By David Crary
Who remembers New Coke? If you’re under 40, you may not even realize that Coca-Cola changed their formula in the mid-1980s. The New Coke was well received in pre-release taste tests and surveys – bettering both the original Coke formula as well as the Pepsi formula. Coke executives thought they had a winner on their hands.
They didn’t. Partially fed by a strong anti-New Coke campaign by Pepsi, the New Coke formulation fell flat. The market wasn’t demanding a new, sweeter, Coke. They just wanted the Coke they’d grown up with.
Coke hadn’t fully understood its market. They mistakenly thought new and improved was better. It was. And, I’m a little ashamed to admit, that when I ran an irrigation business, I suffered from the same malady. Here’s what I found out:
-
Having a low price wasn’t as important as I thought – After years running a Green Industry business, I realized I was losing out on potential profit because of the values I was placing on the services offered. When working with residential customers I began to understand that my pricing was not reflecting their value of the service. An irrigation system is a luxury addition to any yard, and generally purchased by people with a disposable income, empty nesters and middleclass families, who are sick of moving sprinklers around the yard all summer. By better understanding why the customers wanted the installation I began to see that I was undervaluing my companies’ work.
A good salesman needs to know who he’s selling to and why they’re buying. As a small field service business owner I was no salesman and by inserting my values in the pricing process I was placing my company at a disadvantage. After I raised my pricing to better reflect what my customers found to be reasonable, I found that I could still bill customers fairly and provide them the peace of mind that the work I was doing was of high quality. And really that’s what customers want, peace of mind. That also helped me realize another aspect of the service I was missing out on.
-
My buyers liked maintenance contracts – As a consumer I have always declined maintenance contracts because I thought they were a waste of money and that I could maintain my purchases like I do all my belongings. As it turned out, many of my customers insisted on these contracts and after some reflection I could see why the idea of having “insurance” in case something went wrong would appeal to my customers. Customers like knowing that their purchases are insured, and the cost of a contract, whether I serviced it or not, was going to be great for business.
-
Low prices may raise suspicion - The same goes for being underpriced, although the current theme of homeowners’ is to save on services as much as they can, as the economy continues to bounce back it is important to keep your prices above ‘questionable’ rates. Customers aren’t as ignorant as you may think, and when they see low offers they immediately begin to question the quality of the service you’re providing and the products you’re installing. Just like eating at a cheap fast food restaurant, you get what you pay for. So ensure your customers that what they’re paying for is quality, mindful, work.
-
Referrals are the best source of new customers – Initially, I thought I’d have to spend a fortune on marketing to get my irrigation business off the ground. But what I found was the exact opposite. I found that – because I did such a great job – my customers were telling their friends, and I was gaining customers without spending a dime. Why? Because my customers tended to be affluent extroverts. Their friends were also affluent extroverts. And they had big egos – they loved recommending things – including me – to their friends and earning praise for doing so. Had I understood my market, I would have realized that making it easy for people to refer me to their friends and rewarding them for doing so was my best marketing ploy.
How to Better Understand Your Market
Hopefully, you understand the importance of understanding your target market. So how do you learn more about your buyers? Here are some tips:
-
Surveys – At HindSite, we are receiving results for our first annual Green Industry Benchmark Survey. With our survey, we’re trying to understand what issues the Green Industry – our target market – faces.
You should too. Don’t be afraid to send a survey to your target market. Give them an incentive to complete it (they’ll be entered to win an iPad, you’ll donate money on their behalf to charity, you’ll send them an Amazon gift certificate). Then, turn that survey data into a report that you can send back out to your target market. Not only are you able to better understand your buyers, but if your survey is properly composed, you’ll be able to in turn help them better understand the issues people like them face. It’s a win-win all around.
There are a number of great survey tools out there – Constant Contact, SurveyMonkey, QuestionPro – that make it easy to create a survey. For $20 a month, you can get a pretty robust survey tool.
-
Focus Groups – If you’re planning on offering a new service or have a new marketing message, try it out with a focus group first. Call some customers and prospects ask them if they’d like to take part in a focus group. Cater in some lunch or dinner and have a conversation. You’ll be amazed at what kind of information you’ll learn for a couple hundred bucks.
-
Customer Feedback Forums – Invite your customers to an online forum just for them, and ask them questions. I’ve seen companies that have created private LinkedIn Groups, their’s hosted software you can purchase, or you can use Google Plus’ new Communities functionality to bring people together. With the power of the web it’s a lot easier – and cost-effective - to instantly gather feedback from a lot of people.
-
Pound the Pavement – This one takes some time, but is otherwise a very cheap option. Get out and talk to your customers. Visit their houses. Talk to their neighbors. Prepare a list of questions for them in advance, and then ask probing questions based on their responses to dig deeper into what they are feeling and thinking. The more you know about your customers, the better. Even insignificant information can help. For instance, say you find that the majority of your customers prefer baseball to football. How does that help your landscape management business? Use baseball metaphors in your marketing. Give away tickets to baseball games in return for referrals. Or just use “What’s wrong with Joe Mauer?” as a conversation starter.
Ultimately, cash flow is king in this industry, and if you notice that you’re losing work to competitors because your services are over-priced or they better understand your buyer, it may be time to re-evaluate what your market is demanding. If you’re not booking jobs, you’re not making any money at all. A balance has to be maintained because the economy and industry fluctuate from year to year; a profitable business owner has his finger on the pulse of the industry and can anticipate how the upcoming season may go.