About Advice > Startup

Customer Basics

Customer Characteristics

Most customers have four essential characteristics:

1. They have a particular need. People have all kinds of needs including basic survival needs (e.g., food, shelter, health), rational needs (e.g., dependability, durability, economy), and emotional needs (e.g., love, sex appeal, status, security, acceptance, and power).
2. They have enough money to buy what you are selling. Remember that just because someone wants something you provide, that doesn't mean they have enough money to buy it.
3. They have decision-making power. The person with the actual authority to say "yes" or "no" to buying your product or service is your real customer.
4. They have easy access to your product or service. A customer must be able to find you easily.

Based on these characteristics, your job as a business owner is to answer the following four questions:

1. What need does my product or service satisfy?
2. Who can afford what I am offering?
3. Who has the authority to pay for the product or service I am offering?
4. How can I make my product or service accessible to my customers?

Your answers to these questions will support your market research effort.

Demographics

Now that you know what you are looking for, you can research the specific characteristics of the customers you are targeting. Demographics is the study of groups of people, looking at interests, ages, heritage, income level, education, sex, family status, occupations, and other traits. Demographic studies are usually limited to a certain geographical area. For example, if you are looking for information regarding potential customers in your neighborhood, you could research the demographics of your particular ZIP code. A good source of demographic information can be found online at the U.S. Census Bureau.

Visualizing Your Ideal Customer

One of the most effective ways to learn about your customers is to visualize what they may actually look like. Are they young or old? How are they dressed? Are they single or married? Where do they work? What do they do? Once you have a clear picture of what your potential customer looks like, try to imagine what their priorities might be as they relate to your product or service. For example, some customers might pay 5 cents more per gallon of gas if a filling station is conveniently located and saves them time. Likewise, a customer who likes a particular brand of clothing may travel longer distances and pay more than the customer who buys regardless of brand.

Focus

Although many different types of people may be interested in your product or service, you must narrow it down and determine who most of your customers will be. This group is your Primary Market, and its members will often have similar interests, tastes, needs, income levels, occupations, etc. They will provide most of the profits for your business. Your Secondary Market will consist of the next largest buying group with similar interests and needs.

Getting to Know Your Customers

You can gather information about your Primary Market in several ways:

1. Trade Associations. Professional organizations such as trade associations generally have a tremendous amount of customer and market research pertaining to your industry on hand. At times, this information can be had for free. At other times, membership in organizations can include access to market research or at least a discount on the available research material.
2. Open-ended interviews. Open-ended interviews are composed of questions that cannot be answered with a simple yes or no. This type of interview yields plenty of information, but is time consuming for both you and the person you are interviewing. The greatest benefit to you is that you will learn a lot about the group you are studying including common trends, emotional motivators, and general likes and dislikes of your primary market.
3. Surveys. Surveys take longer to develop, but are generally easier to administer than other types of market research. Since they take less time to complete, people are usually more willing to answer them. Also, surveys provide excellent information if they are well-constructed with thoughtful questions. It is easier and more cost-effective way to conduct surveys by telephone or on-site.
4. Focus groups. Focus groups should be led by professionals skilled in guiding groups of six to twelve people through a series of questions related to their buying habits. Since focus groups require trained professionals to be most effective, they are the most expensive form of market research - but they also tend to yield the most detailed and focused information.