By  Binnie Perper
writing4u@big-idea.com
www.big-idea.com

This article is of course not directed towards us the salon owner but read it with an open mind and apply it to your business situation. Visit Binnies site later......

There are nearly 300 million potential consumers in the United States, let alone the rest of the world. And God knows how many business entities. Of all those potential consumers or businesses, which ones do you want to attract to your business?

Even if your product or service appeals to a wide, seemingly universal audience, you can still narrow the field. And you should. Why? Because there is no virtue in attracting the greatest number of customers. What you want is the greatest number of profitable, long-term customers who have common needs you can satisfy, and common expectations you can exceed.

Customers in target industries or consumer segments In addition, narrowing the target reduces the number of media avenues you need to deliver your marketing messages. This saves planning time and marketing money.

>>> side point from Steve<<<

see what Binnie is saying here... its just as I have always said it is essential even for a Hair Salon to target your market first.

Are you looking for young trendies or mature types?    

• AUTOMOBILES. Examples
  Most adults drive cars. Yet the auto industry divides potential customers into segments of people who have similar interests or life styles, then designs and sells cars to fulfill the needs of these groups. That's why there are economy cars, family cars, luxury cars and SUV's, not to mention min-vans and pick-up trucks.

• SOFTWARE.
  Imagine how many functions you'd have to build into a software product to satisfy everyone who wanted accounting software? Better to develop separate products for home and small business use, as Intuit® did with Quicken®.

New customers versus existing customersBy some estimates, it can cost up to 10 times as much to acquire a new customer as it does to sell additional products or services to existing customers.

So in addition to trying to find and acquire new customers, figure out how to sell more to existing customers. This will turn new customers into profitable customers. (More on that later, too.) Over time, you want to increase your "share of wallet" from these customers

• Examples PET PRODUCTS.
  Most people who own cats buy cat litter. A company that makes industrial absorbents saw the cat litter market as an attractive source of new business. To get a greater "share of wallet," they later introduced an all-pet litter that customers could use for small dogs, ferrets and rabbits, or as a substrate for reptiles.

• CRUISES.
  In addition to expanding its customer base by offering discounts to members of several local non-profit organizations, a local day-cruise company could offer a free "cruise club" membership to everyone who comes aboard. This would entitle customers to one or more of a series of special cruises not available to the general public -- for example, a Summer Solstice Sunday Lunch Cruise or July 4^th BBQ Cruise. Profitable customers What makes a customer profitable?

• NEED.
  First, of course, you need customers who can use the products or services you sell. It makes no sense for a carpet cleaning company to go after a grocery store as a customer.

• MONEY. Customers must be able to afford, and find value in, the products and services you sell. They must have not only the ability to pay, but also the commitment to do if you are in a non-cash business -- e.g. you need a contract or service agreement. You can require an up-front deposit -- perhaps 30% to 50% -- on all work, or just on substantial jobs, to separate the wheat from the chaff.

• POTENTIAL. Acquiring the customer must be worthwhile over the long-term, so consider the lifetime value of the customer to your business. Why? Chances are, your first transaction will not be as profitable as future transactions, since you spent time and money to get that customer in the door.
  Subscription services have a built-in long-term revenue stream, but most other businesses do not. You'll need to sell products or services to them on a repeat or on-going basis to make them profitable, or get continual word-of-mouth referrals from them, or both!

• COST OF SERVICE. Lastly, consider the cost of keeping the customer. You'd be amazed at how much profit erosion comes from pain-in-the-neck (PIN) customers. This includes people who call customer service frequently, require multiple tech support sessions, demand to see 10 proofs of a project when two or three will do, require lengthy daily contact to report status on jobs in progress, and pay bills late after repeated "past due" notices and calls. High PIN customers can cost you more than he make on them! Summing up When you narrow the field, and keep an eye on the cost of acquiring customers and their potential profitability, you can build the kind of solid, on-going relationships that will generate a continuing revenue stream for your company throughout the ups and downs of the economy.

Steve catch you later......................

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