Quit Worrying About the Size of Your Marketplace
When I consult in communities around the country, I often hear business owners say things like: “My marketplace is too small”, or “There aren’t enough of my type of customers around here to support my type of business”, or “When more people move here, my sales will improve.”
When I hear words like these, I realize that the owners I’m talking to have not embraced the idea that their business can become a Destination. Instead, they are running a business that is location-dependent.
The truth is that no one can accurately measure the financial potential of a community today, and where your business is currently located does not have to limit the sales your business generates.
As for measuring the potential of your demographic area, an accurate measurement of its potential cannot be done. Sure, I know that there are really smart people out there who can run demographic numbers that show the statistics of a marketplace. But the problem is these statistics then are correlated to the potential dollars that can be spent in that same area.
Unfortunately, these studies do not take into account the potential impact of a business that makes itself a Destination, a business that is so decidedly different that it consistently pulls consumers from outside its marketplace. In fact, every analysis of every marketplace focuses on who is living there, not the potential spending power of everyone who could buy there.
Here’s why any analysis of a marketplace falls hopelessly short of the real potential of an area: Let’s start with every shopper who is walking around with a credit card, giving that customer exponential spending power. Do you accurately know the spending power of the customers who walk in your doors? You can guess, but you’d be wrong. Even in today’s economy, some of those credit cards are still tied to home mortgage lines-of-credit, and even though credit card spending has declined, some consumers still have gargantuan impulse- buying power.
Then, there are the tourists, who also carry credit cards, who visit your area, and these consumers are never measured or factored into traditional statistics. Plus, studies don’t take into account consumers from cities outside of the traditional 15 miles who don’t think they can possibly find what they are looking for in their city, so they drive somewhere else, thereby participating in Road-Trip Retailing. And studies don’t take into account the spreading of the wealth that occurs when consumers in your city, who logically should buy from your business, drive illogically away to spend their money elsewhere.
Now, I haven’t mentioned consumers who spend money over the phone, via catalogs, with infomercials, on the Home Shopping Network, or via the Internet. Those numbers cannot be accurately measured; they can only be guessed at.
And let’s not forget those consumers in your city or town who walk in, and say, “We’ve lived here 20 years and we never knew you were here.” Suddenly, your business has discovered incremental business in your backyard. And remember: Don’t slap that walking-around-in-a-daze, advertising-avoiding, living-in-a-vacuum consumer. This person is your neighbor!
Add all these groups up and even the smartest statistician can’t tell you the potential spending power that you can capture from the consumers who you could lure to your business, IF you were marketing your business as a Destination.
Here are 5 simple tips that should give you piece of mind about the potential of your marketplace:
- Worry less about the limits of your immediate demographic area.
- Focus more on creating a business that is so different, that you literally remake the demographics of your marketplace, and the share of it that you claim for your own.
- Don’t simply focus on the consumer walking down your street, or driving by. Focus on a consumer hundreds of miles away, and make your business so different that this distant consumer longs to visit your business in person. If you position your business to capture that person and keep him or her interested, the ones walking down the street will be easy to pull in.
- Think about attending our Destination BootCamp and learn how to reposition your business into a Consumer Destination.
- And one last thought: Your “marketplace” is always larger than you can imagine, and most of us don’t imagine large enough