Small business promotion with retail speaker Tom Shay
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Utilizing Demographics

Gathering information about the customer
who shops with you

You can expect that when a new chain store is putting one of his stores in your area, it has have hired a company to perform a demographic study on the neighborhood. The study can be quite complex as well as expensive. With the data they have purchased, your 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? What do they do for a living? How long have they lived in the neighborhood?

The list can go on and on. Of course, the information is useful only if they have also determined what type of customer shops in their store. With 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 and have been 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 know more about your customers, you can make more money. Let's look at how to do this.

Begin by creating a pin map that you 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 your customers. The map is mounted on a cork board on a tripod with a large red dot positioned to denote the location of your store. You will also need to buy several boxes of the pins that have different colored plastic tops.

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

Over several days, you will probably 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.

What have retailers found from this information? One auto parts store found out there were a lot of older cars in his area and that he needed to stock more accessories for these vehicles. A retailer 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 from which he could easily pull customers.

For the business that uses broadcast and print advertising, you can ask what newspapers customers 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 want to know about a customer, you can ask and get the answer just by handing out pins and asking customers to tell you where they live.

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 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 more like you in your neighborhood?"

Your cost for this research is minimal. 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 using the knowledge to enjoy the benefits (and profits) of your efforts.

Tom Shay is a fourth generation small business owner providing proven management and business building ideas through his Profits Plus Seminars, Profits Plus Solutions coaching, books authored, and articles written. Tom can be reached at 727-464-2182 or through his web site:

Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179