Here’s a fact: not everybody buys your stuff. Not even close.
In reality, every online business has a group of customers who spend disproportionately more than the rest and share certain commonalities – and every online business must work like crazy to understand this group of people or they will face a long and expensive road chasing growth.
Sometimes, when we’re talking to clients about our lead persona methodology (the process we use to find the customer profile that represents the majority of revenue) we get this response: “Yeah … but everyone buys my stuff, though. We sell to rugby mums, hipsters and Daily Mail grannies.”
Sure, a business is made up of a whole host of customers, some even argue that these should be grouped into a number of different personas. That’s fine for the likes of VW where you’re big enough to chop up your potential market and segment down your product line to stretch for that revenue forecast of 213 billion Euros.
Good luck to them. But what happens to you, the online SME? You have no chance, there’s no way you have the time and resources to do this.
Say you’ve got 15 heads in the office, operating on average three roles each, you’re going to want to focus all your time, energy and budget on the types of people who are already buying from you, the ones who are spending good money every year, of which there are plenty more out there to go get in front of.
Hell, you’re going to want to steer all 15 heads in the same direction, so that everyone is singing from the same hymn sheet and targeting your product/service and marketing/sales strategies towards the person who buys your stuff (not to mention getting any third party agencies on board).
We know our way works. Why? Because we’ve been over to the other side and back, getting a successful online business off the ground and then setting up the simplest and funnest customer research company for SMEs.
Here are two of the most important lessons we’ve learnt so far …
The 62/20 rule
Vilfredo Pareto is someone you should really check out. He’s one smart dude and he was onto something when he came up with his 80/20 rule in 1896. It was based on the fact that, back in the day, 80% of the land in Italy was owned by 20% of the population.
His power law distribution has since been applied to everything from peapods in the garden to business strategy. The idea is that 80% of sales come from 20% of clients. We’ve been applying this to our personal lives for a while (fitness, finances, relationships etc.) and now we’re using it at WBYS?
Our man Vilfredo is right, but his ideas don’t translate 100% to the world of online businesses. After studying 15 different companies, we found that the top 20% of their customer base generates on average 62% of their revenue.
That means 20% of your customers = 62% of your revenue.
From now on, I want you to think of that 20% as the most important segment in your business. If you can understand them, figure out what makes them tick, this segment is going to unlock a serious business advantage.
Find your lead persona
The second most important thing we found is that there’s always a lead horse. When we get under the bonnet and run our mix of tech and traditional market research techniques we always find strong commonalities amongst this segment that generate a useful, tangible and actionable profile.
We find out the common traits behind their decision making, their personalities, their mindsets and motivations, even what websites they hang out on and what your competitors they engage with. We get to know the humans that make up this 20% and then we help you overhaul your sales and marketing.
Can you imagine how much better your business would perform compared to when you were targeting everyone (and its cousins No-one and Anyone)?
Seriously, we can help
We would love to help. Sign up below to find out the lead persona that drives your business.