Understanding Your Ideal Customer
Understanding Your Ideal Customer
In this, The Faces of Business episode, Tom Herman, Founder, Veda Intell, shares his expertise on Understanding Your Ideal Customers for improved marketing, innovative business strategy, and increasing business growth.
Veda Intell helps entrepreneurs develop an executable business strategy and decision-making based on qualitative and quantitative data. Tom has held many key positions in market research and location intelligence since 1990.
Tom founded Veda Intell in 2020, believing that many aspects of business are beyond the control of business owners but how well they understand their customers is something they can control and is essential for business success. Veda Intell’s objective is to help businesses build a foundation of consumer insights to support more intelligent marketing, decision-making, and growth.
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Damon cordially welcomes Tom, the guest, to this show. The host wishes to know about the guest’s background. The guest describes that he has always been curious since his childhood. He studied economic geography in college. He thinks economics combines “all different aspects of what makes the world work.”
Similarly, business, sociology, anthropology, and psychology made him understand how things work worldwide. He did a master’s in Analytical Geography from Binghamton University.
At twenty, his first job was to analyze store location research, including making a sales forecast. This set the stage for the rest of his career, where his role has always been to support decisions and strategies with information. For the last thirty years, he has aimed to reduce risk and maximize return.
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As of now, he is an entrepreneur.
Damon thinks that location surveying in the retail business is a huge thing. He wants Tom to talk about the location understanding.
He believes retailers like Walmart, Toys” R” Us, and Sears have significant real estate experience. This asset is marketable, especially for retailers that own real estate.”
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The host is curious about the factors leading Tom to start Veda Intell.
Tom describes that Veda is his second market research company. The first one he started in 2000. Over his career, Tom noticed that leaders needed to know their customers more.
So Tom wanted to start a customer-oriented company and set aside the location research.
If the business owner understands their customer, everything becomes easier. Harder if they don’t. So, “VEDA Intell’s mission is to help companies understand their ideal customers better so that they can serve them better.” Tom believes that customer understanding is the foundation of all businesses.
Damon asks Tom about the merits of understanding our ideal customer.
“It’s a continuous process” because things are constantly changing. Tom answers. We, however, have to start somewhere. Tom believes that well-begun is half done. “Starting is getting your ideal customer profile nailed down.” The ideal customer profile is one thing, but we can have a customer feedback program after every sale.
Tom regrets that “most companies don’t have that foundation of customer knowledge” that they need to have in place to support their operations. To him, it is the “right place to start.”
Damon invites Tom’s comments on the vision of Veda Intell.
While talking about it, Tom addresses some of the most commonly held misconceptions. Firstly, most people associate customer research with marketing and sales. Customer research affects every area of the company. Knowing a customer is essential to serving them.
Tom argues that if a customer goes to an airless paint website that doesn’t tell the consumer what that product means to them in terms of making their life easier, “it’s kind of a miss.” Delivering relevant messages can help boost airless paint brush sales.
Together with marketing and sales, this research helps a business in customer service, product development, and strategic planning. Tom has termed this understanding as “customer clarity.”
Avoiding customer research is a red flag. Not having enough information will cause problems that will create organizational stress.
Veda Intell provides business owners with strategies and tactics. They help businesses to locate their ideal customer so that they can serve them.
Tom talks about leadership as well. A leader’s main job is to create a vision for the company and then support the team in achieving that vision. It includes providing the team with the resources. And one key component is customer intelligence, “that’s necessary to support that effort.” Its absence can fail leaders.
Tom shares a workable tip for understanding customers. Solving a customer problem in their language is the most crucial thing. “It does more than that for your customer.” With that knowledge at hand, we can communicate with them effectively. This aspect needs to be added to the visions of many businesses, or if they do, they don’t use it to their benefit. They themselves don’t understand the significance of their products for their customer.
Damon agrees with Tom, saying, “people in a certain industry use acronyms and lingo and other things.” As a result, their customers may not even understand what they’re saying.
Tom believes that doing periodic check-ins with customers is a must. Businesses think that their customers are changing. Tom contradicts this, saying the markets are changing. They need to keep in touch with their customers to find out what they’re thinking and how they’re behaving.
