Often when businesses take time to set a plan for their SEO and search engine marketing, they focus more on the “what” and not on the “why”. It’s tempting to utilize “what” is the latest in search engine ranking techniques and social media channels, but these are secondary to understanding “why” customers are searching for the products and services they need. Without understanding the “why”, your business can spend time and money only to miss opportunities to connect with profitable customers.
The Pareto Principle
You may be familiar with the Pareto principle, aka the 80 / 20 rule. Developed by a business-management consultant and named after an Italian economist, the principle evolved into a common business rule of thumb that basically states 80 percent of your sales will come from 20 percent of your customers.
Not All Customers Are Good Customers
When it comes to profitability, the numbers can be even more skewed. Case in point, Robert S. Kaplan, a professor at Harvard Business School, released a study “A Balanced Scorecard Approach To Measure Customer Profitability”. In it, he states, “… 15 percent to 20 percent of the customers generate 100 percent (or more) if the profits. In this case, the most profitable 40 percent of customers generate 130 percent of annual profits; the middle 55 percent of customers break even, and the least profitable 5 percent of customers incur losses equal to 30 percent of annual profits.”
Market Research Makes the Difference
Customers and markets are constantly evolving. New needs or wants arise. New products, solutions and competitors enter the market. How are you staying in tune with “why” your customers make the buying decisions they do? Knowing their “why” affects everything from the products and services you choose to develop, the prices you charge, the marketing message your deliver, the marketing channels you use to reach them, and the keywords that will get you ranked when they go searching.
All the Best,
The Solopreneur’s Guide