Part 3 of 7
So let’s get to part 3 — learning about our customers to better understand how we can sell our race to them at the right price.
Are you thinking of a price yet?
Do you already have a price in mind?
STOP RIGHT NOW!
Because, the price you have in your head right now is based on what?
A gut feeling?
That doesn’t seem very scientific.
Nor does it sound very repeatable.
Will your staff be able to set your race prices for you based on the way YOU want them set?
Will those prices be the way your gut works, or theirs?
Can you teach your gut feeling to someone?
Nope. Didn’t think so.
You might try to argue that your gut feeling is the art part of the equation.
Art is sort of like a gut felling, right?
We’re not talking about the art connected to hokey religions and ancient weapons here.
The art we’re talking about is an element within a pricing strategy used to make sense of the data you collect.
It then goes on to become part of how you make a decision on how you will set your prices.
It’s true that your race will involve creating an event (e.g. a product) that you want PEOPLE to enjoy.
When you’re dealing with people, sometimes you need to trust your gut concerning a decision you need to make.
But that gut decision needs to be based on facts, not blind feeling.
You can get lucky by winging it, but that is random luck.
Even poker players have a system.
Right now, you need to understand HOW we decide on a price.
You need to know how to think up the correct answer, before you can trust your instincts on a guess.
So put any price setting ideas out of your head for now.
You need more to go on — more data — before you can trust your gut to make a well informed decision.
Your art needs something very important that only you can supply.
You art needs data.
In Part 2, we talked about the third secret in your pricing strategy — the HOW we create it.
Today’s lesson is the first of three parts that will focus the HOW.
It will begin to help you develop the kind of data you need to collect, and how that data is used to help you make pricing decisions.
This part beings with a very simple question:
Who is your customer?
Your customers are the people you want to pay your registration fee and participate in your race.
They are YOUR kind of people.
But what do you know about them?
Do you know any of these things about your customers:
- How old are they?
- Where do they live?
- Do they work?
- Where do they work?
- How much do they make?
- What do they buy?
- How many races do they go to a year?
- What races do they go to?
- How much do they spend on racing?
The answer is probably, “No”.
But that’s okay.
Why is that okay?
Because you can find all of this information out using the science of demographics.
Once you do know some of these these things about who your potential customers are, you will have learned an important step in how to sell to them.
How do I use demographics to do this?
Ideally, you want to look at your customers as distinct groups and figure out who fits into what group.
Here are some groups that your customers might fit into:
- Budget Sensitive — Only register for a few, specific kinds of races a year.
- Price Sensitive — Only register for a races with a certain level of quality for the price. They avoid events that they think charge too much and only appear to be in it for the money.
- Novice Sensitive — Never raced before or are interesting in races the cater to new racers. They do not know what to expect from a race and are concerned about looking foolish.
- Reputation Sensitive — Only register for races with a good history and reputation. The race’s cost, swag/awards, and qualification standards are never an issue if there are rave reviews from past racers.
- Convenience Centered — Only register for races close to their home or work. They appreciate the promoters, neighbors, and anyone making money for the sport when it’s close by.
- Status Centered — Only register for races that everyone else is registering for or is considered to be only for those competing at a higher level, even if they are not.
- Challenge Centered — Only register for races with interesting formats and locations. They see high quality in unique course layouts, and believe this counterbalances the cost.
This is not an all encompassing list, but it should be enough to get you thinking about which segment you want to target.
Some customers fit into more than one segment, but only collecting information about your customers will help you figure that out.
Yes! Collecting information about your customers is important in setting your price.
You’re not a marketing firm (yet), so I’m not expecting you to collect the kind of data you would use for a full-blown market feasibility study.
That would be overkill!
However, I know it’s possible that you’ve never gone out and talked to your actual customers before either.
So here are three (3) very easy bootstrapper tactics that you can try that will give you some quick analytical insight into who your customers are, and which of your segments they might fit into:
Tactic #1 — Find potential customers by actually talking to people
Sounds simple, right?
But it is just that simple.
Go talk to people.
Go to other races and talk to people.
Go to racing stores and talk to people.
Go online and talk to people.
Go talk to your racing friends.
Go to group sporting events and survey potential customers on what they look for in a race.
And when they start talking back to you, shut up and listen.
Shut up and listen?
Think about that old saying that goes something like this:
“You have two ears and one month so you can listen twice as much as your talk.”
Your potential customers will tell you what they look for, what they hate, and what love.
Listen to it all!
