Creating Success from the Inside Out: The #1 Thing You Must Do to Prep Your Business for Total Success

I have to admit that I groaned when I found out what this one thing was because it is not an easy task.  In fact, it is incredibly difficult. 

It is something that a good friend of mine, a product manager at my day job, has been telling me that I should be doing for my business.  He even went so far as to telling me to stop everything I was doing for six months and go through this process because it is so important.  I ignored him for the last year and then recently I started an online business class – the whole first week of class was devoted to this one thing.  That finally sent a strong message to me that it is really important!

So what is this one thing?  In very short terms, Voice of Customer (VOC).  We must identify and understand our ideal customer(s).  To do this, we need to interview our customers/potential customers so that we can understand their wants, needs, fears, and desires.  Once we have this information, we can create an image of our ideal customer and tailor our products and marketing to that customer.

Mexican Mocha Lollipop by Catskillcandyco

You may have more than one ideal customer for your products.  For example, I sell bridal jewelry and everyday jewelry.  So I have bridal customers and regular customers.  I can also look at my regular customers and break that down further into my customers who buy the more modern jewelry I make and the people who enjoy more classic, ornate work that I create.  Each of these types of customers has their own set of wants, needs, fears, and desires. 

To start, come up with a survey of questions to ask your potential customers.  You want to gather information like age, gender, marital status and occupation.  But delve deeper to find out what kinds of magazines and books they read, what music they listen to, and what their interests are.  How do they live their lives?  What is important to them?  What are their concerns and fears (related or unrelated to your product)?  What are their dreams and what kind of life would make them happy? 

Here are some suggestions for accessing your customers to get this information:

1.       Who in your inner circle of friends and family are customers or meet the criteria you have set for who you think your potential customers are?  Talk to them first to go through the survey and tweak it based on these early interviews.

2.       If you have a Facebook page or website, put up a link to the survey (you can sign up for Survey Monkey for free and create a 10 question survey) and offer a coupon or some incentive to those who fill it out

3.       If you do art shows or craft fairs, have surveys available for people who come to your booth.  Offer them incentives to fill out your survey.  You might also glean some good information just by chatting with them casually.

4.       Use your email list and send out a survey request to your current customers.

5.       Do you have repeat customers with whom you have a working relationship?  Talk to them, too.

Once you have enough information gathered, you can look at the trends and start to come up with an ideal customer that represents these commonalities.  Make this ideal customer into a real person.  Give them a life and a story. 

Working Woman's Organic Salt Scrub from BeyondThePicketFence

 

At first I thought I was my ideal customer.  After all, I make things that I think are nice and that I would wear.  But once I started this process of identifying my ideal customer, I realized that I am just one person amongst many and not everyone thinks like me, wants the same things that I want, or even has the same fears and desires.  I realized that by limiting my customer experience to just myself, I would be cutting off a whole world of potential. 

Once you have an ideal customer created, it will help you to see whether the products you are offering fit what this ideal customer wants or needs.  Maybe it will generate some ideas as to new products you could offer that you hadn’t thought of before.  Perhaps you need to tailor your products to fit the price range of your ideal customer.  It may also give you some insight into where and how you could be marketing and promoting your products. 

Consider who your ideal customer is and leave a comment below.  Who is your ideal customer?  What insights did you discover from doing this exercise?  What other ways have you used to glean information about your customers?

Creating Success from the Inside Out - What you need to do right now to maximize your profits

We might sell handmade scarves, beautiful one of a kind collages, jewelry, vintage finds, soap, pottery or any other untold number of products. It doesn’t really matter what it is – what’s important is that we are selling.  Selling is what sustains our livelihoods.  So how do we maximize our profits so that we sell more?

Blackbirds Baked in a Pie Tea Towel by wickedmint

It’s time to take a good hard look at our profit history.

I’ve known subconsciously for a long time that there are some jewelry styles that I just love to make but that don’t get many views or sell in my Etsy shop.  At the same time, I know that there are certain styles that sell more often.  But without actually sitting down and analyzing my profit history, I would never actually know the facts so that I could take action to maximize my profits.

Here’s what to do:

1.   Dig out your spreadsheet, software program or whatever it is that you use to keep track of the items that you sell/have sold.  You can do this analysis for any time period you wish – this year, last year, the last 6 months...  I did it for the last 3 years since that’s how long I’ve been in business.  Do what makes sense for you.

2.       Take out a piece of paper and think about how to divvy up the types of products that you sell.  Write down your categories.

You want to determine what percentage of your business income comes from each of these types so figure out how you want to compare.  For instance, if you sell hand knit outerwear, you could create these categories (mittens, hats, scarves…).  Or perhaps you sell different styles of outerwear, in which case you may want to divide your categories into children’s mittens, children’s scarves, adult mittens, etc.  For example, I sell earrings, bracelets, necklaces, etc.  I also have a bridal shop, so I created categories for bridal earrings, bridal necklaces.  For my own purposes, I also broke it down further into vintage style earrings, modern earrings, resin earrings, etc.

