When people ask you “who are your customers?” do you respond with a phrase that goes something like “30-45 year old working mothers?” or “the 15-25 age group” or “men between the ages of 45-65 who are balding?” Ok. I’m having some fun – but you get the picture. This is what we call demographics.
Demographics is defined as “the classification of populations, especially consumers, by various characteristics, including age, gender, race, religion, and income.” Many businesses feel strongly that their success depends critically on their ability to understand demographics and successfully target various segments of the population. As the demographics of a company’s customer base changes businesses are guided to develop new products to serve them or enter new businesses with different demographics.
Peter Drucker said “Demographics is the single most important factor that nobody pays attention to, and when they do pay attention, they miss the point.” And I absolutely agree with Mr. Drucker – we are all missing the point when we focus on demographics! I do believe that defining your target is important but I think we need to do a little more digging.
In the design world you have personas – a documented set of archetypal users who are involved with a product, typically the product’s users. Each persona has a name and a picture. They’re supposed to give designers a sense that they are designing for specific people, not just generic, ill-defined users. Dan Saffer of Adaptive Path says “Done well, this is exactly what personas do. The problem is, most teams build personas from the wrong kind of user information, or worse, base them on assumptions. It’s no surprise that a Web search for personas brings up an amazing variety of persona sets, and most of them are terrible.”
Ok so that’s the design world. But guess what? We’re pretty much doing the same thing in the world of business with demographics. We come up with ideas about who we think our customers might be and without having spoken directly to any of these customers, build a consortium of imaginary friends. Without any research to back assumptions, it’s easy to end up with a product or service built for what business owners and marketers think their customers are like, rather than what the customers really are like. It’s the difference between reading about someone and actually meeting them, – between fantasy and reality.
This is what is missing. Many think that what they really need to know about their clients are things like age, marital status, and annual income. And those things DO matter but they are not the most important thing. What you really need to understand are the circumstances that will lead your ideal clients to you.
Never assume you know what your clients really want and need. Once you’ve identified the key circumstances, you will find it much easier to connect with potential clients and offer them relevant information about your services. Knowing – really knowing – who your ideal clients are and how they think is the most important part of building your business.
The only way to create a product or service offer that your ideal clients can’t refuse is to make sure that:
- You are fulfilling a need that is very important to them,
- Your approach benefits them in a unique way,
- The perceived value of your service is very high, and
- Your offer is better than any of the available alternatives.
Keep in mind that guessing about the key circumstances is unlikely to get you the results you want. You have to talk with some of the people in your target market and find out what’s going on in their world. Part of understanding your client’s circumstances is being able to make that shift so that you are aware not only of the situation, but of your clients’ take on the situation.
You simply can’t create a product or service offer without a deep understanding of your ideal clients – and this understanding must be based on facts, not assumptions. Focusing on demographics will only give you market segments. You need to determine what people do (actions or projected actions), and why they do them (goals and motivations) — and not as much on who people are. It’s not that knowing who people are, is not important, it just isn’t as important as knowing why they’re doing what they’re doing.
It’s easy to see the surface elements that we’ve used throughout business to separate and shallowly categorize one another — race, age, where we live, what we like to eat, and so forth. It’s much harder to uncover our customer’s goals, motivations, and behaviours. But to truly fulfil a need this is what we must find out and quit focusing solely on demographics.
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