Damon asks the guest to tell the audience about the challenges he has faced.
He recounts that recently a company reached out to him, and they created a copy of the software. Its people were convinced that the app was going to change the industry. But unknowingly, they were pitching it to the wrong market.
Tom investigated the matter and discovered it wasn’t a product issue. “It was a positioning and sales issue.” Despite its great utility, they pitched it to the end user, who wanted to avoid another piece of software to learn. “That was an interesting eye-opening situation.”
Damon adds that not knowing the right customer “could waste 10s of millions of dollars pretty quickly.”
Tom discloses that getting information and delivering results to the client is excellent.
Damon asks Tom if businesses across the US have become accustomed to understanding the customer. Tom says that all big and midsized companies realize its importance. While small businesses often need to pay more attention to this vital aspect to boost sales. Those, who need it most, ignore it. The host finds this situation somewhat ironic.
Tom argues that spending thousands of dollars on marketing and product promotions won’t fetch the desired results unless companies “pause for forty-five days” and get the required information. Doing so will surely add lifetime value to their work. Damon thinks that this practice can also increase the conversion rate. Tom further adds that the better they understand their customers, the more chances they will have to retain them.
Tom raises a similar point, saying that a company often thinks its competitors have a similar product or service and sell it. But they need to realize that many other methods exist to achieve better results. He advises a company to conduct a competitive analysis to outperform its direct or indirect rivals.
Damon passes concluding remarks, saying Tom has dropped some real nuggets about why we should understand our customers for our business to help you be more successful.
The discussion ends with Damon thanking Tom for his indispensable insights and precious time.
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Damon Pistulka, Tom Herman
Damon Pistulka 00:01
All right, everyone, welcome once again, that means the business we’re back, we went live before and some snack food in the software. So we set up another event and we’re back in here. I’m happy to be here today. I’m really excited, because we’re gonna be talking about understanding your ideal customers with Tom Herman Herman from VEDA entail. Tom, welcome for being a thank you for being here today. First of all, go, I’m all messed up from that little snafu.
Tom Herman 00:28
Hey, that’s all right. Yeah, thank you, Damon, for having me on the show. I’m excited.
Damon Pistulka 00:32
Oh, this is gonna be fun. Because I tell you what, if there’s anything that I understand, it’s how little we really know about our customers.
Tom Herman 00:42
Yeah, unfortunately, that’s true. Yeah,
Damon Pistulka 00:45
yeah. So Tom, let’s talk a little bit first, first of all, let’s talk about your background, because you’ve been in market research and doing this a long time different companies. And so what’s, what really got you interested in this?
Tom Herman 01:03
You know, I think I’ve thought about that. And, you know, I was the curious kid growing up much to my parents, that they were probably upset with me alive for asking why all the time. But I need to know what, you know, why things happened the way they did and all that. So I was always that kind of kid and then got into college and took a class called economic geography, which was this, you’re just a an elective that I didn’t think much of I thought I had to check off.
And it was the most amazing class in that it combined all these different aspects of what makes the world work, which is economics, you know, business and sociology and in anthropology, even and in psychology had brought everything together to really explain to me or at least in my mind, how things worked across the world, and why things were the way they were. And that just kind of opened up my mind to, you know, business and economics and all different things like that. And I ended up going to graduate school for research.
And my first job out of grad school was working for a publicly traded retailer here in central New York, doing store location research. So my job was to analyze locations for retail stores, which you included coming up with a sales forecast that I had to defend in front of a real estate Committee, which included all the shareholders of the company, and it was, you know, pretty terrifying for, you know, mid 20 year old kid. Yeah. But the sales forecast was the basis for the go, no go a decision.
And if it was a go, it was several million dollars of investment between the store build the inventory and the staffing. So it was an eye opening experience in probably the best first job that I could have ever hoped for. And it had set the stage for the rest of my career where, you know, my role has always been supporting decisions and strategies with information. So all for the purpose of reducing risk and maximizing return. So, you know, it’s really, it’s been a career of, you know, 30 plus years at this point.