3.       Write down the total revenue you got in each of the categories.

4.       Next to each category list the average price point of the product. 

You probably have a range of prices within each category.  Look at what you sold (for your chosen time period) in that category and come up with the average price point (total revenue in that category divided by the number of sales in that category will give you the average).

5.       Determine what percentage of your total business income came from each category.  Do this by calculating your total revenue for your target time period.  Now divide the revenue for each category by the total revenue and multiply by 100 for the percentage.

Crow Steals Sun for the People by geminiriverrocks

Now you have written proof of what products sell the most.  You may already have known this intuitively, but seeing it on paper and seeing how much your best selling products are contributing to your bottom line can be very helpful for focusing your energies in the future on the products that are yielding you the most revenue.

I sell far more earrings than necklaces or bracelets.  Since doing this exercise I’ve given myself permission to go crazy making earrings and not worry so much about having enough necklaces and bracelets in my shop.  In doing this exercise, did you confirm what you already knew or did you discover some new insights as far as where your revenue is coming from?

A little plug to the fabulous Rich Happy Hot B School, the online marketing course that I am taking right now which is transforming the way I look at my business and teaching me how to turn my business into the best it can be.

Next time, I’ll talk about the number one thing I learned recently that we must do in order to prep our businesses for total success.

Creating Success from the Inside Out - 5 Money Traps to Avoid When Pricing Your Work

I was inspired this week to talk about setting prices for our work after participating in a webinar about money blocks, given by the Lucky Bitch, Denise Duffield-Thomas.  It got me to thinking about what money traps we artists on Etsy may fall into as a result of our own money blocks.

1. Setting your prices at wholesale level in a retail environment

I have gone through several iterations of pricing formulas and read lots of articles to figure out the best way to price my work.  The conclusion I reached was that I need to price my products so that I can sell wholesale, establish pricing consistency no matter where a customer might find my product, and still make a profit.  If I sell a pair of earrings for $40.00 on Etsy, then wholesale buyers will need to buy those earrings from me for 50% of that price, at most, so that they can sell those earrings in their shop for $40.00 and still make a profit.  This also means that I need to price my products so that when I sell my earrings to a wholesale buyer for $20.00 I am still making a profit.  If you are thinking to yourself, “I don’t sell wholesale, so I can set my retail prices lower”, I ask you to reconsider this as you read the rest of this post.  I believe this thinking is potentially damaging to your wellbeing as an artist.

2.       Not paying yourself for labor

If you’re like me, you love every minute of creating your handmade items, so it doesn’t often feel like work.  However, there are two points to consider here.  The first is if you want to scale your business up and potentially hire a person to help you in the future, then you need to build labor rates into your product prices.  If you don’t charge yourself for labor now and then you find yourself hiring someone later (whether it’s a person to help you bead, sew, knit, balance your account, or ship product), you will have to recalculate all of your prices at that point, which could affect an established customer base.  More importantly, your time has value.  Your skill has value.  You should get paid for that time and that skill.  And I don’t mean $3.00 an hour!

Lucky Cat Sculpture by amberhlynn on Etsy

3.       Assuming that YOU are your customer

I fall into this trap all the time!  As artists, we may not have an income level that matches that of our customer.  It certainly depends on your market, but it’s important to avoid pricing your items according to what YOU can afford.  You may have an item that, when you calculate the price, you think, “Oh, no one will buy that at this price!” If you are assigning an appropriate value to your items then the customers who love what you offer and see the value in the product will be happy and willing buyers.  If you sell the item for less than what it is worth, then you are in danger of devaluing yourself as an artist. 

Another aspect to this trap is that we spend so much time with our products that sometimes we can grow too close to them to assign an appropriate value.  Familiarity can cheapen the value of the item, in our own eyes.  Try to look objectively at your work.  Put each item on a pedestal and adore it!  That customer who has been hunting for just the right thing will adore it, too, when they find it in your shop.  And they will pay money for it.

4.       Looking at what your competitors are charging and pricing your items accordingly

I believe that setting your prices according to your competition is detrimental to your wellbeing as an artist and a business owner.  When I browse products on Etsy, I’m amazed at how cheaply some sellers price their products.  It can be hard to offer an item for sale that is sometimes double what other sellers are offering for a similar product.  Don’t let other people’s money blocks dictate the cost of your items.   Come up with the formula that feels good to you, that helps you meet your business goals, and that reflects what you are worth as an artist.  You will be more at peace with yourself and happy doing the work because you know you are getting paid fairly for it. 

5.       Feeling guilty about asking for the true value of your work

I love lifestyle business guru Leonie Dawson who explains that there is a balance to the Universe in the exchange of goods and services for money and that when one person gets more value than the person on the other side of the transaction, it’s not healthy for either party.  That’s not to say that you can’t offer sales or promotions.  When you offer a promotion, you aren’t just selling your items more cheaply.  You are doing it for a reason; perhaps to create more buzz for your shop; to get more customers to sign up for your newsletter or blog; or for other non-monetary reasons that still have value to you as a business owner.

Do any of these money traps resonate with you?  How have you overcome them?  Are there other money traps we, as artists, should consider?