Finding Your Ideal Customer.
Want to know the answer to any of the following questions?
- What is an ideal customer?
- What is an Avatar?
- Why you need to know who they are
- How are you going to identify them?
What is an ideal customer?
Your ideal customer is the sort of customer that you want in your business. It sounds obvious doesn’t it, but most garages, in fact, most small businesses don’t identify their ideal customers. The problem with not identifying your ideal customers is that you end up with any type of customer and not the customers you prefer to deal with.
When you’re starting up, you probably think, hang on. I can’t be too fussy. Any customers will do. And that’s probably true. But once you start to get a little bit more established and have only been trading for a couple of weeks or months, and customers are coming through the door, you’ll start to notice that some of your customers are different to the rest.
You want to attract better customers.
What is an Avatar?
If you do any research about finding your ideal customers you will find people talking about something called an avatar. An avatar is the description of your ideal customer. They look at things like age, gender, income level, social demographics, education, where they live, where they hang out, what they like, and what they don’t like.
Garages would like to add the number of cars they have in the household, maybe the type of cars. So that would build a picture of your ideal customer. And that is called an avatar.
In an ideal world, we could go to a website, and ask what my ideal customer is. Unfortunately, it doesn’t work like that.
You have to do a lot of research to create an avatar.
The Hack (Taking Atomic Action)
But I’ve got a little shortcut for you, a hack that will help you identify your ideal customers.
Using something called the 80/20 rule.
The 80/20 rule came about when a fellow called Pareto discovered that 80% of the land in Italy was owned by 20% of the population.
The 80/20 rule applies to just about everything.
For example, 80% of your income comes from 20% of your customers.
Or 80% of your problems come from 20% of your customers.
The exact numbers won’t be exactly 80 and 20%, but it will be approximately that ratio.
According to those two examples, is it possible that the top 20% of your customers are probably going to be your ideal customers.
The other 20% are the ones that give you most of the problems, are probably the customers you don’t want.
This simple hack makes it easy to identify your ideal customers using the 80/20 rule.
This is how you could put this into practice tomorrow and start by making a few notes on your ideal customer, start building your avatar without too much effort, which is the whole ethos of the Atomic Success program. (small changes -big results)
Using last month’s or last year’s invoices, placing them into a database then ranking them in order of the size of the invoice, you will find the top 20% of the invoices will account for 80% of the total income.
Look at those invoices, and who they were from, and you can start to build a picture of who those people are.
If a business with a turnover of £360,000 from 1,121 customers. has an average invoice value of £321.
80% of that £360k is £288k which would have come from just 224 customers. This reduces the amount of work required to find your ideal customers significantly.
How about using data from last month?
Remember the bigger the data set the more reliable the data. However, we don’t want to work through over 200 ideal customers. We simply haven’t got time for that.
Last month this business wrote 93 invoices worth £30,000.
Their average invoice value is still the same £321.
However, 80% of £30,000 is £24,000 from just 19 customers.
Now that’s a bit more manageable.
Who are those ideal 19 customers?
Start making a note of the ones you remember and start building a profile.
There are loads of free profile templates available on the net.
As you start to build up a reasonable profile of this person. You might need to get a little bit more personal with your customers in casual conversation, asking them where they went to school. Did they go to uni? What’s the highest qualification they hold, etc.
You can ask them how many cars are in the household.
That is how you start to build up the avatar of your ideal customers.
With a manageable number such as 19 customers per month. This doesn’t seem too onerous.
But what if you don’t want to look through your historical invoices?
How could you start doing this tomorrow?
That same business averages six invoices for a total of £1,800 pounds every day.
The average invoice value is still £321.
80% of £1,800 is £1,440.
20% is just one customer. One customer’s invoice was £1,440, or thereabouts on that day.
Now that was probably one of your ideal customers, someone willing to spend a bit of money on their car, but you have to be careful.
Was it somebody who spent a lot once, and you’ll probably never see them again, or is that the sort of person who spends, every year without quibbling, without being any real hassle, the sort of customer who when you tell them what their car needs, authorises the repairs without question.
You don’t want to waste time profiling somebody who spent that money but haggled with you through the process.
Why You need to Know who Your Ideal Customer is
If you don’t start building a profile of your ideal customers when you try and win more customers the only way to differentiate your business is Price.
You’ll enter into a price war. You’ll be cutting prices, doing quotes and you will shave a bit off here and a bit off there just to win the business.
What you’re attracting now, is probably the worst type of customer, ones that are very price sensitive, and you’re having to cut your margins to the absolute bone to get them.
You might even not be making any money just to win that customer.
The first hack reduced the list from 1,121 customers to one customer a day.
I bet, most of us could make a few notes on one customer every day and see if a pattern starts emerging.
Once you’ve got a pattern for your best customer, start looking at a pattern for your worst type of customer. Hopefully, you will come up with some striking differences.
Then when you do any marketing, you know who you are trying to attract and who you are not talking to.
This ensures all your marketing material will be aimed at your ideal customer.
My ideal customer is called Alan. Giving him a name gives me someone to talk about or talk to when I’m doing any marketing.
Hacking the Hack (For the Lazy among Us to Take Action)
So for those of you who are lazy.
There’s an even further hack to the 80/20 rule. And that is the 80/20 of the 80/20 rule.
The 80/20 of the 80/20 rule states that 64% of your income comes from just 4% of your customers.
Now that is pretty impressive. But this doesn’t work on a daily basis because you can’t have bits of a customer. Well, I hope not.
So in a year, If we use the 64 / 4% rule, 4% of 1121 customers is just 45.
If we can find those 45 customers that are our highest spending customers, we can start to see if there is any particular personality traits, demographics etc with these customers.
I’m pretty sure everyone is interested in winning a few more of those customers because those 45 customers spent £230,000 of the £360,000 turnover.
That’s only four customers a month and those four customers spent £19,200 of the £30,000 monthly total.
Now I reckon it’s worth spending some time identifying those four customers every month.
Next Steps (Taking Action)
So once you’ve identified your ideal customer, you want to engage with them, especially when they turn up at the business, because there’s a famous saying: birds of a feather flock together.
Which means your ideal customer will have friends that are like him or her or they will have family that have similar traits.
Once you have attracted one of them, you need to start going the extra mile. You need to start adding some real value to what you do for these customers, because you want them to tell all of their family, you want them to tell all of their friends, you want to ask them for referrals.
You need to ask them for reviews from these better customers, because their friends will see their reviews as they pop up on social media. Then they will know where they go to take their car and they don’t even have to ask.