Let’s get started with the challenge

Day 8: Who Is Your Customer Base?

Today's Prompt:

Come up with your initial customer definition, by beginning with an initial one- to three-word definition of your target market. This customer definition will change over time as you get more information about customers, so, for now, keep it broad and simple.

Use your identified competitors and the research methods mentioned in the text above to gather demographic information and to find out what your customers like.

Share any interesting and new tools that you’ve found to research potential customers in the comments section of www.30dod.com to help out your fellow community members!

One of the most crucial tasks of an early business is to locate the customer base. Today, we'll look at a common misstep businesses take when identifying customers, and then we’ll give you two tools to start finding out more about who your customers are.

Customers vs. Users

The biggest problem new businesses have when trying to identify their customer is mixing up their customer and their user.

Two examples: Facebook and a toy maker.

Facebook provides a free social media platform for billions of people. It doesn't charge these people anything for using Facebook. These people are its users.

Facebook's customers, on the other hand, are the advertisers. These are the customers who pay Facebook money. They pay to get their adverts in front of Facebook's millions of users.

Here's the interesting part. Facebook's "product" is not actually Facebook. Its product is the massive amount of data and information it can provide advertisers about its users and the ability for advertisers to place adverts in front of them.

Now, the toy-maker. This toy-maker produces action figures for boys aged 8–10.

These 8–10-year-old boys are the user of the product. The customers, of course, are the parents who have to shell out the cash to buy the toy.

In both cases, the company and craftsman need to create something that is attractive for the customer and not just the end-user. Otherwise, they won't have a business.

Many times, the customer and the end-user are the same person. If you buy a sandwich and then eat it, you are both the customer (because you bought the sandwich) and the user (because you ate the sandwich).

It's important to look at your business idea and work out who the customers and users are. Maybe they are the same person – that’s great! But, in a lot of businesses, they will be different, and the important thing is to have a clear idea of who the customer is.

B2B and B2C

Most likely, if you are going to be selling a craft, your business will be business to consumer (B2C), but in this section we will address both business to business (B2B) and B2C transactions.

Knowing your customer is particularly important if you are engaged in B2B transactions. B2B is when a business sells to another business. That second business is the customer here.

For instance, let's look at the shop where you just enjoyed a delicious sandwich. That business produces sandwiches. They sell sandwiches directly to sandwich eaters like us. That's called a B2C transaction – the sandwich is sold directly to the person who eats the sandwich.

But the sandwich shop also does catering for cafes in the local area. Each day, they produce 500 sandwiches and sell them to local cafes. This is a B2B transaction. In this case, the customers are the local cafes, and the users (or consumers) are the cafes' customers.

Often, businesses will do both B2C and B2B work. In general, there's more steady money in B2B than in B2C because you can secure long-term, steady contracts rather than having to worry about selling individual sandwiches.

If you want to scale your business, then it's generally faster to start selling to companies who can buy 1000 items of your product at a time rather than one at a time like a normal consumer would.

If you make furniture, like Margo, perhaps you could arrange to make 20 pieces for a boutique furniture store instead of finding 20 individual clients. Or, if you do consulting work, then perhaps, instead of seeking out five individual clients who pay by the hour, it's better to find one business client who can pay you a retainer.

Learning more about your customers

Once you've had a think about who your actual customer is (not just your user), it's useful to find out as much about this group as possible. Focus primarily on B2C for now. Once you have a good grasp on this, you'll be in a better position to think about companies you could work with.

Start with some basic questions: Are your customers mainly male or female? Which countries do they live in? What age groups? What income level? What level of formal education have they received?

Then get a little more in depth: Where do they hang out online? What sorts of products do they like buying? What events do they go to? What magazines do they read? What films/TV shows do they watch?

Any and all information you have about your potential customer is useful. This information allows you to craft a product or service that appeals to people who might want to give you money.

This isn't manipulation so much as it is making sure your business is valuable and memorable to your customers. Do your customers value environmentalism? Then maybe you could donate a portion of profits to a tree-growing charity and make sure that the product is made from sustainable materials. Having more information about your customers allows you to make tweaks like this.

Two powerful research tools to get started

You can start this research by looking at your competitors. Plug their websites into http://www.alexa.com/siteinfo/, and you'll see the geographic distribution, age, gender, and education level of the audience of that site. If you think that site appeals to people similar to your customer, then this is useful information. (Be aware that this only works for larger sites where there is enough data.)

Another way to explore your customers’ likes and dislikes is to go to Facebook and type the following into the search bar:

"Pages liked by people who like x" where x is the name of a competitor's page.

This will bring up a list of all the other pages that people who like x tend to like.

You can also type in queries like "pages liked by people who like x and who live in London," and you'll get only the London-based fans.

The beauty of this tool is that it will also tell you your audience's preferred TV shows, charities, organizations, films, books, websites, causes and a whole bunch of other information. All of this helps you get to know your customers better.

One thing to note: To get this to work, you'll need to switch your language setting to English (US) in Settings. Right now, only US English is supported as this is a relatively new and experimental feature. There's a guide here about how to turn on this powerful feature: www.maketecheasier.com/enable-facebook-graph-search/.