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I often ask clients about their analysis of their present customer base as it relates to both profitability as well how they fit within a niche that is served.  All too often there is a blank stare when I bring up either subject.

I call the process of defining your best clients and then cloning them strategic marketing.  This process takes in both client profitability analysis as well as niche development.  In fact, I believe that niche development should always start with customer profitability analysis.

You must know where your profits come from.

Most private business owners have an idea of where their profits come from.  Rarely do they spend time analyzing the amount of profit each customer provides.  When you do analyze client profitability you not only have to look at how much money is produced, but also how easy it is to produce those profits.

Profitability analysis leads to demographic analysis

Once you understand where individual customer profits rank its now time to start looking at your top ten clients and start to develop commonalities they may have.  This could be anything from where they live to what clubs or organizations they belong to.

If you’re in the business to business market, you might want to examine how they become customers or what industries or types of businesses your best customers come from. 

For example, in our business some of our best customers are specialty manufacturers that make sub assemblies for OEM’s, but could also just as easily make products for the aftermarket in those same industries.

Demographic analysis leads to psychographic research

Once you understand the demographics of your most profitable customers, its now time to start looking at the psychological makeup of the customers that are the easiest to work with and provide outsized profits. 

These customers will have the mindset that allows you to be successful with them.  This means they will allow you to help them discover what’s important and take your advice when it’s appropriate.

Finally, it’s time to build your niche

Now that you’ve assembled information about who your best and most profitable customers are its time to build a niche around them.  Find a common area you can become an expert in.  Learn all you can about this particular area of specialization and finally do all you can to make it easy for people in this particular sub-sector easily find you.

When you take these steps you’ve started on your way to develop a niche.  Now it’s time to tell the world who your best customers are and why.  You just might find those best customers will start finding their way to your door.

Josh Patrick

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Topics: wealth management, strategic planning, niche management

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