Who are your customers?

I didn’t know this when I first started working as a consultant — and nobody was kind enough or smart enough to tell me — but I’ve always had very specific target customers, a very specific “target market.” For instance, I tend to work on large projects, where the smallest project might cost a client $50,000, and a large project will cost several million dollars. Therefore, my clients must generate enough revenue (profit, actually) to be able to afford these prices.

So, even though I love things like ice cream and wouldn’t mind spending a lot of time in an ice cream parlor, it doesn’t make sense for me to spend a single minute targeting ice cream stores in my advertising: They can’t afford me. I need clients who have problems that will cost at least $50K.

As you can imagine, there are many other ways to classify potential clients. A divorce lawyer won’t have any need to advertise to businesses. A business accountant may not work on personal taxes. A real estate agent who sells million-dollar homes will have a limited audience.

Market to your target customers

Once you know who your target customers are, you’ll have much more success selling your consulting service. When I opened my small consulting business in Alaska, I was able to easily find information about potential clients based on my “ideal customer.” I got lists from the Chamber of Commerce and other sources, whittled the list of potential clients to about 100 companies, and I targeted those companies with postcards and other forms of advertising. While I eventually had to move back to the “Lower 48” for family reasons, I received enough feedback from those prospects to be very happy with my efforts. (In fact, they continue to contact me even though I now live in Colorado.)

In essence, I maximized my advertising dollars by spending wisely. I didn’t waste time trying to market to people who couldn’t afford my services.

Understand why customers hire you

A related part of this discussion is that you need to understand why people hire you.

If you provide a business accounting service, that may be easy to understand: Small businesses need accountants, but they can’t afford to hire them full time, so they typically have one or more bookkeepers on staff, then hire an accounting consultant on a part-time basis to make sure their books are correct, especially at the end of year and tax time.

When I provide a computer programming service, I know people hire me for these reasons:

• Smaller organizations may have no programming expertise at all, but they need to have custom software written to help run their business.
• Larger organizations have existing programming expertise, but they may not have enough people on staff to handle new projects.
• Larger organizations may have programming expertise, but they may not have the specialized expertise I offer. For instance, right now I now how to write in a new programming language named Scala, and I can also write apps for the Android platform. These are new technologies that some programming staffs may not be able to handle.

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This seems like basic knowledge to me now, but when I first started in the consulting business I had no idea why people hired me, I was just glad to have some work. Fortunately I learned this lesson before I went broke.