What are your profitable markets?

What are your feelings when you need to work with your accounting system? Fear? Confusion? Dread? Disinterest?

As a result most small business owners invest as little time, money and thought as possible into the accounting function. Off-the-shelf software is used “as-is”, with no customization for the particulars of your business. The only data collected is that required for tax reporting. Basic financial reports, like profit and loss statements, are generated on a sporadic basis from “stale” data (4-6 weeks old). Unfortunately, this general, out-of-date information is used as a basis for making important growth decisions, like the hiring or letting go of staff, or the decision to add or cut product/service lines.

Think of your Accounting System as a Knowledge Gold Mine - rather than an Administrative Pit

So why am I talking about accounting data in a marketing blog post? Because for most small businesses, your accounting data is really the knowledge base of your company – the results of all of your company’s operations (good and bad) show up in the financials. Here you have a gold mine of information on customers, purchase habits and cycles - and the costs associated with delivering value to these customers. If your accounting database is designed properly, you can “drill down” into this untapped reservoir to uncover “pockets of profitability” and know exactly where to focus your growth efforts.

What market segments or customer groups are most profitable and which are the most price sensitive?

Especially in turbulent economic times, it is important to pull away from market segments that are shrinking or price sensitive, and increase marketing efforts on segments that are growing or more profitable.

To make these decisions from an informed perspective, use your accounting history data. For each customer, add a field for market segment in your accounting system. Depending on your business you may choose one or a few of the following:

  • Ownership (Government vs. Business vs. Consumers)
  • Industry
  • Size (Revenue, number of employees, Income)
  • Distribution (Online vs. Retail vs. Wholesale)
  • Purchase frequency
  • Demographics (age, gender, ethnicity, lifestyle)

After entering the data for each customer, you can generate sales and profitability reports by segment. Here you mine for your “pockets of profitability” or golden market segments where you get the most profits.

About the Author(s)

Jeanne Rossomme headshot

Jeanne uses her 20 years of marketing know-how to help small business owners reach their goals. Before becoming an entrepreneur, she held a variety of marketing positions with DuPont and General Electric. Jeanne regularly hosts online webinars and workshops in both English and Spanish.

President, RoadMap Marketing

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