Written by Chris Lambrinides
CHAPTER 1 - MARKET RESEARCH
Now let’s talk about the demographics of your market.
Definition: Market research is any organized effort to gather information about target markets or customers.
You can do a few different types of market research. My recommendation is first to start a market demographic study.
This is an easy way to determine some critical information about your market. It will help you establish where your actual service area should be and help you decide exactly where to spend your marketing dollars.
We will select the service areas most likely to be open to your marketing efforts and uncover the potential customers with the most disposable income. Then we will help you uncover the sweetest spots within your area to target and focus your efforts.The easiest way for me to explain how this works is to do an actual assessment of my service area. Start by accessing the “Market Research Template” from the download source. Make a copy of that, and pull it into your drive. Please note you will see three tabs in there. One contains my test account data, the other has some helpful links, and the third is just for you, in the form of a fresh template to start your market research.
Why Do Market Research
■ To show or prove the financial viability for your service in a particular area.
■ To assist in creating your official service zone and to determine how far you are willing to travel
■ To determine a list of areas within your service area of customers who are most likely to take advantage of your services—in other words, “Sweet Spots.”
I’m going to take you on a walk-through of a market analysis of my local area. If you follow through it with me using your data, when we are all finished, you will have a nice analysis of your market. With this information, you will be able to identify the absolute best places to focus your marketing efforts. We will match you up with the people and prospective customers who are the most likely to use your service.
Your marketing budget is only so big, and every dollar counts. By using this template and doing the exercises with me, you will be able to laser focus on all the prime locations. The obvious first choice for your research is the Internet. Let’s get started!
Determine Your Service Area
Step 1) Access the “Market Research Template” download that comes with this book. Import a copy of that into your Google Drive, and we can get started. Please note the color coding in the top tabs of the spreadsheet. You can access the data in each column for your own service area from the following websites:
Step 2) Go to freemaptools.com and navigate to the fifth option on the left. It is titled “Find Zip Codes Inside a Radius.”
Step 3) Enter the miles you are willing to travel from the zip code in which your office is located.
Tip: For this exercise, enter a distance that is a little farther than you would usually travel. You never know if there is a great zip code right outside your usual territory. Maybe it would be worth going there for a little higher of a fee? At this point, we are just researching, so it doesn’t matter if you overestimate.
This is a cool tool that’s handy for this and other research applications. It shows you the radius of the area you are willing to travel within. It also spits out the data we will need for our market research report.
As you can see, I am willing to travel twenty miles from our home base, and my zip code is 07461. Entering those two items yields me a list of all the zip codes within my radius, as well as the state and town name.
Step 4) Grab the highlighted data. Copy all the text, and paste it into the provided template. It should look something like this once it is in:
Please note I use a fancy splitting formula to cut out the un-needed data from the import. If you would like to use my formula for your data, just “unhide” the columns containing the formula on the far left.
Step 5) Examine the initial three columns of data you imported. Does everything look complete? Are there any towns you can think of that are missing? It never hurts to double check your work.
These five steps will help you determine your potential service area.
In the next section, we will research and enter relevant demographic information. This will help determine the possible customers in your new service zone.
Plug In the Demographic Data
Step 6) Navigate to the second website we will use in this process. Go to factfinder.census.gov. Enter the first zip code you have listed in your spreadsheet. It will then take you to a page that looks like this:
From here, you will be able to uncover all sorts of wonderful information. You will know all about your service area and the potential customers within it.
At the least, I would like to see you enter each zip code into the website and log the following data points:
■ Population count
■ Median income
■ Total homes in each zip code
■ Number of homes occupied by renters
■ Number of homes occupied by owners
■ Median age
■ Level of education high school and beyond•
■ Poverty level•Percentage of population who are female
With these nine points of data tracked against your zip code, you will have powerful data at your fingertips. But let’s not stop there. We are so close to making it just a little bit better.
Step 7) Navigate to melissadata.com/lookups/zipdistance.asp
From here, you can plot how far each of your prospective zip codes is from your home base. I know this seems like a small thing, but trust me, do it. The data will come in handy in the future. Go to your spreadsheet, and plot every single data point in every town we listed.
