Coaching for Small Business Success
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- Frederica Wilkins
- 3 years ago
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From this document you will learn the answers to the following questions:
What is Rob's Quality Dog Test?
What do you know about?
What does Developing a Customer Profile help do to the common characteris3cs of poten3al customers?
Transcription
1 Coaching for Small Business Success Customers/ Markets Coaching Session 2 Entrepreneurial Coaches Institute, LLC
2 Who are your customers? What is your poten3al market? Some Ques3ons to Consider Who are your poten-al customers? How will you reach them? How will you promote sales? What s the size of the poten-al market? What are the opportuni-es for market growth? What s driving that growth? How will you a=ract and hold your share of that market? What s be=er about your product, from a customer s point of view?
3 Evalua3ng Poten3al Products Do the dogs like the dog food? Rob Ryan Founder, Ascend Communica3ons Smartups
4 Evalua3ng Poten3al Products At this point, any number of poten3al product/service ideas based on core competencies Priori3zed and developed into right product for right market Will it sell? Will it be something customer would be willing to pay for?
5 Evalua3ng Poten3al Products Criteria to review each product idea that may have merit from sunflower exercise Rate product/ service idea: Scale of 1-6 (1 being worst, 6 being best) Adapted from Rob s Quality Dog Food Test, from Smartups, by Rob Ryan Internal, no customer input at this point Focus on highest scoring items
6 Evalua3ng Poten3al Products Criteria to review each product idea that may have merit from sunflower exercise Rate product/ service idea: Scale of 1-6 (1 being worst, 6 being best) Internal, no customer input at this point Focus on highest scoring items
7 Evalua3ng Poten3al Products Product Idea- developed enough to already have customers or s3ll a dream Customers- ease of selling product, ease of receiving money Start- up- how quick to make money; 3me and expense to implement Applica3on- solve a clear problem, or just fun to have or do Uniqueness- totally unique, or just varia3on on exis3ng idea
8 Evalua3ng Poten3al Products (cont d) Value- save or make customer measurable amount of money, or rela3vely abstract value Marke3ng- difficulty to sell, and ease of poten3al customers to learn of it Barriers- anyone else start same thing easily, or substan3al barriers to compe33on. Compe33on- many others doing same thing, or you the only one Scalability- once customer purchases, speed in spreading to other poten3al customers
9 Evalua3ng Poten3al Coaching Tip Products These are very subjec3ve ra3ngs, and the entrepreneur will need to take care to rate them as dispassionately as possible. It would be good to have others (family members, business associates, top customers, etc.) also rate the business ideas, in order to get some addi3onal viewpoints.
10 Evalua3ng Poten3al Coaching Tip Products Please understand that the actual numbers and totals don t necessarily mean anything. They are simply a way to make some compara3ve judgment calls on a range of poten3al product/ service ideas. Use the numbers only as a guide.
11 Evalua3ng Poten3al Coaching Tip: Products As a coach, your job is to ask ques3ons to help the entrepreneur logically think through their business idea. You are not giving advice. However, at some point in the process, as you gain credibility in the eyes of the entrepreneur, your opinion is likely to be sought. Try to avoid it, but if you can t, answer with something like, in my opinion, and don t make your opinion absolute.
