.
Instead of paying big bucks to get in front of a huge audience, you can target your ads so they’re only being shown to people most likely to actually want your product or service!
But there’s another growth method that’s widely ignored by small businesses in their marketing … referral programs.
The fact is:
- Humans tend to socialise with other humans who are similar to them. We bond over things we have in common…
- Mums of young kids tend to spend time with each other
- Punk rock teenagers tend to hang out together
- And your customers tend to socialise with people who will also benefit from your product or service
There are a number of options to set up a referral program. And it’s a great way to reward your best clients for referring their friends to you.
In a future article, we’ll discuss how to set up an effective referral program that gives your best customers a reason to tell their friends about you!
For now, you can simply ask your best customers if they know anyone else who would benefit from working with you. It might be a phone call, a letter, or an email … simply ask if they would be willing to refer your business to one of their friends.
You might be surprised how many of your ideal customers will happily refer you on … I mean, you’ve just helped solve their problem, why wouldn’t they want you to help solve their friends problems too?
So, What’s the Next Steps?
Well, we’ve covered a lot today, so let’s recap. You’ve learnt…
- Why targeting specific ideal customers is critical to increase profits
- How to define who you want to target
- And how to get a steady stream of those people coming in your door through strategically marketing your offer…
If you implement the strategies I’ve outlined in this article … you’re ready to grow your business and, quite frankly, create a profit generating machine.
If the task feels overwhelming or you’re just not sure where to start, click this link to get in touch with us. That will open up my calendar where you can book a time with me to do a 30-minute strategy session to help get you on the right track.
- How to Identify and Find Your Ideal Customers and Fill Your Business With Them - September 1, 2017
- How to Do a Thorough Competitor Analysis so You Can Blitz the Competition - August 1, 2017
- Why Setting Clear Business & Marketing Goals is an Absolute Must! - July 1, 2017
- How to Create an Unforgettable Unique Selling Proposition - June 1, 2017
- Understanding Your Marketing Metrics & How to Get a 500% ROI or More… - May 1, 2017
- 5 Signs Your Digital Agency Might Be Blowing Your Budget - April 1, 2017
- Why Email Marketing is so Important for Small Businesses - March 1, 2017