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Utilizing Demographics

Gathering information about the customer who shops with you

You can fully expect when any new chain store is considering putting one of their stores in your area, they have hired some company to perform a demographic study on the neighborhood. A demographic study can be quite complex as well as very expensive. With this data they have purchased, the competition will learn about the customers in the area: How many residents are there? How many live in each house? How much do they earn? How far do they drive to and from work each day? How many cars do they have? What do they do for a living? How long have they lived in the neighborhood? How old is their home?

The list can go on and on. Of course, the information is useful only if they can also determine what type of customer shops in their store. Knowing this information, the competition can determine if there are enough available dollars in your neighborhood for them to have a profitable business. In the case of your business, however, you are already there. Probably, you have been there for many years. In all likelihood, you are not going to engage some company to go out and gather this information for you. But if you knew more about your customers, you could make more money. Let's look at how to do this.

Let's begin by creating a pin map that we will display near the checkout of your store. The pin map starts with your using a street map of your community; make sure it covers an area large enough to include the homes of all of your customers. The map is mounted on a cork board on a tripod. A large red dot is placed on the map to denote the location of your store.

We will also need to visit the office supply store to buy several boxes of the pins that have different colored plastic tops to them.

As customers are leaving your business, the employee having the last contact with them, asks the customer to use the pin to mark where they live. As we have several different colors of pins, we will give to the customer who has made no purchase a pin with a white head. To the customer whose purchase is less than $25, we will give a pin with another color. To the customer making a purchase in the range of $25 to $100, we will give a pin with a third color. Purchases in excess of $100 will be marked with a fourth color.

As you do this over several days, you will probably begin to see a pattern. The pins will be segregated somewhat by color. This will be your indicator of where your most valuable customers live. In gathering this information you may want to do the survey to see how the weekday shoppers differ from the weekend shoppers. You could also do the survey before you advertise, and then again after your advertisement has reached the customer. Some dealers who have used this mapping technique, have given one color of pins to women, and another to men. You could also ask qualifying questions of customers; do you own your home or is your car five years or older?

What have some dealers found from this information? One found out there were a lot of older cars in his area, and now he needed to stock more accessories for these vehicles. Another dealer, who had been utilizing a direct mail piece for his advertising, found a heavy concentration of customers along the outer border of his direct mail distribution area. When he purchased more flyers to extend the boundary, he found a market area where he could easily pull customers from.

For the business that uses broadcast and print advertising, you can ask what newspapers they read, or what radio or television stations they listen to and watch. Imagine the possible uses of this pin map study technique! Almost anything you would want to know about a customer, you can ask and get the answer just by handing out pins and asking the customer to tell you where they live. The value of this tool comes from an old, but true and powerful business adage; it will cost you $20 to find a new customer, but only $4 to keep the ones you have.

Every time you advertise with print or broadcast media, you are sending your message to thousands of people. Unfortunately, the vast majority has absolutely no interest in your business. You may find one radio station better than another, but it is still true the majority is never going to shop with you. This is where the $20 expenditure comes in.

See what a small percentage of those reached is actually responding to your efforts and you can see why it costs $20. As for the people walking in the front door of your business; they are telling you they like and have a need for your goods and services. Your effort at this point is to heed the old adage of, "Never forget a customer. Never let a customer forget you". This is the $4 expenditure. Your efforts and success in understanding this smaller, but potentially loyal group of shoppers is the key to your success. Your question at this point is to ask, "Where do you live?" And, "Are there anymore like you in your neighborhood?"

The chance of the answer being "Yes" is much higher than your chances of finding that customer with traditional advertising. And with the pin map, they are telling you what form of traditional advertising they will respond to. Your cost for this research is minimal.

And after you have gone shopping for the few supplies you need, the only involvement you have with this research is deciding what you want to know, how to word the question, and then documenting the information. The customer and your employee at the front of the store will do the rest of the work. Armed with this information, you are capitalizing on your demographic studies, and taking the extra $16 to enjoy the benefits (and profits) of your efforts.

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.

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PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
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