The Emotions of Selling a Business
April 26, 2022Attitude and Success Part I: The Seasoned Business Owner
May 10, 2022Small Business Marketing: Creating the Perfect Buyer Persona
When you first began your business, you were probably willing to work with anyone who could fog a mirror. However, as your business has grown, you’ve had to become a little more selective. Your business has become more complicated as it has grown. All of a sudden, you’re looking at the vulnerabilities in your company and you’re concerned with concepts like value, profitability, throughput, production, and efficiency. So, how do you identify the customers who enable you to maximize these aspects of your business? Join me as I explore how to target your small business marketing efforts at your ideal customer.
Follow Along With The Financially Simple Podcast!
TOPIC INDEX:
- – How to Create the Perfect Buyer Persona
- – The Theory of Constraints
- – The Pareto Principle
- – How to Define the Perfect Persona
- – Passion
- – Profitability
- – Procedural
Small Business Marketing with Purpose
In his book, Good to Great, Jim Collins introduces a concept that he calls, “Get on the Bus!” The idea is that you must find the right people to work in your business, but then you must also put them in the right roles. Although he is referring to a company’s employees, the same concept can be applied to identifying the perfect customer persona. You see, anyone could spend their money in your business. However, some customers require more effort than others and they may not provide the same value to your business.
On the other hand, there are customers who fit your ideal “buyer” persona. These are the clients that could use your full suite of products and services. They see the greatest value in them. Clients who fit your perfect customer persona fit the way your business works. With the ideal customers, your business could become more profitable, valuable, fluid, and synergistic. The right customer can do wonders for your business.
This is why you must approach small business marketing with purpose. If you know exactly which customer persona provides the greatest benefit to your business, you can target your marketing efforts at them. But why must you define your perfect customer? Why can’t you serve them and everyone else?
The Theory of Constraints
As a business owner, you’re naturally inclined to try to be all things to all people. You want to help every customer. But realistically, you just can’t do it. Attempting to do so places incredible strain on the business. You see, in Dr. Eliyahu M. Goldratt’s Theory of Constraints, he states that, “constraints determine the performance of a system. A constraint is anything that prevents a system from achieving a higher performance relative to its goal. A system is any collection of interconnected parts sharing a common goal.”
Basically, your business can only handle so many customers. Think of the garden hose at your home. When you turn the knob on the faucet, a steady stream of water travels through the hose, allowing you to water your garden, rinse your porch steps, etc. The hose was made for that. It handles the pressure with ease. But what if, when you turned the knob, all the water spilling over Niagara Falls each day was suddenly forced through your garden hose? Undoubtedly, the hose would explode and you’d have a huge mess on your hands.
The same is true of your business. It was designed to handle a steady stream of a specific type of customer. When the perfect persona is flowing through your business, it is able to thrive. However, when you try to serve all the customers in your market, the business will buckle under the pressure.
The Pareto Principle
The Theory of Constraints is supported by the Pareto Principle (also known as the 80/20 rule). This principle asserts that 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event. When you apply this rule to your clientele, it suggests that 20% of your customers account for 80% of your sales. That means 80% of your clientele is providing very little benefit to your business while taking a substantial amount of your time.
Therefore, to maximize profitability and efficiency, you must identify who the 20% in your clientele is. Your small business marketing strategy should have a strong focus on reaching the 20% that accounts for 80% of your sales. If you’re not doing this, you have a persona problem. You’re providing your goods and services to customers who aren’t good for your business model. So, how do you define your perfect customer persona?
How to Define the Perfect Buyer Persona: The Three Ps
When my wife and I were expecting our firstborn, I planned out all of my client meetings so I could spend the first month at home with them. Well, God had other plans, as our baby girl came a month early. All of my meetings fell in that month, so I couldn’t be there as often as I wanted to be during that first month. Not only that, our baby girl spent around 45 days in the hospital because she couldn’t keep her body temperature up. Needless to say, I was exhausted.
I’ll never forget sitting in a meeting with a client and knowing they could see the exhaustion all over me. At that moment, I remember thinking, “They don’t care. They don’t care how I’m doing or that my wife and daughter are waiting for me at the hospital.” It was as though the client was pointing his finger in my face and saying, “I don’t care!” And then it hit me. I suddenly realized I didn’t have to work with this client. That’s when I apologized and explained that I couldn’t meet their expectations at that time. But the story didn’t end there.
Passion
This particular client responded by scolding me. Now, I’m not necessarily proud of this moment, but I responded by saying, “Sir, I don’t have to work with you, and, at this moment, our professional relationship is done.” I’ve told you this to explain that my passions have helped me to identify ideal client personas in the past. Who do you want to work with? Is there a specific niche (i.e., school teachers or medical professionals) that you wish to serve? Knowing what and who you’re passionate about is a big step toward defining your perfect customer persona.
Think about it. If you’re going to leave your loved ones at home (or, in this case, the hospital) you had better be passionate about the people you’re working with. When you’re helping the customers you’re passionate about, you’re going to love what you do. It’s your purpose. It’s your passion.
Profitability
Perhaps you’re thinking, “Justin, all I really care about is which customers can make me the most money.” Well, that’s the second point in defining your customer persona. Focus on the clients that provide the greatest return or billable rate per hour. For example, if you run an auto repair shop, you could decide to only work on a certain type of vehicle. I know an auto repair shop owner that only works on Porsches. Likewise, I know individuals who will only service Mercedes, BMWs, or even Motorcycles.
You could break this down even further by only offering the repair jobs most profitable to you. For instance, I know a dentist whose entire practice is based on extractions. He gets patients in and out very quickly and he’s built his practice on this highly profitable procedure. But how do you know which clients provide the greatest return? Follow this simple equation.
Procedural
The procedural approach is all about finding which customer persona allows you to reach the most people using automation or procedures. This is a scalable approach. A great example of this is what Southwest Airlines has done. You see, if you’re looking for first-class accommodations with complimentary champagne and steak dinners, Southwest Airlines is not your airline. They know their clientele values efficiency and value.
Because of this, Southwest Airlines was able to transition its entire fleet to the Boeing 737. They’ve strictly used this aircraft since the 70s. This enabled them to standardize pilot training, receive discount pricing for purchasing their fleet in bulk, and save on maintenance inventory. With this particular plane, Southwest is able to get the maximum number of passengers from point A to point B with each flight. By serving this particular client persona, they maximized their throughput.
Wrapping Up…
Friends, there you have three approaches to defining your company’s perfect buyer persona. Knowing who you intend to serve could help you increase profitability and maximize your throughput while pursuing your passion. Look, I know life is hard. But life is good. Small business marketing can be frustrating. But it doesn’t have to be. By defining your ideal customer persona, you could make it at least financially simple. Let’s go out and make it a great day!
Do you still have questions about defining your company’s perfect customer persona? Reach out to our team! We have been through this process many times before.