If there is one variable that plays a vital role in the success of your business, it is your daily customer number, or how many people you can expect to buy your products or services every day. The size of the crowd that you can rely on daily is the one that drives your operating strategy, the design of your space and the number of employees you hire. It is a number worth knowing, before you even start your business.
Fortunately, there is a formula that helps you approximate this number, based on your location and the demographic of your area. To make this number relevant, you need to offer quality products and services that people want to buy. However, when all others pieces are in place, this is a good way to define the size of your potential daily customer base.
This is how to do it, in a nutshell:
Let’s detail the process.
Step 1. Find demographic data for your area
Of course, if proximity is essential for your business, such as in the case of restaurants or bars, the size of the crowd you may expect depends on how heavily populated your area is. It also has to do with how large within this population is the group of people your business is targeting.
So, before anything else, define your ideal customers: the age bracket they belong to, the ethnicity, the money they make. Once you have clearly determined what segments of the population may be interested in your business, find information on them on the U.S. Census Bureau site, by plugging in your zip code. Extract four pieces of information:
- The total population estimate in your area;
- The age percentage of your ideal customers;
- The ethnicity percentage of your ideal customers;
- The income percentage of your ideal customers.
Step 2. Find the ideal number of daily clients
Use the information you collected to create an ideal scenario. Plug it into the following formula to find out how many people in your area can potentially be interested in your business:
Total Population x Age % x Ethnicity % x Income % = Your Total Market in Your Area
For example, if the population total estimate in your area is 23,435, out of which 91% are your ideal age, 92.6% your ideal ethnicity and 70.6% your ideal income, the formula would look like this:
23,435 x 0.91 x 0.926 x 0.706 = 13,942 persons
Your ideal daily customer number is 13,942 persons that you can market to and can turn into customers.
Step 3. Find the real number of daily clients
Unfortunately, real life does not work with ideal scenarios. Not all the people you have at your disposal in your area to coax into getting into your restaurant or store will actually do it. The reasons are many, including the state of your competition and the fact that not all of them know about your business.
A most realistic number is 1% of your ideal customer base, which is a typical conversion rate. On the optimistic side, you can expect a 2% of your ideal customer base to turn into actual clients. In our example, you can expect the size of your daily crowd to be as following:
13,942 x 0.01 = 139 customers a day
Or in the best case:
13,942 x 0.02 = 278 customers a day
The difference lies in the aggressive marketing of your services, so continue spreading the word and improving your services, and hope for the best.
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