12 Evalua3ng Poten3al Products How does Clemor score his ideas and jus3fy his score from his sunflower model Clemor s Lemonade Stand
13 Clemor s Lemonade Stand Evalua3ng Poten3al Products Lemonade: (scale of 1-6) Product Idea- 5 No customers yet, but easy to have product ready Customers- 6 Nearly all will enjoy buying lemonade from me and will pay on the spot Start- up- 6 Very easy to setup, low overhead Applica3on- 1 Just fun; if person thirsty, could get water or soe drink from home or convenience store Uniqueness- 2 Everyone heard of lemonade stand, but I m only one around and I m going to make it fun to stop
14 Clemor s Lemonade Stand Evalua3ng Poten3al Products Lemonade: (cont d) Value- 1 Strictly quenching thirst and enjoying taste, and wan3ng to support neighborhood kid Marke3ng- 6 Everyone will see stand within couple days, and yard signs will be all over neighborhood Barriers- 2 Anyone can set up stand almost immediately, but very few other kids in neighborhood Compe33on- 5 No one else doing this now, but convenience store located just outside neighborhood Scalability- 4 Customers will tell others of lemonade, in large part due to my customer service inten3ons
15 Entrepreneur Toolkit In Summary: There are any number of possible products and services that can be developed from a core competency
16 On the Bookshelf Evalua3ng products resources Smartups by Rob Ryan, par7cularly chapter 2
17 Defining your Target Market If you don t know who your customers are, how can you assess whether you are mee-ng their needs? Rhonda Abrams The Successful Business Plan: Secrets and Strategies
18 Defining your Target Market Must know who customer is to know if business is mee3ng their needs Requires thorough understanding of customer Who they are Where they live How they behave What they can afford What they want Only a limited number of people will purchase from you Develop profile of exactly who they are Target marke3ng efforts toward them, focusing on core competency
19 Defining your Target Market Must know who customer is to know if business is mee3ng their needs Requires thorough understanding of customer Only limited number of people will purchase from you Develop profile of exactly who they are Target marke3ng efforts toward them, focusing on core competency
20 Defining your Target A Case study: Market Paul Sawyier Art Gallery Frankfort, KY
21 Defining your Target Market Customer profile should meet these criteria Definable- characteris3cs that poten3al customers have in common Meaningful- must relate to decision to purchase Sizable- large enough to sustain business Reachable- leads to effec3ve ways to market to poten3al customers
22 Developing a Customer Profile Process of determining who will likely be a customer Where they live and work, what they do, their interests and antudes, why they might purchase your product Requires some judgment calls May be more than one customer profile
23 Steps in Developing a Customer Profile Describe product or service Clear descrip3on of product can help to iden3fy common characteris3cs of poten3al customers Define geographic area Consider ramifica3ons of seemingly straighoorward defini3on Distance, climate, natural barriers, logical travel 3me, etc.
24 Steps in Developing a Customer Profile (cont d) Describe demographics Relates to needs of customer and ability to purchase Age, income range, occupa3on, gender, marital status, family size, educa3on, etc. If a business customer- industry type, revenues, physical size, number of employees, etc.
25 Steps in Developing a Customer Profile (cont d) Characterize interests, antudes & concerns Lifestyle factors Leisure ac3vi3es, friends, community service interests, lifestyle, entertainment, cars owned, etc. If a business customer- cunng edge or conserva3ve management style, products & services used, community ac3vi3es, etc. More intui3ve
26 Developing a Customer Profile Group Discussion Describe the typical person who might listen to the following radio sta-on Country music NPR AM talk radio Classical music Classic rock
27 Developing a Customer Profile Group Discussion Which radio sta-on would a customer of the following likely listen? Lawn service Fishing equipment Motor oil Independent book store Discount coupon books for regional restaurants
28 Using a Customer Profile Summarize into target customer statement Must relate to marke3ng efforts Understand and rela3ng to customer More responsive to their needs and wants Berer understanding of needed marke3ng efforts
29 Using a Customer Profile Largely based on educated assump3ons for new business or product Criteria to help marke3ng efforts Definable Meaningful Sizable Reachable Market research can refine customer profile Surveys Feedback Observa3ons Analyzing sales data Tracking ad results Sales clerk conversa3ons
30 Developing a Customer Coaching Tip Profile Someone may have the idea, I know my market, because I ve lived and worked there all my life. Ask them to define it. If it is very broad, (i.e., all women in the county,) ask how will they reach each one. Will the 75 year old spend as much as the 35 year old? If not, will they spend as much reaching each one? If not, how will they adjust? Keep asking 3ll they see the need for developing the profile.