Step 8) Navigate to trends.findthehome.com
At this site, we are researching and logging the average sale price of a home in your service area.If you find any missing data, other free websites will provide similar data for you. Google around a bit; you’ll find it.
Analyze and Review the Data
Researching and logging all the information in your service area will take almost a full day. I promise you it will all be worth it. You will be so much closer to making better-informed decisions in your business. Now for the fun part: analyzing and reviewing, slicing and dicing the data, cutting up the spreadsheet, and sorting through the columns. We will go over some different factors here and try to determine why each of them is important.
Let’s focus on this area first:
■ Median income—The higher, the better. Sort your spreadsheet from highest to lowest median income. Highlight with a color of your choice the top-twenty towns that have the highest median income.
■ Total homes in each zip code—Although this won’t be a deciding factor for you, it will be helpful later on.
■ Number of homes occupied by renters—The lower the number, the better. Renters are going to be much less likely to use your services.
■ Number of homes occupied by owners—The higher, the better.
■ Median age—This is an interesting one. My research has shown that women between the ages of forty and fifty-five are my most likely customers.
■ Level of education high school and beyond—The higher, the better. More education typically equals more disposable income.
■ Poverty level—The lower, the better. Avoid areas with a high poverty level.
■ Percent of population who are female—This one doesn’t matter too much. It will always end up being around 50%.
Sort each column from highest to lowest. Highlight the top-twenty highest or lowest cells based on the factors above. Step back and take a look at the data. It should be no problem for you to decide what areas will be the most responsive to your services.
Here is where I would most likely target (in my area)
Other things to consider are distance in miles from your location and average home-sale price. What appears to be an amazing town might not end up being so amazing when you see how far it is from your home base. Average home-sale price is interesting because it may help you gauge the size of the houses. Larger homes usually will equate to a higher window count. The more windows on-site, the higher your average ticket price can rise.
Don’t base your decision on any one of these factors alone. Use all the data together to make an educated determination. We want to put your marketing efforts in front of the people most likely to take advantage of your services.
The other part of your market research is seeing what your competitors are up to.If I had only twenty hours for market research a year, I would spend sixteen hours researching the ideal customer and the local town demographics and spend the other four hours doing a competitor analysis.
Don’t discount the power of knowing what your competition is up to. After all, you can’t be better than them if you don’t know what they are like. Competitor research is part of knowing your market. We don’t want you to become obsessed about this, but we do want you to have some general knowledge about them. Here are some things you should know about the companies you are up against:
■ Company Name
■ Owner’s name
■ Phone Number
■ Service Radius
■ Employee Count
■ Vehicle Count
■ What is their core business? — Window Cleaning? Pressure Washing? Landscaping?
■ Big contracts held?
■ Big contracts end date?
■ Marketing–what methods are they using against you?
■ Direct Mail
■ Social Media
■ Paid Print advertising
■ Web presence
■ How do they rank against your targeted keywords?
■ How are their reviews and ratings?
Social media can be a great place for you to keep an eye on the competition. You don’t need to stalk them, but it couldn’t hurt to keep your eye out for what they are up to. How active are they? Are they doing anything worth emulating? What kind of promotions and specials are they running? What’s the word on the street?
Again, I don’t want you to obsess about this, and it’s something you should check on only a couple of times a year. Don’t have an adversarial relationship with them. In fact, you should try to befriend them all. Have conversations with them, and even try to get together now and then. Likely, most of them will not have similar goals as you, and they can turn into great sources of referral work. We got tons of work from friendly competitors.
Do know that your strong marketing campaign will help your competition grow? Your marketing creates competition. I knew that our marketing efforts kept whole competitor companies of ours in business. I did a ton of marketing. On some days, it caused hundreds of people to call us for services. If we couldn’t get to them fast enough, or if they thought our price was way high, they could call one of our competitors.
These were people who never knew they wanted their windows cleaned until I spent the time and money to market to them. It always irked me on some level that my hard marketing work kept some of our competitors in business. But at the end of the day, I was just happy to have plenty of work.
