Attracting the right client, one who comes through your door or to your website and buys your product or service, seems to be the first step in growing any business. However, who is your ideal customer? This concept came across my desk in the new book by John Assaraf and Murray Smith, “The Answer: Grow Any Business, Achieve Financial Freedom, and Live an Extraordinary Life,” recently. The is the best book of the year for business development.

Who Is Your Ideal Customer?

The standard view of defining an ideal customer entails demographic information: gender, age group, income level, marital status, geographic location, etc. Although the value of this kind of information may seem obvious, most businesses put no effort into defining these categories. This means that finding and marketing to the ideal customer just won’t happen.

What Does Your Ideal Customer Want?

A second and equally valuable definition, as described in the book, is psychgraphic information. In other words, why does someone buy from you? This is not so easy to know unless you ask your current customers. You can buy plenty of “who” lists of customers from list brokers, although your “why” list is best when you build it yourself via questionnaires, interviews or surveys that you conduct yourself. This may seem like a lot of work. However, Assaraf and Murray offer a little number-crunching to explain how valuable this effort can be, as outlined here:

How to Multiply Revenue by Sixteen-Fold

Consider the concept that 20 percent of your customers generate 80 percent of  your revenue. Now the math gets to be really fun: the 20-percenters generate four times as much revenue as the rest of your customer base, and there are four times fewer of them. The value of each of the 20-percenters is therefore sixteen-fold higher than the non-20-percenters. Your most effective strategy to increase business is obvious: Get more 20-percenter type customers. When you know who your ideal customer is and why they buy from you, you can put more effective effort into getting more of them. When ALL of your customers are of the original 20-percenter type, then you will have increased your revenue by sixteen-fold. Now doesn’t that seem like fun?

This little overview us just a glimpse of how the combined use of demographics and psychographics can boost your business. I don’t pretend to do justice to this strategy here, so I simply encourage you to get the book and dig into it for yourself. Oh, and this book offers a lot more than this topic, so I will mention more of it later.

Dr. D