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Which customer is theirs?
Knowing which customer to target
Decades ago in the small town I grew up in, I remember what was perhaps the greatest challenge the local businesses faced; it was that of the choices the potential customers had before them. In making their choice of where to do business, in addition to shopping locally, one of their options was going across the river to the community that was several times larger than ours, going up river to a city of 75,000 or going down river to the state capital.
While those were formidable competitors, the other choice for customers was a couple of mail order companies such as Sears, JCPenney and Montgomery Ward.
If only it were that simple today. While catalogs have seen their heyday come and go, the Internet has more than taken up that component of the marketplace. Further, research tells us that the square footage of selling space available to each person has continued to grow and grow far beyond any previous level. Only the current challenging economy shows the possibility of decreasing that amount of square footage. The challenge then, as well as today, is finding a way to create a border around the town to keep that local money within the community.
As compared to developing a strategy, perhaps a merchant would have as we look at this situation today is that they should just try to get any customer to walk in the door to do business. After all, if customers are few, they should just be glad with getting anyone to visit.
That strategy is about as far as possible from what should be done. In your working with a business in your district, you would be hard pressed to find any intelligent business owner that would follow that advise. The reason for that refusal is that this strategy would be very expensive. After all, the idea of trying to get anything in the door would require them to use a lot of radio, television and newspaper advertising. And it would not be a lot of advertising with each medium, the business would have to include every station or paper within each medium.
Instead, you can help the business in getting the most results with the least amount of dollars by helping them to properly identify the customers most likely to do business with them. Better yet, you can use this strategy to help put a barricade around your Main Street district to keep the customers, and their dollars, inside your district once you get them in.
Better yet, it will be the existing businesses that will get them into the district, and this strategy will help you to attract businesses with a high chance of succeeding to join the existing businesses in your district.
To implement this strategy within your district, you need to first identify those businesses that are the most progressive; the ones that understand the concept of building a business as compared to those that simply survive. The reason for selecting these businesses first is to save your time, your sanity, and provide you with a track record for future success.
One of the positive aspects of these progressive businesses is that they are most likely to be able to identify their customers and have been able to put the right kind of merchandise in their business to keep those customers coming back.
These businesses also know where their customers live, and understand the concept of getting existing customers to bring their friends into that same business. This repeat and referral business is crucial to the success of any business that wants to last a long time in your district.
The second step in the process is to extend this initial exercise to all of the other progressive businesses in your district. What you are likely going to find is that all of the progressive businesses do not go after the same customer. Some appeal to the most affluent customers, while others are appealing to people are on the other extreme of the financial and social scale. It is not that one is more type of customer is more important than another customer. Instead, the important factor is that these businesses have done their homework and are able to identify who their customers are.
By being able to identify their customers, these businesses are more apt to know which of the advertising mediums to use, as well as knowing that creating events, such as private sales, and sending postcards to tell of new arrivals is very effective.
As you perform the exercise, the next step is to categorize each of the type of customers being targeted. As an example, we will create five types of customers and refer to the affluent customers as the ‘A’ customers. Those on the other extreme will be referred to as the ‘E’ customers.
As you have the various businesses in your district perform this exercise, your next task will be to group them according to those that have the same target customer. Walk into each of the businesses within one of these groups and look at the merchandise they offer. You can easily envision that the customer making a purchase in one of these businesses would easily shop in another of the businesses in the same group. If you ask the businesses within a particular group to share with you the names of their customers, you will likely see some of the same names frequenting each of these stores.
The opposite end of this information tells us that these businesses each of target customers that are not aware of other businesses that likely sell what they would like. Further, this is telling you there are many customers that are doing business within the district but only with an individual business.
They may be customers of the men’s clothing store, but unaware of the gift shop, bookstore, and computer shop. These customers are likely making purchases for these product categories in businesses that are outside your district. This is the part of the money that is in the community that we want to capture; not only for getting more money into the district but also for helping the individual businesses to capitalize on each other’s efforts as well as taking advantage of being near each other. After all, isn’t that why businesses are located next to each other as compared to being free standing buildings located all about the community?
To resolve this, we need to engage each of the progressive businesses appealing to their customers to make a point to invite them to visit some of their counterparts in the Main Street district.
Our example is the men’s clothing store that hosts an open house one evening. The purpose of this event for their business is to introduce their customers to their recently received summer merchandise. As it is difficult to entice customers to come to a store solely for the purpose of selling merchandise, the merchant needs to be able to give their customers an additional reason for attending.
This is where the men’s clothing store merchant, with your assistance, engages the wine shop, an art gallery and/or a massage therapist. These other businesses are also within the same category with regard to target customers. The invitation to the event tells customers to come enjoy a festive evening and while they are there, take a look at the recently received merchandise.
Now a larger percentage of the customers of the men’s clothing store are introduced to the wine shop, art gallery or massage therapist. Slowly but surely, the businesses in this category find that their customer lists are more closely aligned. Perhaps with the next event a jewelry store or women’s clothing store is invited to join in the event.
With this concept we are helping to change the customer’s shopping habit to get them to spend more time, and money within the district. And as the customers spend more time in each trip within the district, a natural addition to the group of businesses is going to be a restaurant. After all, if they have been within the district for several hours, surely they are getting close to lunch or dinner time. What started with the customer as a trip to visit one store has been cultivated to become a multi-shop visit – all within your district.
This exercise is duplicated for each of the categories, ‘A’ through ‘E’. After having created a successful promotion for each of the businesses, the next progression is to help each group establish a calendar of events. You and the participating businesses will find that this shared database marketing will produce a higher return for the invested dollar than traditional television, newspaper and radio media.
When this has been set up within your district, it becomes easier to determine which business and what type of business should be the next to join your district. It is important that we do not attempt to get just anyone to open just any type of business within the district. Repeated failures, while giving occupancy on a short term basis, are an indication that opening in the district may not be the best idea.
Instead, we want potential businesses to see that opening within the district as compared to a strip center on the outskirts of town greatly increases the chances for the success of the new business. And you, as a Main Street district staff person or volunteer are an integral part of that formula.
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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.
Profits Plus Solutions, Inc.