Also, whether you believe it or not, there is enough glass out there for everyone to clean. There is way more glass than all the window cleaning companies in the world can handle. Your competition isn’t your real competitor. The real competitor is you and the customers who don’t know they want their windows cleaned.
The demographic research into your service area was our first step. Then we looked at whom we are up against in that market with our competitor research. Now we are going to look into the psychographics of our potential customers within the market. The demographics we looked at will help you understand who will use your service. Psychographics help you understand why they will use your service.
Here are some examples of psychographic factors:
■ Concerns—What worries them?
■ Lifestyle—Do they live beyond their means, or are they savers? How do they spend their leisure time? What are their hobbies? What brings fulfillment to them?
■ Values—What are they?
You can figure this stuff out from surveys, informal conversations, and data mining.
Check this out: segmentationsolutions.nielsen.com/mybestseg-ments
It is a very interesting website. Enter a zip code, and then it will give you psychographic profiles of your potential customers. A gold mine of information is here for you. It contains everything you need to see regarding whom you are marketing to and what their interests are. You enter the zip code, and it spits this out:
Look below. It pigeon-holes the people in that zip code into predefined segments.
Then, if I click into 09 Big Fish, Small Pond, it tells me about the psychographics behind this segment.
Here is what it says: Upscale Older w/o Kids—Older, upper-class, college-educated professionals, the members of Big Fish, Small Pond are often among the leading citizens of their small-town communities. These upscale, empty-nesting couples enjoy the trappings of success, including belonging to country clubs, maintaining large investment portfolios, and spending freely on computer technology.
Golden information! Totally priceless. With this data, I can get a real insight into the people within a particular zip code. With a little analysis, I can determine everything I need to know about my target market. What’s even cooler is that once I find a segment that’s responsive to my marketing or is just a good fit for a customer, I can track them down in other zip codes in my area with ease.
On the Nielsen website, click “Segment Explorer.” Look at all the different segmentations they have created. Give it a review; your ideal customer is in there somewhere. The more you know about them and what they are into, the better you can match and market your services to them. This will save you tons of money. It helps prevent you from marketing to the wrong type of person or area.
Psychographics isn’t as painless to categorize as demographics. It’s not as cut and dried. But once you combine the two types of data, you have a powerful combination on your hands. You’ll know where your ideal customer is and also what makes them tick. This includes how they will respond and what finally motivates them to schedule your services.
The next and final step with this process is to create a customer avatar—four of them, actually. It sounds silly, but don’t skip this; it’s important.
A customer avatar is your most ideal customer and an overview of what likely makes them tick. It combines demographics and psychographics in one place.
Meet Bob Smith. He is a fictional character I created who best represents one of my four main customer types.
Heres my avatar for Bob: Nielsen segment name: 01–Upper Crust
■ Name: Bob Smith
■ Age: Sixty-eight
■ Occupation: Retired executive
■ Lives in: Sparta, New Jersey
■ Income: $150K a year from savings
■ Married: Yes
■ Children: Two; older, live in the area
■ Hobbies: Golf
■ Motivations: Relaxation and hanging out with the grandkids
■ Goals: Get better at golf
■ Fears and frustrations: War, terrorism, and the stock market
■ Objections to using our service: Wants to be sure he’s getting a good value
■ The best place to advertise: Newspaper insert
Review the Nielsen data, and determine your four most common types of customers. Categorize them in the client avatar spread-sheet download:
Give them each a name, and fill in the data about them. Get the data based on the methods I mentioned above. Also, blend in your intuition and past experiences. What type of customers have you worked for in the past? Which ones were the most desirable to work with? Which types would you like to do more work for in the future?
Having four customer avatars, in the beginning, is important. Likely, after you get rolling, you will choose to reduce to two.
Having a customer avatar will help you decide the following:
■ What type of advertisements are they most receptive to?
■ Where should you be marketing to maximize the exposure to them?
■ What type of story should your marketing be telling and with what type of language to use?
A customer avatar will help you track down your most ideal customers. You will gain a better understanding of how they operate. The more you know about them, the better you can speak to them. That will help increase the effectiveness of all your marketing activities.