31 Developing a Customer Profile A Case study: Charlie s Discount Dry Cleaner s Charlie is considering opening a discount dry cleaning business. He plans to offer a service that is less expensive and faster than compe3ng dry cleaning businesses, but, as a result, it may be of slightly less quality than the dry cleaner now serving the area. He has defined his target market in these terms: Employed women in white collar jobs, age 25-50, who have household incomes of $25,000- $50,000 per year, commute by car, children living at home, price and -me conscious, living in the Laurelwood neighborhood. Consider each point of his customer profile. Why would he include this in his target market defini3on? Source: Rhonda Abrams, The Successful Business Plan
32 Developing a Customer Profile Help Clemor develop his customer profile Clemor s Lemonade Stand
33 Clemor s Lemonade Stand Developing a Customer Profile Target customer Resident of neighborhood, age 50-65, s3ll working, likes to work in yard and has free 3me on weekends
34 ss Entrepreneur Toolkit In Summary: Entrepreneur should develop profile of customer, in order to berer focus planning and marke3ng efforts
35 Researching Your Market It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. Sir Arthur Conan Doyle Bri3sh author
36 Researching Your Market Assess possible demand for or interest in a product or service Stay in touch with new trends and customer preferences Objec3ves Project sales volume and price poten3al Helps analyze profitability and cash flow Gather informa3on on buyers and compe3tors Helps in development of marke3ng strategy
37 Researching Your Market Assess possible demand for or interest in a product or service Stay in touch with new trends and customer preferences Objec3ves Project sales volume and price poten3al Gather informa3on on buyers and compe3tors
38 Researching Your Market Poten3al ques3ons to answer Total market size Trends in consump3on, compe33on, and pricing Characteris3cs of poten3al customers Demand for product Expected prices Compe3tors and who are they targe3ng
39 Researching Your Market Keys to market research Asking right ques3ons Looking in right places for answers Benefits of doing your own market research Understanding own products, customers and industry Insight into what customers value and how they see your product Know why customer buys your product and not your compe3tor s
40 Researching Your Market Secondary research Studying data already collected and published Inves3gate demographics of target audience and track the trends that affect lifestyle & buying habits Generally collected first Primary research Gathering new informa3on specific to individual marke3ng needs Firsthand observa3ons and survey informa3on to discover customer s ideas and understand their purchase decisions
41 Researching Your Market Secondary research Studying data already collected and published Primary research Gathering new informa3on specific to your individual marke3ng needs
42 Accessing Secondary Research Helps you understand your market, your customers, and your compe33on Demographic data Number households, ages, educa3on and income levels Economic ac3vity Businesses in area, credit sources, regulatory informa3on Produc3on data Trends and current levels of produc3on of product you are considering Consump3on parerns Per capita purchases by consumers of similar products
43 Accessing Secondary Research Helps you understand your market, your customers, and your compe33on Demographic data Economic ac3vity Produc3on data Consump3on parerns
44 Accessing Secondary Research Wide array of types and sources of informa3on: Public and university libraries, business schools Census bureau reports Chambers of Commerce Planning boards, local governmental agencies Economic development agencies Specific industry departments with state government (agriculture, tourism, mining, commerce, etc) Government publica3ons Small Business Development Centers (SBDC) Trade associa3ons, industry magazines, trade journals Many others
45 Accessing Secondary Research Consider non- technical popular sources Local newspaper ads Popular magazines Telephone books STUDY with thought of what you can learn
46 Accessing Secondary Research A Case study: Joni s Custom Framing Joni owns a custom framing business in a rural county in central Kentucky, one with a small popula3on that s something of a bedroom community to a nearby metropolitan center. She prides herself on quality work. Custom framing sales average about $150 apiece, and her best customers average 2 purchases/ year. She defines her target market as: Female, age 30-55, married, works and lives in the county, household income of $50,000+
47 Joni s Custom Framing Case Study Joni defines her target market as: Female, age 30-55, married, works and lives in the county, household income of $50,000+ Aeer doing some demographic study through census data, she found that there are about 3000 households in the county within that age group. Out of that, only 1070 were above her income threshold. She assumed that there was one female in each of the households. Only 40% of workers living in the county actually work in the county, so her target market is 430 customers. At 2 sales of $150 each, her target market would bring in $129,000 in poten3al sales. Joni recognizes that she won t make sales with all of these. From here, she has to decide if this is enough sales to pay expenses and make it worth her while to stay open, or if she needs to adjust her basic business strategy.
