Identifying and understanding your target customer is crucial for business success, as it drives all other aspects of your business model and ultimately determines profitability.
Primary Implication
One of the top three reasons businesses fail is how well management understands who their target customers are.
The path every substantial business travels to making more money accelerates by knowing, with precision, who benefits most from the products and services they offer.
Overview
You will never earn the money you should until you know who is most likely to benefit from the products or services you offer, your customer. Your target customer reflects who you are building your company for, the very reason for its existence. Without your customers buying from you at a profit, you will never achieve financial freedom through business ownership.
It’s impossible to know who you are looking for when you don’t know what they look like means that you won’t know your best target customer when they stumble across your business because you failed to define who your target customer looks like.
Knowing who your business exists for takes time. It is time well spent. It requires a lot of hard thinking to clearly and precisely define the type of customer who is motivated to buy from you—getting the who right goes a very long way in making more money. The better you identify the concentrated truths about your customers, the better your business model decisions will be in identifying what the most profitable actions you need to take in your business are.
The easiest way to identify your target customer is to ask yourself this simple question: who benefits most from your product? It’s impossible to position your business to make money until you know who benefits most from what you do. Ultimately, your ability to make money is driven by your knowing what matters to your target customers in their decision to buy from you. This is the foundation for your business profitability model.
The importance of defining the who for your business represented by your target customer comes down to knowing the breadth of your product’s appeal. Do you have a broad user base, allowing many different types of customers to benefit from what you do, or do you have a narrow customer base, where only a small group of users will have any interest in what you do?
This first piece of the formula for making more money is vital because everything else in the 7-P Framework will follow from your answer to “who” your target customer is.
Don’t forget that one of the top three reasons businesses fail is how well management understands who their target customers are. The path you travel to making more money accelerates when you know, with precision, who benefits most from the products and services you offer.
