Yesterday, I gave you a hypothetical marketing situation. We run a bait & tackle shop. Having defined our perfect customer, we changed our store layout and image to fit them and waited to see how this changed our business. Today, three months later in the thought-experiment, we see business has declined in two of our three market segments and remained unchanged in the one we thought was our perfect customer. What do we do to fix this?
There were three comments on yesterday’s post, and all three touched on part of the problem. Prof. Geranium, you correctly identified the Dock Dwellers as important. In fact, they are the real perfect customers. Ryan was perfect in explaining how to change the store layout. Annie was right in describing what was bringing the Dock Dwellers and City Slickers into the store in the first place.
Look back at my description of the Dock Dwellers. In addition to buying lots of bait, they “spend their days on the dock chatting it up with tourists.” We are trying to align our definition of the perfect customer with that of our story tellers. What happened to the Dock Dwellers after we changed the store? First of all, they now make up a larger percentage of our customers. This doesn’t mean more Dock Dwellers are coming to the store, it means they kept coming while others stopped. Why would a segment that now spends their time griping “on the docks about how hard it is to find our bait” come into the store more often? Also, notice that the Dock Dwellers are still telling a story about our store; although it is not the message we want to deliver to potential customers.
The tourists are most likely our City Slickers, the biggest spenders in our little store who used to make up a good percentage of our business. Since they don’t live in the area, the way they most likely heard about our store was through the Dock Dwellers. If we want to improve the City Slickers’ sales, we need to look at the driving factor for their business: stories and advice they get from the Dock Dwellers.
The Locals still frequent our store, but improvements made for their sake have had zero effect on their purchasing behavior. As with the Dock Dwellers, the Locals make up a larger percentage of our customer base. But this does not mean we are having more Locals come into the store. In addition, they are spending the same amount of money.
Our story tellers both now and before are the Dock Dwellers. However, they did not make up a large enough portion of our business for us to notice on the first round. They influence the decisions of the City Slickers and drive our net sales higher. Since the Dock Dwellers are our perfect customers, we need to arrange the store to better suit their needs. Bait should be moved towards the front of the store, and we need to take the position of a classic, rustic bait & tackle shop. If the Dock Dwellers tell them to, the City Slickers will shop here. We need to mend this relationship with the Dock Dwellers and rebuild our customer base.
Since the Locals are still coming in for the same goods, changing their part of the store back to the old model shouldn’t hurt our relationship in the long run. However, you can assume a few Locals will be upset when we move the DVDs and eggs further away from the front door. Since the Dock Dwellers’ and City Slickers’ business is seasonal, we can adjust to focus on the Locals in the winter months. This compromise should keep our sales up in the summer and maintain relationships in the winter.
How bad did this hurt us?
If you want a better idea of how badly business has suffered, consider this. The average customer in our old store model spent $31.50. The average customer now spends $9.50. By changing our model, we were losing $22 per sale. This is how large of an effect your perfect customer can have on business.
Now that we know our perfect customer, what do you think is the next step?