Tips & Talk 88 – How Many Customers Do You Need?

Hi there.

It's Sue and thanks for joining me for Tips and Talk

Day. These are bite sized topics that I pull from community

questions and things that I'm observing in the world of handmade

small business.

If you'd like to submit a topic,

DME over on Instagram at Gift Biz Unwrapped.

Before we get started,

I'm gonna share a secret with you.

One of my superpowers is the ability to get an enormous

number of tasks and projects done each and every week.

I easily meet deadlines,

rarely forget to do something.

I know at the start of each day what needs priority,

attention and action type A personality.

Yes, and a follow through on the Kobe assessment,

which should have given me the clue,

but it wasn't until people started commenting to me that I

realized not everyone naturally knows how to do this.

It's the biggest single contributor to the growth I always see

in my businesses without spending hours and hours working either.

It's about focus and doing the right things efficiently.

Prompted by all the questions on how I do this,

I went about finding a way to help you perform at

a higher level.

Two, I analyzed my methods and formalized my process,

which is one many of my coaching clients.

Now, also follow.

You can use it too.

It's all part of a tool called the Inspired Daily Planner,

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Make no mistake,

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First off,

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physical planner isn't dated,

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and that's not all included for each day is a motivational

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book in time for to-dos scheduled appointments and all those ideas

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How many customers do you really need to reach your sales

goals? Have you ever thought about it much less calculated it

out for your specific products?

Knowing this number can help guide your sales activities and reduce

the overwhelm that comes with ambiguity,

not knowing where you'll find people to buy your products and

simply leaving things up to chance.

This number is also the basis for gaining confidence in your

business performance because you can understand and put in place various

ways to get the number of customers that you need.

As an added bonus,

it may prompt you to re-look at your pricing,

production, staffing,

and even materials.

My goal today is to help you figure out your own

target customer number.

It of course,

varies by the product that you sell and your goals,

so your required customer number can and most likely will be

different from all the others.

I've created two scenarios to demonstrate how to determine your number.

I'm sure you'll be able to apply these examples to your

own situation and figure out your own desired customer count.

To begin with,

I've made a couple of assumptions.

First off,

you've priced your products properly,

so you've covered all of your costs and include margin.

Second, I'm treating each sale as a single customer,

so if someone buys from you twice in a year,

it's calculated as two customers.

Third, we're focusing here on retail.

In other words,

direct to consumer sales versus wholesale.

Four, for this calculation,

choose your best selling product.

This will give you the most accurate ending number and one

you can feel confident with taking action on five.

All the calculations are set to the goal of $10,000

in revenue a year.

I chose this number because it's an easy one to multiply

out based on your actual financial goals,

and finally,

keep in mind that this is an overall revenue number,

not profit.

Again, for ease of analysis.

All right,

here's scenario number one.

The product is table runners.

I picked this product because it's more likely a one-off sale

versus a product that needs to be replenished.

That's gonna come in our second scenario.

What you're going to see demonstrated here is the difference in

customer count as a price changes resourcing.

Etsy, I found that custom made table runners go for anywhere

from 15 to $50.

Let's look at both price points.

Dividing $10,000

by your sale price,

you would need to sell 667 runners at $15 and 200

runners at $50,

breaking that down into months.

On average,

you would need to sell 56 runners at $15 and only

17 at $50 each month.

Major difference,

isn't it?

Again, we're working here with an annual number of $10,000

in revenue,

so you'd multiply these numbers to match your annual goal.

If your target was $50,000,

for example,

you'd multiply your number by five and so on.

Having these numbers gives you a single product purchase customer count

to reach.

Another consideration that would lower your number is knowing what percentage

of your customers buy,

again, are repeat customers.

In this case,

maybe a certain number of customers want new runners for every

season, or they buy products for gifts,

things like that.

This is one of the benefits of staying in touch with

past customers,

like sending emails to remind them about your products and trigger

new sales.

You'll note that in this scenario,

the number of customers required is dramatically different based on your

price. I mean,

667 versus 200 is a lot,

and remember,

each sale comes with other time considerations over production too,

like packaging,

shipping, customer service interactions.

Recently in podcast episode 393,

we talked about how strategically pricing your product has ramifications throughout

your whole process.

It's actually a good one to listen to for a detailed

pricing discussion overall.

Now, let's look at scenario number two.

The product I've chosen here is handmade soap at a $7

and 50 cent price point,

calculating the same way we did for table runners.

At $10,000

annual revenue,

you would need to sell 1,333

bars of soap or 444 each month,

but hold on for products like soap candles,

essential oils,

bakery items,

spices, and maybe yours,

a single customer doesn't buy just one.

For our soaps here,

let's say that for most orders,

people buy three at a time.

That drops your customer count to only 111 for the year

or 37 a month.

Am I opening your eyes here?

37 customers a month?

Gosh, that could easily be one craft show day.

Of course,

I know you sell a variety of items.

Some months sales are stronger than others and some customer purchases

will be more or less than your averages,

but running your calculation,

as I've just described,

will give you a realistic average number to work with.

Now, what do you do with this customer count?

It's time to put a plan in place on how you'll

attract these customers already.

Have a plan.

Compare this customer count number to the results that you're seeing

with your current plan and make adjustments accordingly.

Incorporating multiple ways that people can purchase from you will significantly

push your sales in your favor.

You don't need to do all the things I'm gonna list

right here,

especially if you're just starting out,

but having your own website,

selling through a Etsy shop,

attending in person shows,

promoting on social media,

sending emails.

All of these are some of the major streams.

Revenue comes into your business.

I know dealing with numbers isn't the most fun activity.

I know it isn't for me,

but having a grasp on what's required to hit your sales

targets, gives you direction on ensuring that that will happen.

It's the difference between hoping you'll get sales and new customers

versus seeing it play out in real life.

That's a wrap.

I'm a get to the point kind of girl,

and this is what you can expect from these quick midweek

sessions. Now it's your turn.

Go out and fulfill that dream of yours.

Share your handmade products with us.

We want them,

and they bring us both.