And I, I feel really fortunate I have a lot of friends that I know, you know, went to college and then ended up doing something that they didn’t really love. And I can’t say that I everything that I’ve done in my career. I’ve just been so happy to do and that’s it. It’s been great. Yeah. So also along the way, I’ve, I started a couple of companies. So I I’ve been an entrepreneur as well, and I am now obviously so it’s been it’s been a really fun ride for sure.
Damon Pistulka 03:48
Yeah, yeah. So a master’s in analytical geography. That’s it. You don’t hear that often. That’s cool.
Tom Herman 03:58
Yeah. And in fact, the where I went to college Binghamton University, the my professor, my advisor was very well known in the retail geography world and that’s he was instrumental in me getting my first job because he he knew the company and the person that hired me so I had his recommendation to get that job so just you know, a bit of great luck and good timing, I guess which I guess everybody needs Yeah,
Damon Pistulka 04:25
you get that? That doesn’t hurt. That doesn’t hurt. It’s hard work after that is what keeps you in it, but you brought up store location research. That’s it. That was you know, if you look across time in the US at some of the great expansions, whether it’s a Walmart, which everybody sees and then Walmart within the Walmart, it’s Walmart itself with the different size of foreign store formats are you look at now in the news, we talked about the Kroger slash,
what is it Albertsons merger they’re talking about, you know, our CV As or Walgreens or the dollar stores, this happens in industry in retail industries like this, you know, it does, it could be some that are gone. Now the blockbusters at Toys R Us is or, or Sears or something like that or just, you know, about anything, isn’t it really just that that location understanding that and retail is a huge thing?
Tom Herman 05:26
Yeah, I mean, we’ve seen retailers, you know, go under, but they had great real estate. So they, you know, they do have that asset that is marketable after the fact and especially for the retailers that own their own real estate, it it can be some sort of a constellation, I suppose, at the end of the day, if they chose great real estate, you know, yeah.
Damon Pistulka 05:45
Yeah. And that’s, that’s one of the things too is, is you had to defend the sales projections, that that had me like you said, at your age at that time, that had to be an interesting thing to be able to do.
Tom Herman 06:03
Yeah, because you not not just the number, but how you arrived at the number, we’re talking about the competition talking about the size of the trade area you defined for it? And why did you define the trade area the way you did? Because if you get that wrong, then everything trickles down from that is wrong. So yeah, it’s it was it was scary. It took a while to get comfortable and not. You have anxiety attacks every every day, you know?
Damon Pistulka 06:29
Yeah, yeah. So what, what then, as you as you went along, what really prompted you to go out and form VEDA?
Tom Herman 06:42
Well, this is my second market research company. The first one I started in, right around 2000, with a good friend of mine. And he still runs that company, I left it to to do something else. But that was a general rockery, that is a general market research firm. And over my career, that the one thing that I’ve noticed, over and over is that leaders don’t know their customers well as they think they do.
And certainly not as well as they should know them. So I really wanted a company that focused on the customer, first and foremost, and set aside the location received research from my past, set aside the feasibility study work, and other types of market research that I’ve done in my past, and really focus on the customer.
Because I think that’s the one big thing that every company has to get, right. If you get that right, everything else becomes a little bit easier. If you get it wrong, everything else becomes a lot harder. So VEDA Intel’s mission is to help companies understand their ideal customers better, so that they can serve them better.
So that’s the idea behind it. And so there’s really only three things that that the company focuses on, first and foremost, customer research, understanding a company’s ideal customer, and then win loss analysis, which is helping companies understand why they win business, and why they lose business so they can win more and lose less.
And the third thing is competitive analysis, because you need to understand the market you’re operating in, and the competition you’re facing and where you stack up in that hierarchy of competition and how you stand out. Most importantly, so yeah, those are the three things we focus on. But the first, the first thing the foundation of all of it is is the customer understanding. Yeah,
Damon Pistulka 08:29
yeah. So this is cool. And yeah, because if you get that, right, like you said, a lot of other things get easier. Or maybe not easy. But here. Yeah. Yeah. So when you’re when you’re doing customer research, is this something that’s usually like a one time thing?
And you’re out and doing this? Or is it something like, people want to research the customer and they research certain aspects today, and we maybe go back and search different aspects tomorrow. explain this a little bit more, some of the typical kind of things that you’re doing around customer research?
