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5 Steps to Determining the Customer Base for Your Small Business

Marketing Showcase Small Business

Welcome to the five step guide on determining your (new and expanded) customer base...

Imagine this. You’re sitting in your office. The day’s about done. It’s dark outside, folks are checking their parking meters at the end of the day, and the streetlights are on, casting small yellow glows against the concrete. It’s another day. Your numbers don’t add up. You’ve been at that calculator for hours.

Your assets are too low; your liabilities are too high.

That balance sheet is very much not balanced.

You have rent on your building soon and your children’s birthdays are on the way.

Where is the money going to come from?

Determine Your New Customer Base

If you own a small business, this situation might not be unfamiliar to you.

Starting a small business is hard and there are challenges you face that you might not be accustomed to. One of those might be developing, finding, or expanding your customer base.

Because, after all, a larger customer base means more money. Those repeat customers, who often drive your sales, profits, and revenue, make up the bulk of your profit.

So what do you do when you’re looking to build that customer base and establish relationships with new and profitable customers or clients?

Step 1 – Start at Square One and Build a Model

If you’re going to expand your customer base, reach new customers, and increase your profits, consider starting with the basics.

We all know expenses like supplies and car insurance are negotiable, so there’s money to be saved at every corner. But what about building revenue instead of just cutting expenses?

First, catalogue your customer base at the moment—those repeat customers who are loyal to your business.

Now, how do you expand that base?

Second, analyze your business, its strengths and weaknesses. Ask yourself the five W’s and one H.

  • Who else can I reach who will buy my product/service?
  • What other market can I tap into?
  • When will my new customers buy my product/service?
  • Where will my new customers buy my product/service?
  • Why will these new customers want to buy my product/service?
  • How will my new customers buy my product/service?

This starts the process of creating a model in your head. After all, you’re expanding your customer base, and we’re all looking for ways to grow our business in 2020.

That requires just a little bit of imagination.

In two steps, we’ll get to the hard numbers.

Step 2 – Analyze Your Competition

Next step: analyze the companies you’re trying to beat. Why?

Part of the reason is simple. These customers are eating into your target market and possibly taking some of your customer base.

Analyzing them can lead to new knowledge about the ways these companies are entrenched in the market, who their target customers are and what other parts of the markets that are easily available for grabbing.

Here are some questions to ask:

  • Who are my chief competitors (geography, product, target market)?
  • What does their promotional materials and website say about who they are targeting?
  • What kind of price are they asking for their products/services?
  • What are their strengths and what are their weaknesses?
  • Are they overlooking any part of the larger market that I can attempt to acquire?
  • What is my competitive advantage over them and what competitive advantages do they have over me?

Answer those and you will see the market holes and which parts the other companies are missing. You see how you can add customers to your customer base. You may even know how to improve your product or service to compete better.

Now, it’s time to meet your new customers.

Step 3 – Conduct Market Research

After analyzing, the question becomes, “Who are your new customers?”

The answer may be a faint impression in your mind. But there’s a way you can bring it into reality. And that comes with research. There are two main avenues for conducting market research and finding those new customers.

Quantitative: These sites rely on huge chunks of data (generally from surveys) that ask respondents questions about their demographics, buying habits, how they view a certain product, and more.

Qualitative: These are generally open discussions where people talk about your product/service, what they like or don’t like, would they be willing to buy it, and more.

While both are good, qualitative research generally requires more money. If you’re low on resources or just want a bunch of information for cheap (or cheaper), surveys and quantitative research might be the way to go.

Step 4 – Build Psycho/Demo Models

Once you have all the information, it’s time to build your models. Customer models are a great way to get a clear picture of your new customers, what they’re looking for, and what kind of income level they have.

It’s taking that picture in your mind and bringing it into reality. The results may surprise you. You may find that your ideal customer, the one who resonates most with your products or services, has different demographics than you thought.

For the demographic profile, you want to look at several factors.

  • Age
  • Sex
  • Location
  • Income level
  • Marital status
  • Occupation
  • Ethnic background

For the psychographic profile, you’ll want to look at less about dry statistics and more about what makes them them.

  • Values
  • Attitudes
  • Behaviors
  • Behaviors
  • Lifestyles
  • Hobbies

To form these profiles, you’ll need to have included items in the survey that bring out this data.

Once you have the profiles, you’ll be armed with information needed to expand your market and finding your new customer base.

Step 5 – Ask Yourself the Hard Questions

You’ve analyzed your business. You’ve looked at your competitors. You’ve done the research. You built models of your customers. So, what do you do now?

Before you jump into your marketing strategy, before you start making those phone calls, before you put together that new sales funnel, ask yourself the hard questions.

Is my new target market large enough? If it’s not large enough, you may not make enough profits or be able to grow once you’ve grabbed a market share.

Is my new target market specific enough? If a target market is too large and not specific enough, you run the risk of sending out a broad, general message but not really engaging a large portion of your market.

Have I ignored any niches? Niches are beautiful in this world of fragmented and segmented markets. Ask yourself if you’ve missed any, ones that your competitors have missed as well.

Do I really understand how I’m going to reach them, if they will be engaged, if they can afford my product/service? Knowing all those are the nuts and bolts of your new market. Without knowing these things, it’ll be like throwing darts blindfolded.

It is Worth the Effort!

Owning and running a small business is difficult. The hours are long, sometimes consistent 18 hour days, and they are built on a belief that your business will succeed, in a future only you (and perhaps your employees) can see.

When you’ve hit that limit and feel you’re trapped in your market segment share, it may be time to reconsider who you’re trying to reach and expand your customer base. This comes through identifying and advertising to a new target market.

Hopefully, these five steps have helped.

We want to hear your thoughts and any ideas or processes that have worked for you. Leave a comment in the box below.

Author Bio: Chris Tepedino is a writer for He enjoys all aspects of the frozen margarita, dancing to the beats of cumbia, and the occasional misadventure in research. His other works can be found on the Internet.

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