08 Feb You Have Last Year’s Numbers, Now What?
You might think it’s best to run your crafty business based on either your customers or your numbers – not both. Or you may let knowledge of one dictate your big decisions and goals over the other. At Stitchcraft, we get that it seems easier to follow your favorite customer’s advice when they tell you something will sell well. We also understand that one customer’s interest may not be what delivers for your business. It’s important to be aware of new trends your customer base is excited about while letting the facts of your business guide your next moves – and goals.
Know Your Customers and Your Numbers
How well do you know your target customer? Do you know what they like, how old they are, the size of their disposable income, and how much of that fun money they spend on crafting? Or are you keeping tabs on the window shopper that rarely converts to sales? Right now is the best time to be honest about this. You define your target customer. If you’re purchasing inventory based on passing comments, you’re not claiming the power of agency you hold over your business revenue. Define your target customer first, then look at what they get excited about. That’s a sweet spot.
Need help defining your target customer? Here’s our process to develop your own.
How well do you know your numbers? Do you know your last year’s revenue? What about your monthly average revenue? Does it vary by quarter or have specific trends throughout the year? What about your average order value, monthly operating expenses, or profit margin? Are there products with exceptional sell-through rates? Each of these numbers and trends provide hard facts you can use to build strong goals with your target customer in mind.
Goals: Intuitive, Quantitative, and the Dream
Intuitive goals come from what you feel is right for your business. Some call it a hunch; more likely, it comes from seasons of business ups and downs—from seeing what has worked and what hasn’t. It also comes from refining your ideal target customer. You know what they like, what they’ll spend, and what they’ll steer away from. These goals can be as simple as only carrying cheery colors in your inventory to a gut calling to build a community experience for your clientele—on or offline.
Quantitative goals are measurable, so they must come from your numbers. How many months were you profitable? How many more months would you like to be profitable this year—and by how much? Maybe you’d like to increase your revenue. Does this mean growing your customer base, sharing more limited offers to your current shoppers, or increasing the value of your average order?
Now the dream. This is the moment every wish comes true for your business: To help others explore their creativity, with consistently growing revenue and profit, happy customers sharing their open wallets, the easiest, most knowledgeable and capable staff, a handsome salary, and the freedom to take vacations whenever and wherever you please, ideally with your dog by your side. That’s one dream. What’s yours? Identifying the BIG dream helps us stretch beyond our comfort zones. Although these dreams may not be attainable within the next year, it’s likely that the next step to get you closer is achievable.
Real Talk: Last Year was Tough
Last year was not an easy year for many craft businesses. Between continued recovery from a pandemic economy, shifts to cost of living and disposable income, freight rates, and more, tough decisions need to be made. At Stitchcraft Marketing, we see it and we know you may be scared looking at the year ahead.
In 2023, the Stitchcraft team also observed slower social growth in and out of the craft retail industry. Between algorithmic shifts, more platforms than ever, and a growing trans-generational desire for human connection and community, it can be a job in itself to keep up.
As the economy and social media landscapes continue to evolve, your strategy can too. It’s become imperative to have a definitive brand that stands out, actively nurtures current customers, and engages new shoppers with consistent give content. One of the simplest strategies involves making greater efforts to retain customers in order to build the revenue you’ll need to offset the higher initial costs of acquiring new customers. How can you provide a special experience that is unique to your brand to create a loyal client base?
How to Set Big Goals while Facing Reality
First, even if last year provided less revenue than hoped for, continue to set goals for this year. Goals will help guide your decisions so you can stay on track even when nerves ramp up. But let’s be smart. This likely isn’t a 10x year, and that’s okay. Let’s normalize steady, sustainable growth as an achievement worth celebrating.
At Stitchcraft, we believe in the SMART goal philosophy. Goals are best made specific, measurable, achievable, relevant, and time-based. Get a more detailed explanation on SMART goals in our blog exclusively about setting goals.
One SMART goal: increase annual revenue by 3% by the end of 2024.
Another, SMARTer goal: Grow returning customer revenue by 5% by the end of Q2 to ultimately increase spend on acquiring new customers in Q3 and Q4 by $1000 per month. Through Q2, bundle new items with dead stock advertised exclusively to current customers in limited quantities to both increase average order value and clear space for new inventory you know your target customers will love. By bundling and using scarcity psychology, you will sell dead stock at a higher price per unit than if you simply discounted, and increase overall spend. In Q3 and Q4, dedicate this extra $1000 per month on targeted brand awareness advertising campaigns to increase your customer base with your ideal clientele.
Both are goals; one is smarter.
Although the first goal does meet the SMART criteria, how does it guide your business decisions? How will this goal help keep you focused when you’re feeling anxious traffic is slow this week or the next? This goal will likely drive you to push product over building brand loyalty. There is potential for more cash flow, but at what cost? Less profit per unit from running promotions, more one-time customers, and an increased cost to acquire more customers to keep your revenue up.
The second goal clearly specifies a measurable goal, with an achievable action plan. It is relevant to both the year in question and your knowledge of current customers indulging in exclusive offerings, with a timeline for each part of execution. Could a measurable new customer goal or number of clicks per brand awareness campaign be added to this goal? Certainly, but I’ll leave that goal to you.
Would you like to discuss your business goals together? Join the list to be notified of the next Stitchcraft Marketing Mastermind sessions. Stitchcraft Marketing is a marketing agency of crafting experts. We customize every program to showcase your brand, engage your customer base, and generate sales in a way that is nothing less than magical. If you’d like more help generating content for your craft business or devising an effective marketing strategy, contact us today!