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Finding your optimal customer

Module 6: Knowledge framework for growth

Many CEOs think that in order to meet their revenue goal, they need to sell to as many customers as possible. They don’t realise that trying to serve lots of different kinds of customers, with different needs, can actually cost the company more than it generates from those customers. The wrong kinds of customers are a distraction, take time away from servicing your good customers. Bad customers (the ones who are never satisfied, pay late or not at all) are also a financial and psychological drain on the company. In short, the way to grow is not to try and sell to the largest number of customers, but to sell to the right kinds of customers.

Use this four-step process to sift through your customer base, identify your optimal customers and find the “right” customers for your company – the kind that helps your business thrive today and grow tomorrow.

1. Begin with revenue

Sort your customers, from the most to least revenue generated. As a rule of thumb, approximately 80% of your revenue comes from 20% of your customers. Identify the customers that provide 75-80% of your revenue, and list their names, in order (high to low).

Identify the customers that provide 75-80% of your revenue

2. Look at profitability

Now sort this list by the amount of profit they generate (high to low). Highlight the customers who generate the most profit. Don’t be surprised if some of the customers who generate a lot of revenue aren’t very profitable; some may even be costing you money!

3. Determine growth potential

Now re-order the list of customers that generate the most revenue and profit, depending on which ones have the potential to help you grow in the future. Consider factors such as their financial strength and stability, their desire to grow, whether they could refer customers to you, or even whether you and they could partner on a project. In other words, assess how important you are to their future growth, and how important they are to your future growth. If you don’t have any customers that meet this criteria, you should review your marketing and sales strategies to figure out why.

Assess how important you are to their future growth, and how important they are to your future growth

4. Match with your values

The final task is to ask, “Do we enjoy working with this customer? Do they share our values?” Do you get up in the morning and look forward to talking with them, or are they abrasive, pushy, complainers who require constant attention from sales or customer service? Negative behaviour can take a toll on your team, damage your culture and dampen growth. Finding customers that match your values, generate revenue, are profitable and strategically important is what enables you to grow quickly.

Use these four criteria to find your optimal customer. This screening process will enable you to build the profile of your “ideal customer”, and develop a proactive marketing and sales strategy to find more customers who will be critical to the growth and success of your company!

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