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.

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.