How to Focus on Your Ideal Customers

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In this post we will cover:

  • The 80/20 rule in your business
  • How to figure out who your ideal customers are
  • How to figure out what your ideal customers want

The majority of your revenue comes from your ideal customers. This is great news!

I’ve described the 80/20 rule of business before, but it’s the premise for this whole post.

80% of your revenue comes from 20% of your clients, and
those 20% are your ideal customers.

Generally, these customers are loyal, spend a lot and spend often. They may be demanding, or ask you to stretch a little bit further, but they’re fair and they’re profitable. You make a substantial amount of money from them. You want to keep these customers in your business, and keep them exceptionally happy.

The rest of your customers can be organised on a sliding scale all the way down to your c-list, or unprofitable customers. These are the people who waste your time, energy and resources. They’re never satisfied, and nearly always cost you more to serve than they actually spend in your business.

The most profitable – and enjoyable to work in – businesses know how to spot and cater to their 20%, as well as how to spot and fire the difficult customers.

This post is about optimising your customer base so you can

a. serve happy, pleasant customers
b. see more repeat business
c. have happier staff
d. make more money

To identify the bad apples, you’ll have to first make a list of your ideal customers.

Go through your database of customers and make a list of the customers that make you answer yes to the following questions:

  • Has the customer purchased from you on several occasions?
  • Is the customer profitable?
  • Is the customer strategically important to your business?
  • Has the customer spent a significant amount of money in your business?

While you do this, you may also wish to make a list of customers who made you answer no to one or several of those questions. Those customers could potentially be unprofitable, or undesirable ones that you need to review.

When you are trying to establish how profitable a customer is, think about how much they spend, how often they spend, and what they buy. Do they buy high-margin or low-margin items? Have they referred other customers to you? Do they pay on time? Do they buy products or services at full price? Each business will have a different set of criteria to evaluate this, but use those questions as guidelines.

Your ideal customers are those that are highly profitable, and a dream to deal with. You’re more than happy to accommodate their requests, and go above and beyond their expectations. These are the customers you will want to cultivate more of in your business.

Your ideal customers are the ones that:

  • Ask you for the products and services that fall within your expertise or speciality.
  • Value your products and services, as well as you and your staff.
  • Pay a fair market price.
  • Challenge you to be better at what you do.
  • Support your continued business and professional growth.
  • Help you move in new strategic directions.

Once you know who your top clients are, ask them what they want and value in your business so you can continue to provide great service.

Why do your ideal customers buy from you? And what more can you do to encourage their business?

Consider sending a survey out to your A-list customers, and provide an incentive for them to complete and return it. Craft the questions to elicit a true picture of your strengths and weaknesses, and include a combination of multiple choice, ranking and open ended questions.

Ask your ideal customers questions about:

  • The products or services they love or would love to see.
  • Customer service elements that are important to them.
  • Why they chose your business?
  • How your business could improve?
  • How could you do more business with them?

You may also wish to create a survey for your staff to identify anything in your business that they feel could be improved. They work there everyday too, so they’re a great resource pool for ideas and enhancements.

Take the information you collect from these surveys, and use it to genuinely improve your business. Fix any problems, and eliminate any activities or services that weren’t identified as valuable. Maximise the activities and services that were identified as valuable.