November 2013 Coaches Corner
Identifying Your Ideal Clients
We discussed how your life and work experiences are unlike anyone else's, and that by channeling them into your USP, you can create your own unique positioning.
Today, we're talking about the other side of the coin…
Who are your ideal clients? What type of person fits who you are, the value you bring, and the unique perspective you have more than anyone else?
But first, let's start with what's called the 80/20 rule, and how it can save you from wasting hours of precious time…
And potentially quadruple your profits…
It may be hard to believe, but on average, 80% of your sales will come from 20% of your clients.
It's true – go and take a look at your numbers and check for yourself. If you have 100 clients, then only 20 of them are really profitable to you.
This phenomenon, known as the “Pareto Principle” has been a staple in our civilization for years.
It was discovered by an Italian man named Vilfredo Pareto, and applied in more recent times by Joseph Juran in 1941.
He discovered, when testing quality issues throughout his Electrical Engineering career, that 80% of the issues that arise are caused by only 20% of the parts.
Perry Marshall, a well known internet marketer and expert in facebook ad words, just published a new book called 80/20 Sales and Marketing: The Definitive Guide to Working Less and Making More showing how this principle applies to your business and your productivity and what you can do to maximize both. Check out Perry’s article in our ExpertPreneur Magazine, February 2014 edition, offered in the apple newsstand.
How Does This Apply To You?
Think for a second about earning 80% of your income from only 20% of your clients.
That sounds like a lot of wasted opportunity, doesn't it?
You're only getting full benefits from a really small portion of your clientele, yet you are spending your efforts and resources equally on all of them.
Let's use some numbers to demonstrate how a shift in focus could dramatically change your business.
In this example, we'll assume that you make $100,000 a year from 100 clients.
Since only 20% of them earn you 80% of your profits, then you receive $80,000 out of that $100,000 from only 20 people.
Now let's say that all 100 of your clients are like that ideal 20% in regards to their purchasing behavior.
20*5 = 100, so $80,000*5 = $400,000.
You've now quadrupled your income with the same number of clients just by identifying and focusing on your “ideal client” and weeding out those who are not. Then focusing your lead generation on your ideal client from now on to attract more of them.
Pretty mind-boggling, right?
When you stop wasting your time and energy on everybody, and anybody, then you can better target and reach your ideal client. You actually make more money by focusing your time and resources on attracting the right people and thereby get more of them into your sales funnel.
Even attracting fewer people, but more of you ideal client, for whom your product and services are an ideal fit, will result in more sales and more satisfied customers. This is why the quality of your list is more important than the size of your list.
How to Sort out the Weeds
What is it about the 20% that they are so willing to spend more and stay engaged with your business more?
If you are a fitness coach that specializes in helping women lose weight after child birth, your ideal client might look something like this:
Female; 25 – 35 years old (possibly even older); a professional that is on maternity leave; has a combined family income of at least $5000 a month; wants to return to her pre-baby weight and feel energetic after 9 months of low activity.
This is just an example – to identify your ideal client, you would have to have a conversation or use a survey with the “20%” clients you have now, to dig down and uncover all of their needs, wants, problems, hopes, and fears or what’s sometimes called their “emotional hot buttons”. In this way you truly understand them and what drives their behavior including their purchasing decisions.
Once you know this you can better communicate with them and your conversion rates will go up. This might entail reworking the language on your website, and other marketing to target these hot buttons to stimulate the response you want. Namely buying behavior.
You should also phase out every prospect and client who doesn't fit that description.
That may sound harsh, but the other 80% of your clients do not appreciate your expertise the way that the 20% do. And they don't demonstrate their connection with you with their wallets, as the 20% do.
Now, that doesn't mean they are bad people or that you can't have a positive relationship with them…
But they don't see the full value of what you provide, whereas the people who fit in that target demographic do.
And that's why they are willing to spend more on your products and services.
The other reason to segment out the other people is because as a small business owner you only have so many resources and time to attract customers. If you spread yourself too thin you’ll attract less of your ideal ones and more people that aren’t a good fit.
And when your marketing messages are too generic, you risk not appealing to anyone.
Using our earlier example, you might be tempted to generalize with a message like, “Helping you achieve the body of your dreams, with the least amount of work.”
That might appeal to prospects, but it could apply to anyone.
Since your best clients are women, post-pregnancy, looking to return to their youth, it would better suit your business to say something like, ” Helping you lose the baby fat, and feel like you're 21 again.”
The idea is to target that deep-seeded emotion that keeps your ideal client awake at night, while keeping everyone else at bay.
Finding YOUR Ideal Clients
That one type of client who gets you, and fits your business to a “T”…
When you talk to them, they will feel like you truly understand, because all of your knowledge and expertise revolves around solving their most pressing problems or helping them achieve desired benefits and outcomes.
These are the people who should be getting all of your attention.
Not only will identifying your ideal client be hugely profitable to you, but you'll enjoy your work so much more.
New entrepreneurs are always tempted to be generalists – they believe that by reaching everybody, they will get the most clients, and make lots of money.
This is absolutely, 100% not true.
You can get clients that way, possibly even get some good clients, but you will mostly be throwing mud at the wall, then seeing what sticks.
Being a generalist really distills your message.
Think about this: would a chiropractor perform oral surgery? How about a fitness coach giving relationship advice?
(I recognize that the last one is actually fairly likely, but it's not likely to be good advice.)
These situations don't make sense… and those professionals' actual expertise would go completely unnoticed and not benefit the client.
You've taken the time and energy to really niche yourself and figure out what makes you special (your Market of One).
Now take the time to find out who will appreciate that the most, and focus ALL of your efforts on getting them as customers.
Your Next Step
First, I want you to write this down on a post-it: “The riches are in the niches.”
Now put it on your wall.
It may sound a little cheesy, but the message is absolutely true – you will make more money in a finely-tuned niche with a well defined and clear target market.
Potentially four times as much as you were making before, based on the 80/20 math.
It will really benefit you to take the time to picture your ideal client. Once you have a clear image in your head, start finding out where that person spends their time, both online and offline.
Check out forums, blogs, even local associations…
Focus your efforts on finding that 20% and your business will grow faster than you ever imagined.