Grow your profits through customers

Most of us talk about target customers as a fundamental part of business management—you know who your targets are, right?

However, there is also a business saying that you need customers with a problem only you can solve, and it’s for you to identify that unique selling point and communicate it clearly to your would-be customers. Well said, right?

As I get to know a client, one thing I usually ask is how do the salespeople decide which leads to follow up on or which phone calls to return first? I assume they use some hierarchy of criteria that defines a target customer to guide them.

For the most part, I haven’t found that to be true. They will generally return calls of current or past customers and have specific companies they are trying to sell to that are on their radar. Beyond that, it is rare for a company to know who their best prospects are.

Why does it matter?

Simply because all customers are not made equally!! Some buy more, some are more loyal, and maybe most importantly, some are more profitable for you. So as you begin to gather the list of names of potential target companies, it is a good idea to know why they make a great target and how to ensure they will add significantly to your profitability.

One of the key furtive to targeting high-profit customers is to identify prospective customers that you can serve at best. Remember! Not all customers seek product benefits equally. Some care most about price while others are looking for a product that meets specific needs and will pay more for it. Others may buy based on relationship or service. Bottom line is, each of those reflects a different strategy, and in developing a strategic plan you need to emphasize one over the others.

That means that certain customers will respond best to what you offer, and you want to define the characteristics that describe those types of customers. Maybe it has to do with company size or complexity of solution.

Possibly they value total cost over initial price. Perhaps trust matters most of all, and that requires a strong relationship. It is important to understand the variables that the customer you can best serve uses to select the vendors they will select. Those are the high-priority customers for your company. Trying to satisfy a customer who wants the lowest price when your business model is not built on that strategy is a self-defeating prophesy—you might win the customer, but you will lose profits.

That is not a success. Be willing to walk away from customers who want what you don’t provide.

What’s more, you ought to define which customers are profitable. It may sound basic, right? But many companies don’t know the profitability of an individual customer. Yet, research has proven that 2 out of 5 of any business’s customers are unprofitable.

Do you know which customers are profitable for your business? If not, then find out! Then discern what sets them apart. Is it the size of their order, what they order, what industry they are in or even what they bundle together when they order?

Once you know who is profitable, your goal is to seek more customers like them. Once you know who is not profitable, your goal is to increase their profitability.

Finally you need to determine which customers your company can grow with all along. The customers who brought you here may or may not be the ones who will get you there. If your business model or strategy has changed, if you have grown substantially, or if market trends and technology have evolved significantly, you may have to rethink your target.

…follow through my next consultative message. Email: [email protected] or [email protected]