Why Local Customers Should Be Your #1 Target

Are You Neglecting Your Best Customers?

The benefits to a community when residents support neighborhood indies (versus shelling out for national chains or Amazon) are many and proven. Then why do too many small businesses in moderately populous neighborhoods fall short of marketing to their own local customers effectively? 

Many of these indies continue to pine for new, non-local customers and spend their precious marketing dollars on what amounts to a shot in the dark. Maybe they believe that local customers are already won over and that the potential of this audience is long-since tapped. Here’s why that assumption is usually wrong.

The legendary Pareto Principle (or 80/20 Rule) is a fundamental strategy that successful companies, large and small, have employed for decades.  But many indie business operators are unaware of how it works.

There are many articles written on the phenomenon, but what it means to your independent small business is simple:  

The top 20 percent of your shoppers (your Best Repeat Customers) should represent 80% of your overall revenue. And if they don’t, you’re leaving easy money on the table.

Local Is Luckier

This 80/20 Rule is important wherever “Shop Local” is a priority, because your neighbors make up the bulk of your Best Repeat Customers. Simple proximity makes this true for most independent shops, restaurants and service providers. Indeed, locals are your low hanging fruit — because it’s easier – and less expensive – to convince a current customer to buy from you more frequently (or in greater volume) than it is to convince a non-customer to buy anything from you at all.

Even if non-local customers must, for whatever reason, remain a priority for your business, know that they will require disproportionate marketing spend. And it’s particularly wasteful if you haven’t plumbed the full potential of your local customer base.

A Different Way of Thinking

To sum up, new lead generation is just a Big Corporate sales cliche that seeped into our small business consciousness. But for indie destination businesses — which make up the majority of “main street” enterprise — it’s often a square peg for a round hole, or (to really layer on the metaphors) a red herring that most scrappy local entrepreneurs can ill afford to chase.