If you study your customers and their purchasing patterns carefully, you might realize that the Pareto Principle holds true for your business. It does for most businesses.
The Pareto principle, simply put, is that 20% of your customers give you 80% of your business.
Now think of what this implies. If you could pay more attention to these 20% of your customers, if you could make them relish every business transaction with you, if you could retain them for life, you are assured of 80% of your business!
Better still, if you could identify the common traits that these 20% of your customers share, if you could come up with a list of common characteristics, situations, etc., you have a profile for your ideal target audience! You could reach out specifically to these kind of customers and increase your business significantly.
It’s very simple, really. You have 2 types of customers – 1 kind gives you large orders or very frequently does business with you. (20% of your current customer base). The 2nd kind, (80% of your customer base) gives you orders infrequently and very small ones at that.
If you had to use your limited resources to reach out to bring new customers to your business, which kind would you rather have?
The ones who place more frequent orders or larger orders, right? Of course! There’s no rocket science involved.
Now imagine trying to communicate with a 60 year old person about your product. How would you do it? If you had to communicate to a 16 year old about your product, wouldn’t the manner of communication be different from what you used for the 60 year old?
When this is so obvious, I wonder why we make the mistake of trying to reach out to “everyone” in our marketing communication.
It is far more beneficial and efficient to communicate to a niche, to a specific target audience with a specific set of characteristics in a manner that would appeal to them the most.
Look at the target customer profile you have put together. Based on this, identify the niche you should cater to.
Keep these pointers in mind while selecting your niche:
- They should already have a want / need for your product. It is too expensive and time consuming to create a need for the product. Cater to audiences who already have a want / need for your product.
- Avoid niches where there are too many competing products. Select a group whose needs are not being catered to by too many people already.
- The size of the niche market has to be large enough to be able to sustain your business. If it is too small, it may not serve your purpose in the long run.
- You should be able to reach this niche market and cater to them easily and affordably. Conduct a cost-benefit-analysis.
- Your target audience should have the ability to pay for your product.
- You should be bale to gather information about your niche so you can tailor-make your marketing campaign to suit them perfectly.
Doing this will ensure that you get the maximum benefit from your marketing campaign and have the most lucrative customer base.