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No, The Customer Is Not Always Right...For Your Business

Somethings hold true over time. Here is a nugget from over 15 years ago that is still on point today. In a January 2005 article for Entrepreneur magazine, the great Brian Tracy wrote tips on how to find your ideal customer. His tips included:

1. Define your product or service from your customer’s point of view.

2. Define the ideal customer for what you sell.

3. Determine the specific benefits your customer is seeking…

4. Determine their locations

5. Determine when they buy.

6. Determine your customer’s buying strategy.

He goes on to make the point that you must be able to define the very best customer for your business. The article ends with the lesson that a lot of entrepreneurs and business owners don’t. When they don’t, they waste time and money trying to sell to people who aren’t good customers.

These points still apply today even though the world is in a slightly different place than it was in 2005. I’ll add to Brian’s words of wisdom by saying you can’t and shouldn’t try to be everything to everybody. Even if you say “but everybody is my customer”, you know that is not always realistic. Having money to spend doesn’t always make a someone a profitable customer. A business must put its most profitable customers in the center of what they do. It is ok to do so and fire those that are not. We do the same.

Let’s break this down a bit more.

A lot of businesses have a sales team of some sort. That team can be two people or two hundred and the following principle holds true regardless of the size of that sales team. For our example, let’s assume that you own company that sells widgets. These are the very best widgets around and your average sale is $5,000. Would you want your salespeople chasing a customer that only has $300 to spend? No, of course not. If you had a seller that did this consistently, you would have to fire that seller. Marketing is the first step in your sales cycle and it shouldn’t chase $300 customers either.

Some retail businesses can be built with 50 or 100 core customers. These are their very best customers, someone who buys frequently and has a higher than average sale. Once that business establishes its core base (of 50-100), then it is time to expand into reaching new people that match the characteristics of their best customers, age, demographics, geography, etc. Of course, they can and will sell to someone even if they don’t fit into the business’s core customer profile. However, these buyers should not be confused for the core and shouldn’t be the target of a marketing campaign.

How do you expand your core? You have a couple of options. The first is targeting a "look-a-like" audience to your core. If your business, is frequented by NFL fans and you want to grow using a “look-a-like” audience, targeting could include college football fans or NBA fans or fill in the sports of choice. Or you could expand your product/service offering and build a new core customer based on this new offering. Say you are a HVAC company and you have a large share of the heating and cooling business in your market. Growth is still in your future so you expand your service offerings to include plumbing and electrical, branching into new consumer markets. But this new offering and its targeting should still be focused on the best consumers. Growth comes much faster when you have the right target.

To wrap up, you have some good customers, those that are profitable, usually that 20% that makes up 80% of your revenue, some that you actually like and some that you could be friends with. Then you have other customers that make you constantly check your grief to dollar ratio when you work with them. They could even be named “Karen”. And sometimes, you have to fire these customers. Here is a secret… that is ok. Not every customer is right for your business. The same is true for prospects, not every prospect makes a good customer and it is also ok to say “Thanks but we are going to pass on your business.” The less time you spend on “bad” customers the more time you can spend on good customers. The more good customers you have, the more profitable your business will be.

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