| ERROR MSGby Susan Paul, Georgia SBDC Ever been in a business where, as on the television program Cheers, "everybody knows your name?" Knowing customers, whether by name or their preferences, is crucial to the success of a business. Customers are the lifeline of the business, and the more a business owner knows about customers, the better the owner is able to attract and maintain them. Management expert Peter Drucker once said that "the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself." How does a business owner get this knowledge and understanding? One way to get to know customers is to find out what zip code area contains the largest share of a business's customers. To meet this goal, ask customers for their home zip code when they make purchases. For each customer's purchase, record the zip code with the total amount of sale (next to the zip code). If a customer on subsequent visits makes more purchases, record the zip code and amount of purchase for each visit. To analyze the information, a business would calculate total sales, total number of customers, and the share of customers and sales for each zip code. For every zip code in the list, there should be a total number of customers and total amount that these customers have spent. After a business collects this information for a period of time from many customers, it is likely that some zip codes will occur more often than others. Similarly, customers from some zip codes will have higher spending levels than others. A simple analysis of the collected information will reveal where customers live who are more likely to spend money at your business. This analysis helps a business define its customer base. Do customers extend across many zip codes, or are they primarily in one zip code? In other words, do they represent a broad range of geographic areas, or is the area well defined? This knowledge can help determine whether marketing efforts should be broadly or narrowly focused. Every dollar spent on marketing needs to reach the group that is part of the customer base. A business must know where its customers are coming from to know that money spent on marketing is being well spent. After gaining knowledge of the customer base, the owner can undertake specific marketing efforts. These may include direct mail advertisement to households in certain targeted zip codes. If a business advertises on the radio because it knows the customer base, one can confirm that the radio station listeners are in the same geographic area as the customer base. Also, if a business advertises in the newspaper, it is important to know that the newspaper's circulation includes the geographic area(s) that are included in the customer base. Once a business knows about its customers, the objective of marketing becomes trying to reach more customers. So use this lifeline and find out more about customers. They are necessary for a business to profit.
To obtain small business assistance contact a consultant at a Small Business Development Center. > See also: Marketing, Advertising & Sales
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