The more you talk to potential customer and get to know them, the more you’ll be able to charge.
The more I can charge?
Yes. The more you know about your customer, the better you will be at providing them that something they think is valuable.
Customers will pay you for something they see a valuable. But you have to find out what that is first.
“If only races had more music.”
“If only races were held at this special place.”
“If only there were more of this kind of racing format.”
You can learn all these things and more from just shutting up and listening to your customers.
But you have to go out and talk to them first.
Tactic #2 — Mine your competitor’s results to find customers
Data mining is not something only Big Data Scientists do.
You can do it to, using your competitor’s own race results as your source.
The tactic works likes this:
- Go find one of your competitors
- Find their latest race results
- Count how many racers raced in each category
- Ask yourself which category had the most, and which had the least
- Make some assumptions based on what you learned
- Find another race and/or competitor and repeat the process
- Go back a few years and see if you see any trends
What you will learn from your competitor’s is two things:
The first is how many people show up to your competitor’s events.
Numbers tell a very powerful story, especially if those numbers are very big, but equally so if those number are very small.
Additionally, if you get a chance to actually visit your competitor on race day, you can see first hand what they bring to table that racers might consider to be of value.
You can them compare that value to the number of people that showed up to that race.
Are you bringing that same level of value to your races?
The second thing you will find out is what categories and classes have the most racers.
This will also be a very telling statistic.
It will inform you of what kind of customers are possible in that location for that type of race.
It is only accurate to a point considering that you didn’t factor in how long the competitor has been in business, or what marketing efforts they used.
However, for the purposes of collecting information, if should give you enough to go on with regards to understanding what potential customers exist in your market area.
It might also help you evaluate what your competitors think is value for that price.
Tactic #3 — Lurk online to find potential customers
Many of your potential customers use meetups, discussion forums, Facebook, and social media outlets to find, share, and plan group activities, local races, and outdoor events.
Find the ones in your area, or in the area near any of your potential venues, and read their posts.
Explore their rants and questions, find out what they like and don’t like, and get an idea of who might be in your market.
Plenty of people talk about their race experience online, often without a filter.
You can learn a lot about what racers think about a competitor, or how a competitor’s reputation impacts racer turnout.
The idea is to learn about what the community-at-large is talking about in your race’s geographic area.
Are they talking about your upcoming races?
If not, do they know you are even having a race?
Chances are they are talking about someone’s race, sharing event information, or complaining about someone’s race they didn’t like.
These comments will help you develop your segments, understand what is popular to them, and even how to market your own events to them when the time comes.
However, take what is said online with a grain of salt. Too many people like to tear down race promoters on social media without any real justification.
Now put it all into your data soup and churn.
When you’re all said and done with talking to customers, listening to their responses, mining your competitor’s results, and stalking them online, it’s time to make sense of it all.
Remember those distinct customer groups we talked about?
It’s time to put your findings into those groups (or into any new ones you’ve discovered).
Put them into your groups however you see fit to do it.
The only rule is that you need to remember what criteria you used to make the choice of what went into each group.
Then do it the same way every time for all the others.
Once you have your chart of findings connected to your distinct groups, you need to do some thinking about the results.
Some thoughts about your data might include:
- What distinct groups did you discover that where not on the list?
- What distinct groups did you find nothing about?
- Why is one group more important to you than another group?
- What group stands out to you and why?
- Which group do you identify with more than any other?
It doesn’t need to be super in-depth analysis. You only need to see what jumps out at you.
Hopefully, your basic demographic results will help you to learn something about your potential customers that you didn’t know before.
It will also start to focus you in on which group or groups of customers you are actually building races for.
Examples of this might include:
- Why is there a large population of junior racers, but few races for them?
- Why is there a high demand for a particular race discipline, but not many races that feature it?
- Why are their no races for elite or pro athletes in an area with a large population of elite/pro athletes?
Put this work in a safe place, because we will come back to it.
Just know that this analysis will help lead us to making an informed pricing decision later.
Competitors play an important role in our next step.
Your next email will take on the second most important pricing strategy question:
We’ll learn how to take some of your competitor analysis and use it to understand why their pricing decisions can help you to make yours.
If you want to sneak a peek into market forces and how competitors fit into your pricing strategy, take a few minutes to review another article I wrote titled Look before you leap into race promotion.
Can you think of why market forces, and the prices set your competitors, can have an impact on your own pricing decisions? Hit reply and let me know what you noticed.
Kyle M. Bondo
Reckoneer | reckoneer.com