48 Conduc3ng Primary Research How customers will react to product offering Common methods for conduc3ng research Observa3onal- watching people Survey- asking people Experimental- senng up tests All responses must be carefully recorded
49 Planning Your Market Research Strategy 1) Describe target customers; those most likely to buy from you, as specifically as possible 2) Develop list of specific ques3ons about your market that you must know before proceeding 3) Define types of data you need to collect to answer those ques3ons 4) Determine what data is available through secondary sources 5) Decide what primary research technique(s) you will use to collect data which isn t already available
50 Planning Your Market Research Strategy Seek help in finding data Librarians, agency personnel, SBDC, and others can all help with sugges3ons on planning, where to look, and even developing and analyzing surveys Carefully select research sample group Adequately represent target market Personal rela3onships can affect answers Set criteria before research starts Determine how many customers have to express an interest to con3nue the process
51 Planning Your Market Research Strategy Seek help in finding data Carefully select research sample group Set criteria before research starts
52 Analyzing & Interpre3ng Market Research Data Review must- know ques3ons Make judgments from informa3on collected about larger target market Forecast what might happen based on informa3on Results may require you to rethink ques3ons, data needed, and even target market or product itself
53 Researching Your Market Coaching Tip Some may not want to bother with this, I talk to my customers everyday, and learn from them. Most likely, though, they are not asking them specific ques3ons and recording the answers and analyzing them. Plus, most nice customers will not necessarily tell you what you really need to know to improve products or customer services.
54 Researching Your Market Coaching Tip Doing market research takes hard work and consumes a lot of 3me in order to really understand what the market truly is. Some entrepreneurs may not want to spend the 3me, but it s essen3al to increasing the odds of business success.
55 Researching Your Market Help Clemor plan how he will research his projected market for lemonade sales Use numbered steps from previous slide Clemor s Lemonade Stand
56 Clemor s Lemonade Stand Researching Your Market 1) Target customer resident of neighborhood, age 50-65, s3ll working, likes to work in yard and has free 3me on weekends 2) Ques3ons to answer How many poten3al customers do I have? What will they be willing to pay for lemonade? 3) Data needed to answer ques3ons # households in subdivision # cars driving by corner % of popula3on that drinks lemonade Price neighbors willing to pay for lemonade
57 Clemor s Lemonade Stand Researching Your Market 4) Where to find secondary data City planning commission/ sheriff s office 5) Primary research techniques & ques3ons Observe # of cars traveling past corner from 4-6PM Phone calls to 10% sampling of neighborhood, phones # s from whitepages.com, ask if they like lemonade, if price was $.50, $1, $1.50, & $2, how many cups would they likely buy in one week
58 ss Entrepreneur Toolkit In Summary: Aeer defining customer profile, market research will help determine sales poten3als and marke3ng strategies
59 On the Bookshelf Market research resources From Partners for Small Business Excellence hrp:// From Missouri Small Business Development Center hrp:// Useful hints from 2004 issue of Entrepreneur magazine hrp://findar3cles.com/p/ar3cles/mi_m0dti/is_8_32/ai_n /?tag=content;col1 One of many business analysis guides from Alabama- based Regions Bank hrp:// A very detailed set of market research tutorials from KnowThis.com. Par7cularly note the real- life marke7ng stories: hrp:// of- marke3ng- tutorials/planning- for- marke3ng- research/ Some extensive details on how to do primary research, including on- line and interna7onal market research, from Canada Business: hrp://
60 On the Bookshelf Agriculture- specific market research resources Extensive producer s guide from Ag Marke7ng Resource Center on conduc7ng market research hrp:// Similar guide from Alberta, Canada, with comprehensive list of websites to help hrp://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex7222 Shorter, more succinct guide from Cornell Univ. hrp://media.cce.cornell.edu/hosts/agfoodcommunity/fap/dyomresearch.pdf
61 Entrepreneur Toolkit Summary worksheet - Session #2
62 Session 2 Entrepreneur Toolkit Product comparison chart Customer profile Market research strategy Recommended readings Session 2 ques3ons
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