A while back, I served as the business-planning expert on a panel of young tech entrepreneurs discussing their new companies.
One young man spoke passionately about his new software. He had just one problem: It wasn't selling.
He didn't understand why. It was so cool and innovative. In the course of his presentation, he mentioned that his grandfather had owned a successful small business, a butcher shop.
To help this young entrepreneur understand the root of his problem, I summed it up this way: Don't sell meat to vegetarians.
His butcher grandfather certainly understood what he was selling and who was likely to buy - and who was not. He knew what his customers, especially his best customers, were like. He wouldn't try to get a vegan to buy his short ribs.
It's surprising how many entrepreneurs and small-business owners don't really understand who their likely customers are. They might think everyone can benefit from their offerings and be afraid to eliminate any prospects, so they don't narrow their target market.
Then they waste their time, money and enthusiasm trying to sell to the wrong prospects.
Even if they've identified the characteristics of their likely customers on paper, they often don't spend the time really getting to know and understand their prospects' real concerns and behaviors.
This is especially true for innovative companies that have come up with new ways to solve customers' problems. The entrepreneur has created something wonderful - a new product or service that makes customers more productive, saves them money, perhaps even delights them. But if they can't identify the right target market and concentrate on those customers, they won't make sales.
I knew someone who invested in one of the first hotel electronic-key companies years ago. Back then, hotels used physical keys for each room.
When someone lost a key or took one with them after checking out, the hotel sent a locksmith to change the entire lock. This was expensive and time consuming.
With electronic keys, a front desk clerk could change a lock in a minute. Clearly, this was a big savings for hotels.
The electronic key company should have had hotel owners begging for them, right?
Nope, hotel owners looked at the expense and disruption of removing existing locks, and buying then installing the electronic key system and said, "No, thanks." Company officials slowly realized their best customers would be those building new hotels and changed their marketing.
You have to watch what people really want and what they do.
And you have to stop trying to sell your wares to people who are not going to buy them.
How do you know who might be the best carnivores for your butcher shop?
? They shop with your competitor. It's easier to convince a customer already in the market that your product or service is "better, faster, cheaper" than the competition than to persuade someone has who never bought your type of product or service before.
? Their conversion costs are low. If a customer, especially a business customer, already has invested a great deal of money in his existing solution and changing would be costly and disruptive, that person is going to be far less likely to buy from you no matter how good your product or service.
? They look like your customers. In other words, they have the same demographics, industry traits or buying patterns as your current customers or customers who buy from your direct competitors.
If you know that your current customers buy their groceries at Walmart, you're probably wasting your resources marketing to people who shop at Whole Foods.
? They need you repeatedly. These are your best customers, a source of recurring revenue.
You especially want to target these high-value prospects. They're not just carnivores; they eat steak every night.
Remember, customers don't do what you think they should do just because it makes sense. They make choices that meet their own needs and desires.
So take the time to learn who your best customers really are and what they like.
Make sure they like meat.