National Clothesline

he reason most businesses never become Big Businesses is because they don’t follow the same practices that the large operators do. The most important thing they overlook is planning.

Most small businesses are reactive rather than proactive. That is, they take a punch in the mouth before they hit back. More specifically, they wait for a competitor to move onto their turf before they develop a marketing plan.

As a general rule, the guy that lands the first solid blow wins the fight. Just like a boxer needs to train, in business this takes planning. You’ve got to know what you’re doing, where you’re going and how you’re doing while you’re getting there.

What do you need to know about your current best customers in order to find others like them? Answer: geographic location, demographics and purchase history.

• Geography. It’s no secret that people usually live in neighborhoods of people like themselves. Geographic location analysis reveals clusters of people with similar demographic characteristics. These people generally share similar purchasing habits.

• Demographics. Consumer behavior varies with age, sex, education, income, occupation, etc. These are typical demographic parameters that describe a customer.

• Purchase history. When did a customer last visit your store? How often do they come in? And how much do they typically spend? You will be able to divide customers into basic categories like good, better and best on the basis of how recently they’ve come in, how often, and how much they spend. When you combine what you know about current customers with the information available about geographics and demographics in your trade area, your search for new customers narrows in on those most likely to be profitable.

Years ago, Stan Golomb suggested that cleaners could find where their customers were coming from by placing a map on the wall with the location of your store clearly marked, or simply draw a cross, with your location at the center, where the lines cross.

He suggested that you ask your customers to make a mark approximately where they live, in order to get a fix on the geographic areas your customers are coming from.

Building on that premise, I suggest that you give different colored markers to customers who spend different amounts. For instance, if a customer generally spends less than $25 and only visits once a month, on average, hand them a black marker to show where they live. If another customer spends between $25 and $50 per visit or comes in more frequently (like once a week), give them a blue marker to use. And customers who spend $50 to $100 per visit, can be handed a red marker.

This kind of basic “geocoding” will provide you with powerful insight into the lifestyles and whereabouts of your most profitable prospects.

The next step is to determine the potential market for your services, then determine what share of the market you are now enjoying. From that figure, determine how much more of the market should be available.

This is easier said than done. However, Bill Bishop, here in our office, has developed a formula to determine each area’s drycleaning potential, based on certain categories within the Purchase Potential Index complied from current U.S. Census Department figures.

“The spending habits of the residents in any given market say volumes about what they could be expected to spend in your business,” according to Bill.

One factor he looks for is a high index in apparel spending.

“Naturally, what is purchased needs to be maintained in some way. Generally high numbers in the other categories almost ensure that the area is going to be good for drycleaning as the preferred method of maintenance.”

Based on comparisons with other drycleaners in similar markets, we are able to estimate a “drycleaning potential” for any location in the country.

Bill also says, “Considering that the average cleaner gets about 80 percent of its business from within two miles and the rest from beyond… you have an 80 percent market potential. Depending on how many competitors you have and where they are situated in relation to your location, you’ll be sharing a certain amount of this potential with them.”

By combining these three factors — geography, demographics and purchase history — you can then focus your promotional plans on customers and prospects who are most likely to be profitable to you.

Dennis McCrory is president of The Golomb Group Inc., a firm that designs marketing programs for drycleaners. Contact him at The Golomb Group Inc., 7664 Plaza Ct., Willowbrook, IL 60527 Tele: (800) 679-5856 E-mail: dennismccrory@golombgroup.com