Tom Herman 09:15
Yeah. So ideally, it’s a continuous process. Okay. It’s, it’s not a one, a one and done type thing. But you have to start somewhere. Yeah. And, you know, the place that I always recommend starting is getting your ideal customer profile nailed down as in as much detail as you possibly can. But you’re right. It’s something that needs to be done over time. Because things are always changing. You know, you really need to be doing this consistently over time.
So and that can take lots of different forms. The ideal customer profile is one thing but you can have a customer feedback program where after every sale you’re sending out, you know, a survey of some sort where you’re you’re getting During feedback, there’s lots of different ways you can do it. But you have to start somewhere. And unfortunately, most companies really don’t have that foundation of customer knowledge that they need to have in place to support their operations. So that’s really the place to start.
Damon Pistulka 10:19
Yeah, and one of the things I noticed as I was going through your website, you made the you make the point of how I’m gonna get to that spot. It’s, it’s how it helps across the organization. Can you keep talking about that? Because everybody thinks about customer research, they think about sales. And that’s important, right? Yeah. But yeah, talk about the organization overall. Yeah,
Tom Herman 10:49
very true. So most people associate customer research with marketing and in sales, but it really affects every area of the company, just about if you think about how do you serve your customer? Well, if you don’t know them? Well, you know, so it comes down to not just marketing and sales, but customer service, product development, strategic planning, it’s really such an important aspect of what a company does, then if you don’t have that, right.
So I call it customer clarity is what I refer to customer clarity is understanding who your ideal customers are, what makes them tick, and why they buy, why they behave the way they do. And most importantly, why did they buy from you in remain loyal to you, if you know those things, again, things get a little bit easier. If you don’t know those things.
To me, it’s a red flag, because not having that information is going to cause problems downstream, that will create organizational stress. So you’re gonna have your marketing department arguing amongst themselves about who, you know, what are we supposed to be saying to our customer? Who is our customer? You know, what’s the what’s the right approach? What What strategies and tactics should we be using?
That’s like, the worst thing you want, as a leader of an organization is to have, you know, that type of misalignment internally over, you know, the who the ideal customer is, and how are we pursuing them in servicing them. So it’s really something that, you know, I say this, I don’t mean to be harsh, but it’s really a leadership issue. Because leaders, you know, a leaders main job is to create a vision for the company, and then support the team in achieving that vision.
And that includes doing providing the team with the resources, they need to do their job to get to that vision. And one key component is customer intelligence, that’s necessary to support that effort. And if that, if the team doesn’t have that customer intelligence, then that’s a bit of a leadership, you know, failure, really. So you really want to give your team the best chance of reaching the vision that you’ve set for, for your team.
Damon Pistulka 12:56
Mm hmm. So that’s awesome. First of all, that’s awesome. Because it is a leadership thing it is, because if that leader can understand that have that customer clarity, I love that that phrase, has the customer clarity, when they’re thinking about the vision, they can consider the customer much more fully and, and develop a lot better vision? Overall?
Tom Herman 13:24
Right? Yeah. Ideally, you have the customer work done in conjunction with creating your vision for sure. So yeah,
Damon Pistulka 13:33
yes, that’s something. So what’s the big deal? First of all, what are some of the uses that you’ve seen of this data that people wouldn’t think about? They were like, Okay, that’s cool. I never thought of using my customer data like that my customer research data and those kind of things.
Tom Herman 13:57
I think that the most fundamental use is to really understand what problem you’re solving for your customer in their language. So it’s one thing to say we make this thing and it does this, it serves this purpose. But it does more than that for your customer. It solves a problem, it makes their life or their job easier. And you got to understand that because that way, you’ll be able to communicate that to them. So that they really saw it resonates with them. I think that’s that’s a big one that I think is is missing out and you look at websites have a lot of companies and it’s really clear that they don’t know.
Or if they do, they’re not you they’re not using it to their benefit. They it appears that they don’t know what their product means for their customer to their customer. So it again, if you can pull up a bunch of websites just randomly and see what they’re saying and have a good sense of do these. Do they really know who their customer is? And do they know what they’re or product means to that customer in their language. It’s yeah, it’s rare that a company is using their customers language effectively, when they really should be.
