Continual Improvement: Finding new Customers
Are new customers hard to find? Photo by Bindaas Madhavi
How can you increase your turnover, or even protect your existing income? New customers are one answer, especially in a weak economy or when the markets are saturated or highly competitive.
But how do you find them? This is the subject of this third article in a series about a DIY superstore (Woodlands DIY, based in Horsforth, Leeds) that revitalised their business.
Who are your customers?
Finding new customers begins with a survey. This is an efficient way to get to know who your existing customers are, what they are expecting and how they can be reached. It can be run easily from the till and the information it produces can assist in brand development, advertising, store layout and even deciding what products to stock.
A survey was conducted at Woodlands DIY one summer Saturday. A staff member stood at the exit and used a simple checklist to record information about every shopper. Observational data was gathered about what time shoppers arrived, their gender, approximate age, number of companions and whether they purchased goods. Shoppers were also approached on the way out and asked if they wouldn't mind answering a few questions about past visits, the store's visibility, products and their general impressions.
Shopper comments pointed to some immediate improvements such as "labels are not good enough" and to services they valued, like "timber cutting is excellent." Deeper analysis using descriptive statistics produced a wealth of interesting findings, some unexpected and some quite alarming.
Get to really know your customers. Photo by Auntie P
A short quiz may help to illustrate how perceptions of consumer behaviour can be clouded (answers at the end):
1. What percentage of the store's Saturday DIY shoppers do you think were men?
2. What do you think was the average age of all shoppers?
3. How many knew of the business because they were local residents?
4. How many were in the store on their first visit?
5. What was the conversion rate (purchases made) for men? And for women?
6. What times of the day did older people shop?
7. What were the peak entry times?
Segmenting your customers
Grouping customers into market segments provides a business with a clear model of its customers, as well as revealing opportunities that the business can simply reach out to.
Divide and conquer - Photo by Beta-J
Back at the store each segment was given a name, their typical characteristics profiled and buying patterns clearly described.
For example; self-employed builders comprise 50% of customers, are 35-55 years of age, exclusively male, working locally, buying in bulk and do not require assistance.
This information allowed the store to target the particular needs of their existing customer segments. It furthermore showed gaps, like not appealing to women shoppers or professional men in their mid-thirties with families. These were attractive markets with disposable income, arguably less price sensitivity and reachable through advertising.
What the store and these shoppers needed was a compelling reason for unexploited segments to visit and buy.
What does 'brand' mean to you?
A brand is a primary tool in reaching out to new and existing market segments. It is more than just a logo. It is a series of expectations that form in people's minds, mental images that become the basis of their ongoing relationships and how they understand your products. Plus a brand will guide the store and its people in their behaviour, appearance and communications. Brands become the identity and a compelling reason to shop.
For Woodlands DIY the data showed growth potential, but to do so the brand had to shift subtly from being builder's merchants towards a DIY and lifestyle image that was less 'trade'. This meant identifying what each segment wanted, what would attract them, how they could be reached and what to sell them.
As a result certain attributes were emphasised, such as the product range. New emotions were encouraged, like curiosity through a new slogan "...just a whole lot more". Practical changes were also involved, such as extending the product range, paying more attention to signage and prioritising customer assistance. Services like the saw room were given prominence and a tea-room was introduced.
The new tea room at Woodlands DIY
These were not massive changes, just small continual improvement steps.
Each was taken for a specific purpose and its outcomes could be measurable. The tea room aimed to provide shoppers with more of a reason to visit, to extend shopper dwell time and provide pensioners with a rest stop. Even the opening times and menu were chosen carefully on the basis of the survey information, such as serving early breakfasts so as to make the store the first stop of the day for the trades.
Continual improvement and the customer
Knowing more about your customers is vital. It helps with the design of the brand, making cost-effective improvements, identifying new markets, spending wisely on advertising and even helping to choose what products to display on the shelves.
1. 90% were men.
2. The average age of all shoppers was 47 years old.
3. 45% were local residents.
4. 1% were visiting for the first time.
5. 71% of men converted, versus 86% of women.
6. Older people shopped around 10am and after 2pm.
7. Peak entry times were 10am, 12.30 and 3pm.
The next part in this series will look at Merchandising and the store layout.
Patrick Onions is principal consultant at The Knowledge Studio and an experienced practitioner in knowledge, information and project management. For more information visit www.knowledgestudio.co.uk