Entrepreneurship is all about finding niche markets, which arise from an untapped potential in a corner of an existing market ignored by major companies. Finding customers for a specialized or niche business is no longer an arduous manual task. Somewhere there is a list of names that will allow a business, no matter how "niche," to locate its specific target customers.
Vinod Gupta was working for a recreational vehicle (RV) manufacturer in Omaha, Nebraska, in 1972. One day his boss requested a list of all the RV dealers in the country. Of course, at this time no such list existed. Gupta decided to create one. Gupta ordered every Yellow Pages phone book in the country, 4,500 total, took them home to his garage, and started manually sorting through each book one-by-one, compiling the RV list that his boss coveted. After providing the list Gupta told his boss he could have it for free if he could also sell it to other RV manufacturers. Gupta's boss agreed, and his company-infoUSA Inc.-was launched.
Today infoUSA no longer sells lists on yellow pieces of paper, but maintains one of the nation's largest databases, including 14 million businesses and 220 million consumers. More than 4 million customers access this resource. More than 90 percent are entrepreneurial companies and have only one or two employees. These small businesses account for 60 percent of infoUSA's annual revenue of $311 million.
The point is that entrepreneurial businesses that want to thrive in specialty markets can use databases for reaching customers. While this resource does not do the whole job, it can and should comprise the core of a marketing program which also includes publicity, word-ofmouth recommendations, or "buzz," savvy geographical placement of the company's physical outlets, such as retail stores and offices, and, if affordable, advertising.
Slicing and Dicing
Put another way, databases, which slice-and-dice lists to pinpoint just the right prospects for products or services, enable entrepreneurs to find the proverbial needle in the haystack. An entrepreneur might target a market of only 200 companies or a select universe of individuals who might have use for a specific product or service-such as feminist-oriented prayer books for Lutheran women ministers in their 20s, or seeds for gardeners who grow vegetables native to Sicily, or, like one of infoUSA's own customers, jelly beans for companies with employee coffee-break rooms.
Databases have the ability to take the legwork out of locating specialized customers and make the job as easy as one, two, three. According to infoUSA, to use databases effectively, company owners must take three distinct steps:
Step 1: Know Your Customers
"In any business, there is no substitute for retaining existing customers. Make these people happy, and they become the base from which you add others. As a niche marketer, you have at least an idea who might want what you have to sell, even if those prospects aren't yet actually buying. Get to know these people. Understand what they are looking for. Consider what they like and don't like about your product or service."
Step 2: Analyze Your Customers
"Your current customers or clients have all of the information you need to find other customers. Analyze them to find common characteristics. If you are selling to businesses, consider revenue and number of employees. If you are selling to consumers, focus on demographics, such as age, as well as income levels. Armed with this information about your customers, you are ready to make use of a database to look for new ones."
Step 3: Find New Customers Just Like Your Existing Customers
"In a niche business, you find new customers by cloning your existing customers. Once you know and understand your current customers, you can determine the types of businesses or customers to target.
"An online brokerage, for example, was seeking to build its business further and needed a list of names of people 'with a propensity to invest' just like its current clients. Our company used proprietary modeling to provide a set of names of individuals from throughout the U.S. with the required level of income.
"You should buy a database-generated list only if you have analyzed your current customers. In addition, you should wait to buy until you are ready to use the list, because lists do have a short shelf life-about 30 to 60 days if you are selling to consumers and six to nine months if you are selling to businesses. Indeed, about 70 percent of infoUSA's entire database changes over annually."
No Magic Bullet
The magic of databases is that there is no magic. Every entrepreneur has a product or service to sell. The trick is to match what you are selling with people who are buying. Used effectively, databases serve as the resource for making that happen. Do not make the mistake of expecting a database to perform the entire job of securing customers for products or services. An entrepreneur must be ever vigilant about prospecting-and not only when business is slow. Entrepreneurs must encourage sales representatives to call on customers even when business is booming and they do not require their revenues to keep the company afloat. Once customers are secured, make servicing them a top priority.
Explain the two different types of CRM systems, and explain how a company can use infoUSA's database for creating a CRM strategy.