Damon Pistulka 15:13
Two other great points there, you just made that the thinking about as as processing that they, you know, with that knowledge that it can explain the big picture problem, because it’s not like, you know, I have, you know, if I’m making an airless painter that I can make the homeowner be able to paint their house that much faster if they want to, or something like that.
But it’s, it’s about creating a beautiful living environment, or however that customer decides that they feel because of the product, or service that they’re getting.
Tom Herman 15:45
Yeah, exactly. You go to a airless paint website, and it says, you know, the world’s greatest airless paint brushes or something. Yeah, that’s great, congratulations. But that doesn’t tell the user or the consumer of that product, what that means to them in terms of making their life easier, allowing them to do a do it yourself project that otherwise would have been out of reach whatever, you know, it’s, it’s kind of a miss if you’re talking about your product versus what it does for the customer.
Damon Pistulka 16:14
Yes. And then you said it in the words they use, because people in a certain industry use acronyms and lingo and other things. Their customers may not even under what I understand what they’re saying. And they completely describe it completely differently with different words. That’s really,
Tom Herman 16:38
yeah, you see that a lot? Yeah, that’s a common one. Yep.
Damon Pistulka 16:41
Well, especially in technical kinds of things, because you can talk about the, you know, failure modes stress, right rate of a bolt or something, you can just say, this hold 6000 pounds, those are the two different uses the same way of saying differently, the same thing, different ways of saying the same thing.
Tom Herman 16:59
Yeah, well, if your customer is an engineer, that technical language might be perfect. But you need to know, you just need to know your customer that just comes back to knowing who your customer is. Yeah,
Damon Pistulka 17:09
yeah, that’s for sure. Good stuff. Good stuff. So what are some? I mean, is this some stuff that you do like a before and after to? Or are these kinds of things that over time, you want to see how the markets or the how the customers viewpoint around your product is changing? Or what are some of the kind of the before after examples? How use customer data?
Tom Herman 17:37
No, you’re right. So definitely, you want to do periodic check ins with customers to see how things are going. So that’s, that’s a standard approach.
So yeah, kind of to your earlier question, is this a one and done type thing? It really isn’t because your customers are changing the markets changing. customer behaviors and habits are changing, and competitors come into the market from time to time. So I think customers are bombarded with other options all the time. So you need to keep in touch with your customers to find out what they’re thinking and how they’re behaving. For sure.
Damon Pistulka 18:16
Yes, so are your customers that you’re working with? Are they usually like product based customers? Because I envision this and the reason I asked because I envision Yes, I can make that airless paint sprayer, but I could also be supplying something to the the oil production industry across the globe into the the five biggest producers in the world. And I have 10s of millions of dollars in each account every single year that I don’t want to lose.
Tom Herman 18:48
Right? Yeah. So I work with a pretty broad range of companies b2b and b2c. You know, so it’s kind of, you know, it’s true that they all need this information from you know, who they’re about who their customers are. So yeah, yeah, it does. It applies in pretty much every situation where someone’s selling something to somebody.
Damon Pistulka 19:09
Yeah, well, exactly, because I was thinking of that same same company. And so on the airless paint sprayer, I can sell, you know, 5 million of those a year. And I’ve got a lot of different customers there. But I can also have similar customer challenges. If I’m a b2b supplier, like I said in the oilfield, just say in the oil field industry and, and I supply the five major oil producers or however many they’re with, you know, it could be 50 or 100 million dollars worth of stuff each every year.
But I have how many people in each company that I’m dealing with across the organization to really understand that in each one of those companies. It’s almost like you could have multiple customer subsets that you really have to keep track of because it could mean hundreds of millions of dollars in sales for you
Tom Herman 19:59
know your 100%, right? In some b2b situations, you have multiple, you know, decision makers or different divisions. Yeah. So when I say customer, you can’t think of an individual person necessarily sometimes sometimes depends on the situation. But yeah, sometimes it’s pretty complex. Yeah,
Damon Pistulka 20:17
that’s for sure. That’s for sure. Cool. Good stuff. So what are some interesting situations that you’ve been in and tried to give people information to solve that you just wouldn’t think of.
