Target Audiences, Markets, Competitors and Brand Strategy
“Build it and they will come” is an old saying – and its usually untrue. You might have the best goods or services, but if they don’t solve a problem for the customers you want in a more valuable way than your competitors do, you will not succeed.
Many businesses fail due to a lack of market research. They have not sourced and analysed the right data, to assess if there is a large enough market to support their growth plans and create sustainable returns. Smart and early research and market testing will help you assess how well your goods and services meet customers’ needs.
Your research and testing should also inform your brand strategy and positioning in the market, ie how you communicate value to your customers compared to your competitors. When a business with quality goods and services builds a great brand and promotes it well in the market, it builds long term business value.
Goods & Services, Innovation & Pricing
Quality research and testing will also help you to price for value, and by comparison to your competitors. Good pricing strategies can be necessarily complex and should be executed in conjunction with your Finances, Operations and Risk Management, balancing customer value against your Gross Margin, Profitability and Risk Appetite. And once you set up a good pricing framework, don’t just “set and forget” – it should be updated regularly to take into account changes both in the external market and within your own business.
Innovation is also a critical way to gain both market share and a pricing advantage. The most innovative businesses can compete on value rather than price, and may even establish their own unique niche where they are more or less immune to competition. We therefore recommend that you both budget time and funds for goods and services innovation, and invest in customer feedback loops to stimulate that innovation and keep ahead of competitors.
Acquisition & Conversion
The way that your business attracts, engages and converts customers can be made up of a number of micro moments, often called “touch points”, across a variety of channels:
- It could begin with an article that they read online…
- Followed up by a targeted social media promotion they click…
- Then a salesperson calls or chats online, to answer questions…
- Followed by the customer reading online quality reviews…
- Before the customer finally purchases.
Obviously not everyone who starts this process will eventually purchase, which is why this process is sometimes referred to as a sales funnel.
We recommend that your business consider the following customer acquisition and conversion questions:
- What do your targeted customers “look like”, and how do they behave ?
- Where might you find those customers, or where might they find your business ?
- What are the most effective channels and touch points that will move customers towards purchase ?
- How long will it take your customers to buy from you, from initial attraction to final purchase ?
- How can you increase conversion rates, from one touch point to the next ?
- How satisfied are your customers with their “buying journey” ?
Retention & Loyalty
Depending on your industry, acquiring a new customer is 5 to 25 times more expensive than retaining an existing one.
Once a customer makes their first purchase from you, your goal is to retain their business so that they purchase again in the future and also, if circumstances permit, speak favourably of your goods or services to other potential customers.
The ways that you increase retention and loyalty will vary depending on your industry and your customers’ profile and behaviours, but they essentially require two actions:
- Firstly, the goods or services that you deliver must always meet or exceed your customers’ expectations regarding quality and value.
- Secondly, you will need to create the right post-acquisition “touch points” that will maintain the favourable visibility of your business to your customers, without being pushy. These touch points might be surveys, periodical relationship review meetings, social events, shared social media sites… whatever is right for both you and your customers.
Finally, always remember that many industries and businesses are “disrupted” by how goods and services are marketed and sold… so your innovation strategy needs to consider your customer acquisition and retention journeys too.
Monitoring Customer Performance
The digitisation of marketing and sales and more contemporary accounting systems like Xero have created a huge amount of both “lead and lag” Customer data that is available to most business owners and leaders. If you are advertising online, your digital agency should be able to create a dashboard to monitor key metrics and also educate you on what are the best lead indicators for your industry.
We recommend that you monitor key Marketing and Sales data at least monthly, if not weekly, and also look at those top level indicators of the success of your Strategic Plan Actions that relate to your Customers at least quarterly.