Knowing Your Customers The key to products, services, promotions and organizations that work. By: Dr. Gerry Faust

The day of the mass market is more or less gone in almost all industries. If there is a driving force in today's markets it is that people know what they want and they are looking for it. They are even willing to pay more to get products and services that are designed just for them. The key to understanding customers is to realize that they are divided into markets. Markets are groups of people (or businesses) that share similar needs but also have needs that are different from other groups. The key to understanding markets is to understand what they want, what they need, what they value and how they are different from other groups so you can give them something special--just for them.

Markets can be defined on multiple dimensions. For example, different age groups can be different markets. Baby boomers (age 33-51 today) are different from the echo boomers (aged 3-25 these are the children of the baby boomers). They want, need and spend their money on different things. But, you can cut across these differences in age to identify markets, such as the health conscious, the price driven buyer, outdoor enthusiasts, ethnic groups, those with incomes above $50,000, etc. Whenever you identify a group with distinct needs and different buying logics you have different markets and the opportunity to create more efficient, focused marketing efforts and special products and services that will attract and provide added value to those markets.

Some markets are more valuable than others are. Obviously, markets that contain people/companies likely to spend more with your organization may be more valuable to you.

Dominos Pizza® identified a number of national trends. For example, several years ago they realized time is becoming a more precious commodity than money to many people. People are often too busy to cook but would often rather have hot food at home than to go through the trouble of going out to get it. Pizza is growing in popularity, especially for young people. Dominos created a product and service to meet these needs and then identified locations where people with these needs were concentrated (college campuses and military bases) and a multi-billion dollar business developed. By the way, as the young people (baby boomers) grew older, they took these needs and tastes with them and the high value locations for Dominos expanded.

Customer research, not customer satisfaction research is the key to identifying your markets and customizing promotions, products, services and facilities for them. Customer research involves learning what people like and don't like what they value most, and how they would like to see you change. When customer research focuses on specific markets (e.g. is done using seniors, then baby boomers, then echo boomers), it is even more helpful. It helps you identify what you need to do differently to get your message to, attract, and keep those specific groups as customers. When you summarize data about needs across markets (e.g. use broad random samples), you often wash out the richness and often the potential marketing insight value of that data. Customer satisfaction research helps you understand whether people were generally satisfied or dissatisfied with your service, product or facility, but seldom gives you enough information to make them much better. And, research has shown us that customer satisfaction research can lull us into a false sense of security. Even customers who say they are satisfied may leave you. Customer satisfaction does not ensure customer retention.

Meet the Echo Boom

The echo boom 57% of whom are under 15 is making itself known as it is now causing overcrowding in elementary schools and sell outs of "favorite toys" (remember "Tickle Me Elmo") each Christmas season. Children have always been an important target market and now that group is growing fast. The Echo Boomer will drive economics in the U.S. for the next 50-60 years. Getting these kids to be avid health club enthusiasts would have a major impact on the industry market share well into the next millennium.

Time and money are two major drivers in leisure and recreational activities and time is growing in its importance. Today's families are more time starved than ever. Recent studies indicate that 60% of children live in households with two working parents. Children spend their days in school or child care and after school programs including sports. They generally spend more than eight hours a day away from home. Parents are struggling to fit their careers, parenting, home tasks, relaxation and personal time into 24 hour days. In a recent survey 21% said they feel they don't have time for fun anymore and 38% say they are cutting back on sleep to make more time for other things. The value of relaxation and quality family time together is increasing dramatically.

The Echo Boom is different from the Baby Boom in may ways. One key difference is ethnicity. Today about 33% of children in school are African American or Hispanics. And the percentage of Asians is growing rapidly. Asians and Hispanics represent a promising market for those who offer family activities because of their emphasis on family and family activities. Hispanics and Asians are part of the dying culture of "nuclear families", meaning families where grandma, grandpa, mom, dad, kids and sometimes aunts and uncles, all live together. It is very important in these families to do activities together. In 30 years, minorities will approach majority status among young adults while older populations will remain mostly Caucasian

A forecast of the United States' population trend

Age	Total	post boomlet	baby boomlet	baby bust	baby boom	pre boom
1995	--	--	19 to 30	19 to 30	31 to 49	50 & older
2005	--	under 10	29 to 40	29 to 40	41 to 59	60 & older
2015	--	under 20	39 to 50	39 to 50	50 to 69	70 & older
2025	--	under 30	49 to 60	49 to 60	61 to 79	80 & older
number
1995	262,754	--	44,603	44,603	77,587	68,339
2005	286,324	38,241	46,264	46,264	76,476	49,247
2015	310,370	82,280	46,788	46,788	72,744	30,430
2025	334,216	129,872	45,452	45,452	64,740	14,330
percent of population
1995	100%	--	17.0%	17.0%	29.5%	26.0%
2005	100%	13.4%	16.2%	16.2%	26.7%	17.2%
2015	100%	26.5%	15.1%	15.1%	23.4%	9.8%
2025	100%	38.9%	13.6%	13.6%	19.4%	4.3%

About Gerry Faust