Tom Herman 20:40
Trying to think so, recently. This is not sure if this is exactly the example. But a company reached out to me and they created a piece of software, and was convinced it was going to change the industry. And it really is cool, it really is. But they were pitching it to the wrong market. And they didn’t recognize it.
At first, I had a suspicion that that might be the case, just based on everything that I was told, and what I saw, and we prove that to be true, so that it wasn’t a product issue. It was a positioning, and, you know, sales issue, really they were, they’re pitching it to the end user who really didn’t want another piece of software to have to learn and adapt to.
But the benefits of it, were really great for the company for the leader of the company, and leadership of the company, because it in the sales leadership, because it really did help boost sales and drive sales. So it was really a situation where the benefit was not properly understood, and pitched to the person who would see that as a benefit.
So yeah, that was an interesting eye opening situation where things change quickly, once they realize that wait a second, we need to be pitching this to the decision, or the decision makers, actually, the leader of the company who sees the value in this, and will then tell his marketing and tech team, hey, this is why we need to pursue this product, you know, I’m sorry, it’s extra work, or, or here’s what we’re gonna do. Instead, we’re gonna take this off your plate and replace it with this, that sort of thing. So that was that was an interesting one, for sure.
Damon Pistulka 22:34
Well, that’s a really good, a really good use of that information. And it’s a critical critical because you could be out there trying to sell to, you know, if you’re in something in the safe, something around building products, right, you’re selling building products, and you’re trying to out there trying to sell the contractors or something or large contractors, whatever it might be, but really, you should be selling into the building supply distributors.
That’s a that’s that’s a full pa that could really screw things up. Because it’s drastically different marketing, different sales approach different everything, and you could waste 10s of millions of dollars pretty quickly.
Tom Herman 23:19
Yeah, this this company have spent about a year going down the wrong path. And it cost them a lot of time for sure. And probably a bunch of money. I don’t know exactly how much. Yeah, yeah, now they’re going in the right direction. So
Damon Pistulka 23:32
that’s something that’s something to get things going in the right direction. So what are some of the the interesting things that you’re learning happening in the markets and happening that that you you’re uncovering with some of your clients that you’re like, I want to never thought or this is really interesting, kind of that’s going on?
Tom Herman 23:51
Ah, gotcha, I really don’t know if in terms of like trends and such, I really, I approach every project every client with, you know, just wonder of, you know, I love to find out exactly who their customers are in why they behave the way they do. So, for me, that’s the joy and all this is getting that information and delivering it to the client so that they can say, Holy cow, this is great.
Yeah, and that’s not just them, but their entire team, because the idea of of doing this work is so that it’s shared throughout a company, you know, kind of top to bottom side, the sides so that everyone’s on the same page.
And that doesn’t always happen in market research, where a leader Commission’s a study and it ends up maybe being shared amongst a couple of top leaders and doesn’t go anywhere. The point of what I do is, is so that it is shared so that everyone’s on the same page, so that it’s actually actionable. So yeah, that’s the thing that really excites me is making a difference, you know, across an entire company.
Damon Pistulka 24:56
Well, you’re right, like you said before, it could affect customers. or service, it can be affect future engineering products, it could affect ideas of, of how we actually deliver the product to the end customer. It just instructions needed for there’s just so many different things across products or services that this data like you tucked away for, like mentioned back looking at your website really affects each piece of the organization?
Tom Herman 25:30
Yeah, it really does. It’s it’s hard to effectively operate each area of a company, if you don’t have a solid understanding of the customer that you’re serving. It’s, it’s so fundamental, yet it’s it’s just overlooked or not really addressed just because of all the other pressures that are happening within a company and but it’s so fundamental. Yeah.
Damon Pistulka 25:53
Do you think that people are because of the need to better understand customers and to demand that customers know you better that this kind of research is getting more a normal part of business?
Tom Herman 26:11
I would say yes, for larger companies, but for small and even midsize companies, it’s still, there’s still so much work to do. Yeah, the largest companies do a pretty good job at this, as you can imagine, but it just doesn’t seem to be addressed as well, in smaller companies.
