Once a business achieves a certain level of revenue on a consistent basis, new challenges can present themselves.
When you first start your company, you count every nickel and you know where every single ream of paper is located. Then, as the business grows, you start letting go of some of the control and start trusting the processes that you’ve created to keep the business running.
Understanding the demographics of your customers is very important to ensure that your messaging and marketing is as effective as possible. Once your business reaches that certain level, you’ll want to pay real attention to share. Share is your piece of the pie. If you service 3 counties in your area and there are 10 other competitors in that area, it’s important to understand how many customers each of you have. If you’re losing customers and your competitors are gaining them – somethings going on.
You’ll hear fancy companies say “Market Viability Studies”, which helps them determine if there will be enough people to buy their products to invest in building, a second store, etc. You may not be conducting a MVS for your small business, yet you may be interested to know how you can measure the market, competitors and how it’s directly effecting your business. Have you ever considered mapping your customers or seeing them in a snapshot from 3 years ago, then 2 years ago and now today?
Demographic, psychographic, income, attributes, affinity groups, if they prefer cats or dogs and much (much) more – we partnered with a local data research company to offer our small business clients (and some not so small) an enterprise-level look at their data. Our clients are learning what their share was and what it is today in their communities – they are also learning more about their penetration in the market.
Penetration is the measurement of a particular product or service into a specific area. If you analyze your data and customers and notice that you are losing share of customers in your own zip code and then you decide to place a Facebook, Instagram and LinkedIn ad campaign in that zip code to see if you can increase customers – the results from that campaign would be your penetration rate.
There are 50,000 residents in your zip code.
10,000 customers from your zip code
20% share of business in that zip code
You decide to invest in an ad campaign.
After 2 months, you see an immediate increase in customers from that zip code of 5,000 customers, totaling 15,000.
Now you have a 30% share in the market and your ad campaign had a penetration rate of 50%.
If your business could use my help in learning more about your data to grow your customer base – email me firstname.lastname@example.org
**originally posted on EntreNash