Who’s Your Customer? Here is a Lesson from a Big Company and a Small One.
Media blogger Tom Taylor (www.radio-info.com) recently heard Starbucks executive, Bill Black, talk at an Arbitron conference. Taylor had this to say in his newsletter:
Boy, does Starbucks study its customers; creating profiles of “super regulars” who visit daily and produce 20% of revenue, spending over $1,000 a year at Starbucks. (They're just 4% of total customers.) And “coffee house enthusiasts,” who comprise 17% of the customer base and 37% of the revenue. Then “treat-seekers,” who visit maybe once a week and are 27% of customers/25% of revenue. And finally, “basic occasionals,” with special attention on the “youth occasionals.” Bill Black – who donned the famous Starbucks green barista apron – says “It would take us 16 basic occasionals to replace one super regular,” who for some reason quit coming in. So, “we need to focus our attention on the one, and make sure we’re showing the love.”
All customers are not created equal. A Super Regular is worth 16 times as much as a Basic Occasional – so Starbucks directs its time, attention, and resources toward learning about their Super Regulars, attracting them, and keeping them happy.
We have trained ourselves to always ask prospects about their core customer – the person most likely to do business with the advertiser. And we receive a wide range of answers. Some advertisers have a pretty good idea, while others would say things like,
“I’ve seen teenagers in here, and I’ve seen seniors.”
“Mostly women, but I don’t want to ignore the men!”
“Everyone is a customer!”
Now, very few local advertisers can afford to do the kind of market research that Starbucks does. But it’s possible for an advertiser, to learn a great deal about their core customers just by spending time with them.
Recently, we met with Marvin (names and info has been changed to protect the innocent), who owns a small consumer electronics store in the Southwest. Marvin’s store specializes in big-screen TV’s. He doesn’t have a research department – he is the research department. When we asked him who his core customer is, he answered right away:
“Men, 55 and over. They don’t trust the salespeople in the big box stores, so they come to my store for help. They come in here twice – the first time they’re by themselves, so they can decide what they want. But they can’t make a $3,000 decision without permission, so they have to come back in with their wife to make the purchase. When they come back, I make sure I give a lot of attention to the wife – the man’s already sold, but if she feels ignored, she can kill the deal.”
Concentrating his advertising dollars on shows that men 55 and over watch is key to his success. He has learned what’s important to those customers: for example, they get up early, so while the Best Buys of the world open at 10:00, he’s open at 8:30 every day.
There are riches in niches, and Marvin’s niche is older men. He doesn’t have a big marketing budget, but he’s figured out who his core customer is, and focuses his dollars on the core. That approach has allowed him to successfully compete against the big boxes for two decades.
The next time a prospect tells you that he wants to reach anyone who can fog a mirror, remember the story of Starbucks…and the story of Marvin.
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