Damon Pistulka 26:31
Yeah, yeah. Well, that as these demands get higher and higher, I’m sure that that will change because it just really, it’s almost more critical at the smaller company level, to spend the money wisely, that they’re going to spend on any efforts across the board in their organization, then then it is at a larger and larger, say publicly traded organization, which can can generate cash to do this kind of stuff much easier and much lower cost.
So it I can understand why it’s the way it is. But I’m not so sure that we shouldn’t flop the flop the table upside down on that and go, Hey, you’re a smaller company, you should do this even more than a bigger company.
Tom Herman 27:16
No, that’s exactly right. What you said is exactly right. Smaller companies can’t afford to waste money, they can’t afford to be wrong. Yes, they’re not going to last long if they’re wrong. Yeah.
Damon Pistulka 27:30
And you know, and if it’s like something, if you’re limited, you know, say I want to I want to do advertising, or I want to develop a new product, I don’t have three shots at it. You know, you’re you’re more like, you’re more like Elon Musk and SpaceX, we dropped down this much money. And if we don’t get out of the Get out of orbit with it, we’re done. You know,
Tom Herman 27:51
yeah. And we’ve seen a lot of time where you have a company spending 1015 20,000 a month on advertising. And they don’t have a real strong grasp of their ideal customer, they don’t know who they are, they don’t know what to say to them, they don’t know where to find them, and yet they’re spending all this money, all they would need to do is just pause for 45 days, or that’s what our process takes, get the information you need. And then go back to what you were doing.
And either be way more effective at the same amount of spend, or spend less and be more effective. It just it makes this It’s funny how it’s not funny, it’s sad to see companies spending money because they have to they know they need to spend X percent of their budget on advertising, the FAA, don’t spend a fraction of that to do the research that allows them to really do it better.
Damon Pistulka 28:46
Let’s just take a moment to think about that. And just let that sink into people a minute because you just hit a hit a nerve that, that they just brought up a whole different thing, because you’re right. It’s we talk about this and we spend 10s, and hundreds and millions of dollars a year on say our marketing. And we could be saying the wrong thing to the wrong people.
And and even if we’re pretty good at it, how much more effective would your spend be, if you said more of the right things to more of the right people? Or the same audience more than the same audience? Exactly. Yep.
Because everyone talks about when you look at when you look at selling products, any way you look at ecommerce we talk about if you can convert at a higher rate. That’s almost like the panacea because I don’t have to find more customers. I just have to convert more than men to customers. And what you’re saying with the data and the research and being able to speak their language and better to the right people, the right words all that you should They’ll increase your conversion rate on the kind of your activities, your return on your effort.
Tom Herman 30:06
Yeah, 100%. And the other piece of this is retention. So the better you understand your customers, the better chance you’ll have to retain them. And that’s, that’s the other thing that’s often overlooked. Everyone’s chasing after the new customer, you know, the exciting new customer, which is great, you got to do that. But you can’t forget about the existing loyal customers that you have. You can’t ignore them. Because if you do, you’ll lose them at some point. So you really need to be focused there as well.
Damon Pistulka 30:33
Yeah, and this has really come up. I know, in the in the E commerce space where we operate in the last several years, we wrote that the E commerce companies rolled that demand up as as COVID, people were just they were buying more on E commerce.
But as that also drove higher advertising costs, the lifetime value of a customer became more and more important, because if my lifetime value of my customer was that one time purchase, I’m I might only have in my own be 50 or 100 bucks or 500 bucks, whatever the kind of product is, and but if I can turn that into 234 times that my advertising dollar at the beginning, the cost of acquisition doesn’t have to change, but my profitability on that cost of acquisition has gotten so much better.
Tom Herman 31:23
Yeah, no, exactly. Right. Yeah, it’s, you know, lifetime value is huge. And to the extent that you can keep your customers happy and know exactly what they want, and how they want to be served. Yeah, you’re gonna build your lifetime value. And that just is profitability is what that is.
Damon Pistulka 31:39
Yeah, yeah, it is. It is. So what are you excited about in terms of customer research, looking forward?
