When you first start your business, the ideal customer is simple – she's anyone who walks through the proverbial door with money in their pocket. How do you decide what services to offer her? Usually, you'll take on anything that sounds even remotely close to what you think that you can do.
This is what I might call the "yes, absolutely we can do that" phase. Of course, once the client is out the door, "yes absolutely" is quickly followed by, "who do we know that actually knows how to do what the customer is asking for?"
Saying yes to customer requests is a very exciting phase of building a business (or a new business division). And, frankly, that excitement should never completely go away.
Customer requests do two things: they identify market needs, and they push entrepreneurs to think about their next product or service offer.
As your company matures, you tend to realize that you can't be all things to all people.
But that's okay. As you figure out what it is you do best, there may even be some existing customers that you have to let go – and that's okay, too. The key to sustained business success is to identify a substantial, pre-qualified group of customers who are willing to purchase your products or services at a profitable price-point.
Identifying your core clients – so that you speak their language, support their interests, and listen to their feedback – is the most important job in business. Here are three steps I like to suggest:
1. Generate a comprehensive list of both your current and the potential target customers that you have in mind.
2. Once you have that universal customer list, identify the target groups that you think have the highest potential. Study the wide range of attributes that you believe are important for a prospect to become a customer of your company. You need a cross-section of criteria that include demographics (characteristics such as business sector, title, age, gender), psychographics (psychological factors such attitudes, values, likes and dislikes) and geographic attributes (proximity to your business or its distribution network). To be clear, you must go deeper than simply describing where your customers live or how old they are. You need to work across all the ranking areas to create a useful customer profile. For example, simply specifying adults aged 18 to 49 who live in Washington D.C. is too broad. Create profiles of your various target groups based on what they like and don't like, and on what they think, watch, eat, wear, visit, experience, and so on. Essentially, you need to think of your customers not as points on a graph, but as people.
3. Create a ranking system to measure the quality of the leads (potential customers) that you are trying to sell to. At my company, we use a tool we created called the Lead Quality Index™ (LQI). Essentially, it's a grid. We list potential customers down the left-hand side and our ranking criteria across the top. We use categories such as corporate sector (e.g. retail, consumer goods, services), title (co-ordinator versus CEO), location (Toronto, rest of Ontario, rest of Canada, or beyond) and mindset (forward-thinking, pioneering versus market follower). The LQI is no guarantee of success, but it helps us think through and stay focused on our highest potential opportunities.
We only have so much time in a day. Staying focused on who we are selling to and what we can offer them is all-important in establishing long-term, mutually beneficial relationships.
The voice of the customer needs to be heard throughout your business. Remember, you don't buy what you make -- you create your products and services to sell to other people, so it's their vote that counts.
I was once on a conference call to plan the relaunch of a national store brand for a leading retail chain. Because many of the client's products required explanation to shoppers, a member of the chain's merchandising team asked if they should set up the stores' 'help' section to suit the needs of the company, or the shopping behaviour of the customer. One of the owners piped in to say, "set up the section to the liking of the customer, and I'll adapt." He had it right.
As Wal-Mart founder Sam Walton famously said: "There is only one boss; the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else."
Bottom-line: Know your customer. Think like a customer. Delight the customer. In return, they will delight your bottom line. And they'll point you in the right direction for the future.
Ken Tencer, CEO of Spyder Works Inc. is a branding and innovation thought leader who helps organizations reimagine their futures. He is the co-author of two books on innovation – The 90 per cent Rule and the newly released bestseller, Cause a Disturbance (Morgan James Publishing, NY).
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Ken Tencer