Finding the perfect customer

You can’t service everyone and you don’t want to either.?

Quality will suffer, you lose focus, morale plummets and you confuse the market.

It is important that you establish who is a great customer and who is not.

Here is a framework I used for 15 years to identify which customers will be with us long-term and which ones will be a challenge in the short-term.

Will they last 6 months?

1 – Money

We would scrutinize every deal.?Every new customer.?We would review it prior to them becoming a customer and ask how was the negotiation? Were they looking to pinch every penny or did they realize the value we bring??

Once we got past this, we would monitor their payments to see if they would pay on time and how much accounting services they required in the first 6 months.?If this checked out we felt like they had a 50/50 chance of staying with us long-term.?

The other half depended on the owner

2 – Owner Involvement

Your good customers will have eyes on tomorrow. They look at where they are today and leapfrog into the future.

Your bad customers focus too much on the day-to-day operational fire.?They are stuck in the moment, stuck in the day and give no thought to the future.?It is like Groundhog Day to them.?Stuck in this perpetual loop.

I understand this is more geared towards small business, but this can apply to your economic buyer, champion, suit in charge, etc…

Is the owner too hands on and stuck neck deep in the minutia?

If they enable their team, set priorities, delegate and hold them responsible, they will be a great fit in the short-term

Now onto the long-term…

How long will they stay as a customer?

3 – Wallet Share

Customers should not be undecided.?Goals and vision should be established by both sides.?They should have a destination in mind. If not, all options appear the same.

Customers may be lost, but that is OK.?We are here to guide them.?Being lost is not the same as being undecided.?The lost customers know where they want to go. But they do not know how to get there.?

That is where you come in.?

In the first year, the customer should be expanding with you.?They should be adding more users, using more features, increasing their license usage, storage usage, etc…Why? Because we are all marching towards the end goal!?

Naturally as they grow with us we will begin to benefit from additional wallet share.?They will spend more money with us as they consolidate vendors and expand with us.

If not, you will experience the following

• Decisions made without reference to objectives are subjected to frequent reversals.
• There will be many meetings, without concrete results or future milestones.
• People make decisions based on perceived benefits.
• Office politics is guaranteed.

In short, the customer’s office becomes a circus.

Focus on total lifetime value.?That should increase over time, if not they will leave you in the long-term

4 – Referrals

The best compliment you can give any one in business is a referral.?

Not more money, but the opportunity to earn more money and gain a life long customer.?

Track referrals.?

You should be able to track where customers came from.?Build a tree that links customers together so you can easily calculate their contribution and add it to their total lifetime value.?

We had customers that didn’t spend a lot of money with us directly, but their referrals and referrals from those referrals really added up.

Wrap up

Having great customers helps everyone. It makes it a joy for everyone to show up each day.?It removes anxiety wondering if customers are coming or going.?The financial benefit is consistent revenue.

I’ve seen terrible customers shut down businesses because employees and the owner couldn’t reliably project revenue and every day was a defensive battle with the wrong customers.

• If customers understand the value of your product or service, pay on time and the owner is hands off focusing on the future, you will keep the customer in the short-term. (6 months)
• If they grow with you, you are able to capture more of their wallet and enjoy referral business, you will have a customer for life.

Treat the perfect customers like gold.?

It is especially important to focus on customer retention and long-term relationships in 2023 as we fend off an economic downturn.