Investors’ Best Customers
{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to Amazon.com and enter inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}
How to Have Easy Sales, Gel Factors, Part 2
What makes some inventors succeed while others fail? Success isn’t always a case of having the best product or the best strategy; often the difference between a successful inventor and an unsuccessful one is that one inventor chose a market that has outstanding characteristics, or what Don likes to call them, outstanding GEL Factors, (Great customers, Easy sales and Long life), while the other did not. If your idea isn’t targeted for a market with excellent GEL factors, you will have trouble introducing your idea and should consider trying a different idea or market. To learn more about GEL factors look into Don’s book Business Models Made Easy, (Entrepreneur Press, 2006).
In this three part series, we will discuss Don’s innovative business model evaluation method and show how you can tweak your existing business marketing approach or how to create a brand new one for your product that will be successful.
Inventor Story: Dr. Mary Burns
Mary Burns created the pet fountain, a product that went from introduction to over $3 million in sales in just a few short years and is now featured in PetSmart, Petco, independent pet stores and many mail order catalogs — a tremendous success. Burns started just looking for a solution to stop her cat from drinking out of her faucet. Her cat liked fresh running water and nothing else would do, and when her cat Buckwheat wanted water in the middle of the night, Burns had to get up to run the faucet.
Burns started with a crude model which just used an aquarium pump to bring water to the top of a small waterfall that the water then went down. The pet fountain aerated the water, which made it seem fresh to Buckwheat, and Burns decided to introduce the product with a few ads in Cat Fancy, Cats and I Love Cats. Before she knew it, catalogs were calling her to carry the product and when she promoted her product through Pet Age, the industry’s major trade magazine, Petco picked it up and sales have just zoomed up ever since.
Burns had a great product idea, but she also had a great customer group. According to Packaged Facts, an industry research group, “A growing share of the $47 billion pet market is shifting to ‘uber owners’ who make big money and spare no expense for the ‘functional pampering’ of their pets.” Products are being made to resemble those for humans. Humanization is fueling consumer demand for premium products and services, including those bearing familiar brand names crossing over from the human side.
Some additional facts about the Pet Industry according to FletchingCommuntications.com
- Pets can be found in more than 63% of all US households; interestingly only 34% have children.
- 80% of people call themselves “pet parents”
- According to the U.S. Census Bureau, the pet industry is now the seventh largest retail segment in the country.
- After consumer electronics, pet care is the fastest-growing category in retail, expanding about 6% a year.
- 42% of dogs now sleep in the same bed as their owners, up from 34% in 1998.
What makes them Great Customers?
The pet industry is a great market as there are large numbers of pet owners and they are becoming more dedicated to their pets, and they just keep spending more and more money. A market like the pet market has many advantages, first stores and catalogs are constantly looking to expand the number of pet products they carry, consumers keep looking for new products, and the market usually sustains high prices with strong margins for its participants.
When you look at your product there are four main points to consider:
- The number of customers
- How easy they are to find
- How willing they are to spend
- Ongoing sales support
The number of customers
The first important element for great customers is the number of customers. This means that there need to be enough people who can find your business and buy your product, either once or repeatedly, to support you and your business. So this number of people will be different for every product.
The number of customers you will need will depend on a few factors. First, the price of your product will determine partially how many customers you need. If you have an inexpensive item, you will need to sell large quantities to cover your expenses and give you a decent income. But if you sell very expensive products, like for many thousands of dollars, you may only need to have a few customers per month. So with your price you should be able to determine how many customers you need, then see if there are that many customers that are easy to reach.
The second factor for determining the number of customers you will need is how consumable your product is. Will people buy one product per lifetime? Or will they need to keep on purchasing your product every year or two? If your product will require repeat sales, you will need fewer customers, but if they just make one purchase per lifetime you will need many more customers. The pet industry is the best of both worlds: you have many, many customers willing spend lots of money on products for their pets and many of the pet products need to be purchased repeatedly.
Easy to Find
The second element for having great customers is that it is easy for them to find you, or less ideally for you to find them. Great customers will search you out or belong to clubs or organizations that you can advertise with. Sometimes they will frequent stores with products of similar interest or go to trade shows. The idea is that you won’t need total saturation in the consumer market to find your customers, but rather there is already an easy way to find them. Pet owners regularly shop at pet stores and so they are easy to find because they are always looking for new products and in effect they find you.
Spending Patterns
The third element for great customers is spending patterns. You don’t need customers that are free spenders, but you do want them to spend freely on products like yours. Most people don’t spend freely in every area of their life, but everyone has at least one area where they indulge, even if only a little. For instance, many people who buy organic food aren’t big spenders in other areas of life, but they are willing to pay large amounts for natural food. Similarly, some people will spend freely on clothing and furniture, but always buy inexpensive food. You want your customer group to spend freely on your product. Often, the purchase will be an impulse buy or an emotional buy. You can make nearly any product into an emotional buy for some consumer group just by appealing to something that is important to them like losing weight or being thrifty. Pet owners, especially “Uber Owners”, have strong emotional attachments to their pets and are willing to spend freely.
Ongoing Sales Support
The fourth element for great customers is ongoing sales support. Having a low amount of ongoing sales support will save you a huge amount of money. If your product absolutely needs to have ongoing sales support, you will need to make sure your profit is high enough to cover it. Pet equipment like the pet fountain is ideal because it can be sold in a store with support offered by the store, if any is required at all, and provided the manufacturer produces a quality product, very little after sales support is required.
Just having one of the four elements be off kilter will prevent you from having great customers. Be sure to read the next articles about Easy Sales and Long Life.
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