Do you know your customer?

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Earlier this year – as the rain was drowning much of the UK – lots of the European golf trade was making its annual pilgrimage to Orlando, to escape the winter weather and attend the PGA merchandising show. The Orange County Convention centre in central Florida hosts the world’s largest golf trade show. Around 60,000 attendees go to see hundreds of stands spread out over 10 miles of show floor. It’s a pretty impressive site.

All the expected brands are there in force with huge stands containing trucks and even aeroplanes. Thousands of products are on display with the latest technology and materials from all around the world. The really surprising thing is the variety of random devices, training aids and golf clothing. It is unbelievable what people try to sell to golfers: gold toe capped golf shoes, tees that look like a martini glass, stickers to make your clubs look pretty and training aids of all shapes and sizes, that “guarantee” to make you play better.

The first question I ask myself is how can all of these businesses survive? Do people really want monster truck golf carts – wouldn’t they be banned on most courses?

At the end of the day, the secret to these companies managing to survive and even thrive, comes down to one fact; if they have accurately identified their target customer and are offering them what they want to buy.

While I might not want what they have to offer, it may be that they have been very smart to recognise a group of people out there that want what they sell. There were definitely a few people on the gold toe capped golf shoes stand.

According to Bloomberg, 80% of start-ups fail in the first 18 months. In my opinion it is the lack of target customer identification that leads to many business failures. Too often businesses are setup to deliver what the inventor or boss, wants or thinks is a good idea. Often missing the point that they don’t really represent a significant customer group. The end result is that they satisfy their own need, but no one else’s, which ultimately leads to failure.

Target customers aren’t just relevant for product inventors, it’s critical for any business to work out who their target customers are and how you can best satisfy them. This especially applies to retailers. Without working out who your target customers are, how do you know which products to stock?

To put this in another way, your customers have assigned the job of product selection to you. They want you to buy the products they want. In order for a retailer to do this successfully they need to get inside the ideal customer’s head and understand them. So it might seem obvious but in order to do this the first task is to identify who those customers are.

Whether you are a small private club or a large off course driving range – retailers need to understand who their target customers are and what they want buy. Notice I use the term “want” a lot – that’s because most purchases are want-driven and not need-driven (a topic for another blog).

A lack of customer identification tends to lead on to two common mistakes and both can end up failing the business:

1 ) The retailer buys products that they like and not what the customer wants. In most shops it is unlikely that they are the target customer. How many golf pros have other pros as customers?

2) The retailer doesn’t decide who their customers are and try to stock everything! Even worse, sometimes they let the suppliers decide who their customers are and let them decide what they should stock. How can the supplier possibly know who your customers are?

In both instances, the net result for most retailers is that they end up with too much stock. Even worse, too much unsold stock. Why? Because the customers that come in the door aren’t the customers the retailer has bought for and hence don’t want the products that are displayed for them. The net result is slow moving stock, tying up capital, leading to poor stock turns, leading to the need for clearance and resulting in poor margins and a lack of profit – sometimes even a loss. The end result is often that you end up selling to the type of customer that just wants a bargain and for most, that’s not the customer they want to have.

So what can you do about this? Well the first thing is simple. Work out who your target customer is. Who do you want to sell to or who is most likely to come in to your shop? What do they look like, how old are they, what’s their occupation and how often do they visit? What do they watch, read, see and hear?

For many golf pros, the basic customer base will be decided for them – it is often the club members. That being the case the target customers you need to identify are the ones that will or can account for 80% of your margin. In many cases you will find that this is actually only 20% of the membership or shop visitors. Knowing this can focus the mind, which makes the next stage simpler.

Having worked out the target customer you need to get inside their head and work out what categories they want to buy, what brands will they spend money on and what are they willing to pay. Remember they have delegated to you the task of buying the products they want. It’s in their interest that you do a good job and you can do a better job if they tell you what they want. So if you don’t know – ask them!

For some of you reading this you may feel that this doesn’t apply to you. You just have to serve who comes in through the door. But if you sit back and think a bit that’s not really true. You need to satisfy the people that want to buy from you. Those that don’t – ignore.

Now these concepts might be a bit daunting at first and it may not be apparent who your target customers are. However it’s well worth investing time in the process to identify them. If you focus on the customers that generate you the margin you might be surprised what you find. What I can promise is that a bit of planning now will result in a lot of benefits in the future and ultimately happier more profitable customers! After all you are helping them get what they want – what more could you want?

This part is subjective so in part 2 of this blog I will look at a few retailers and discuss how successful they are at targeting their customers and buying accordingly.

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