Tom Herman 31:49
You know, I think just getting the word out is important to me, I think that it just seems just from, you know, being on LinkedIn and spreading the word, there’s a lot of people that are interested in and understand the value of customer research. And I’m excited about that, because the way I see it is, first and foremost, I want to get the word out to explain them to leaders that this is something you need to be doing for the good of your company.
And I consider it a win, to get that message out whether people work with me or not. There’ll be enough people that do. Yeah, for me, it’s a win to just get that out there. And hopefully have leaders take action and provide their team with the information they need to better serve their customers to acquire new good customers, ideal customers, and keep the ones that they have and improve the strength and sustainability of their company. So that’s what I’m excited about.
Damon Pistulka 32:50
Yeah. That’s cool. That’s cool. So the the Yeah. So you talked and we’re talking been talking a lot about customer research. I will I will, we’re getting we’re getting closer to time here. But I do I do want to talk a little bit about competitive analysis. Because I like I like that. I think it’s, I think it’s an interesting subject. And I’ve got some general questions, though. And the competitive analysis that you do, do, you usually find that we don’t know our competition nearly as well as we should, or we got a pretty good idea.
Tom Herman 33:30
I think a little of both. Some, some competitors are more obvious than others. Many times the company will consider their competition companies that have a similar product or similar service and sell it in a similar way. But what they don’t realize is that customers or clients will use other methods or other other ways to achieve the result they’re looking for.
That’s why it’s important to understand what your your customer is trying to achieve. Because there’s multiple ways to achieve that. And it could be ways that you’re not thinking of so your competitors could be companies or solutions that you’ve never even considered. So yeah. And that’s important to know.
So you can position yourself as a better solution to those other options. So yeah, I see that a lot. You know, your competitors. You know, if you’re if you’re McDonald’s, your competitors aren’t just, you know, Burger King and Wendy’s, you know, there’s yeah, there’s a lot more to it. So, there’s, you know, direct competitors, indirect competitors, you know,
Damon Pistulka 34:33
yeah, yeah. When it could be something completely that you got you really it’s not even on your radar at all.
Tom Herman 34:39
Yeah, yeah, that happens. Yep. And again, it gets like
Damon Pistulka 34:43
like, take your example. McDonald’s or Burger King, and I’m not thinking about that. Some fresh home food delivery service could be taken
Tom Herman 34:53
as out yep.
Damon Pistulka 34:56
They’re known this eaten is started is that that little You know, chunking away at the bottom that they don’t know until all of a sudden it starts to really go. Right? Yep. Oh, yeah.
Yeah. That’s, that’s cool. That’s cool. Well, I tell you this is this has been awesome talking to you, Tom, because there’s so many things I think leaders really need to, to think about. And then figure out ways to really learn about their customers so that they can look at this stuff like competitors, like we just talked, or are we selling in the right place? Are we saying the right things? It’s so important that I, I think what you’re doing is really cool. And I think it’s gonna it’s helping a lot of people.
Tom Herman 35:44
Yeah, yeah. And that’s, it’s a great feeling to be able to help folks. Yeah. Yeah,
Damon Pistulka 35:49
good stuff. So if someone wants to reach out to you, Tom and get get a hold of you about doing some some of this or just learning more about it, what’s the best way to do that?
Tom Herman 36:00
Just go to the website, Veda intel.com. And just there’s multiple opportunities to book a call, or email, or send an email either way, and I’m always open to chatting with anybody about you know, what they’re working on and an offer, you know, my advice and we work together or not? Yeah.
Damon Pistulka 36:19
Awesome. Good stuff. Well, thanks so much for being here today. Tom again, today on the faces of business. We had Tom Herman from VEDA entail, we’re talking about customer research, we’re talking about win loss analysis. We’re talking about competitive analysis.
And if you didn’t get to listen to the whole thing, go back to the beginning, go through some of this stuff. Tom was dropping some real nuggets here about why you may want to consider this for your business to help you be more successful. Thanks for being here today, Tom.
Tom Herman 36:52
Thank you, Damian. It was a pleasure. All right. Well, we will be back
Damon Pistulka 36:55
again next week. Everyone. Have a great rest of your week. Tom, hang out for a moment. We’ll talk all right.
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