Who the Heck is My Ideal Customer?

For small businesses, it is exciting to get someone on the phone. Traffic from any channel means that SOMEONE is paying attention to your product. The probability of making a sale is now greater than 0. But is that really the case? If you’re trying to sell solar panels to someone renting an apartment, that probability is still at 0. That person isn’t ready for this type of purchase, and very well may never be. It is critical to know exactly who your ideal client is.

If you don’t know who this is, then chances are your efforts aren’t all going to the right places. At some point(s) during your day, your energy and time are being wasted as you chase rabbit holes that won’t ever convert. Frank P. Cespedes, James P. Dougherty, and Ben S. Skinner III wrote a great piece about identifying ideal clients for the MITSloan Management Review. They told the story of a business that experienced early success, grew to a sizable company, but had never established the ideal customer profile.

“Without clarity around that, the sales process becomes a function of individual salespeople’s ‘heroic’ efforts in the field, not a scalable platform for profitable growth” (54).

The Customer Influence

ThisWay

The operations of your entire company depend on who your ideal customer is. “Customer selection impacts not only operating costs and margins… initial sales also influence the venture’s trajectory of organizational skills, because businesses develop capabilities and routines in the process of interactions with customers” (55). Your ideal customer influences everything about your product, your sales & marketing efforts, your internal/external communication, and many other facets.

Retention is one of these other areas. It goes without saying how important this is. You need to keep customers. Attracting new clients is one thing, but it is moot if you cannot retain your current base. The effect of a high churn rate is demoralizing and can be the single factor inhibiting the success of your company (not to mention potentially keeping investors at bay). “An incremental 2% increase in retention leads to a 20% higher multiple” when it comes to revenue, which affects the company’s valuation. When a business knows who their ideal customer is, it becomes incrementally easier to improve the retention rate.

Attract the right customers in the first place 

When someone sees that your services aren’t a fit right off the bat, they will cancel. This multiplies with all of the wrong people you are attracting. Think about your value propositions, the customers who would find value in your product, and go after them. If they find value, they are far less likely to cancel, and more likely to continuously pay for something beneficial to them. In addition, you will have far more visibility into what is working vs. what isn’t.

When your customer has been identified, put them front and center. Speak their language because you can. When they see that you know them, they will be more inclined to purchase your product. Your product may be the best thing since peanut butter and jelly, but the focus should be on those who are using it. This will attract more of those who should be using it without pushing away any of those outside of the ideal circle. And, of course, when there are more people in your base who find value in your services, they are more likely to hang around.

What type of buyer? 

buyertypes

Something else to take into consideration is what type of buyer your customer base is made up of. Do they rely more on the relationship aspect of things? Or, are they looking more at the transactional side, only caring how the product will serve them at that moment? Are they impulsive or highly analytical? These characteristics will also help when truly getting to know your clients.

Metrics

Data. And data. I can’t stress enough how important it is to have data on everything. This is how you know things are working. Or not working. Concrete data will help to solidify your findings on who you should be working with. If you can detect behavioral or buying trends, you can replicate best practices and allow yourself to scale. You can see what clients respond to. You can see where they hang out. Data will be a main force in driving you toward where you need to be.

Metrics are used to drive improvements and help businesses focus their people and resources on what’s important.” In other words, they bring to attention what is needed to help the business grow. Your team will know what improvements to make and what to draw their lasers upon for the next financial quarter. If you know what to shoot for, you’ll know whether or not you’re hitting the target. In this case, you’ll be well aware if you are bringing in a higher percentage of customers that fit your ideal profile.

Now, go get ’em tiger! 

Haven’t found the customers who could get the most value out of your services? Then stop what you’re doing and nail this down. The business will be built for these clients, so any more construction will be in vain. Are you one of the fortunate few who already know who your ideal customers are? Focus all of your attention on them. Make sure they know that they’re the focal point of your priorities.

More importantly, talk to them. Get to know their pain points. When you uncover these from the source, it is much easier to go find others who fit the same profile. Call them, email them, or use a live chat software to engage with them.

Customers have more control than ever. Good service is only possible when you know what they want or need. In order to know their wants, you first need to know who they are. Solve that piece, and then look at getting your business to the next level.

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About Sebalis Davis

Sebalis is a member of Pure Chat, a live chat software company. He has a passion for solving problems that inhibit the growth of businesses. He looks forward to educating his forthcoming twin girls all about the business world, as well as instilling the type of fitness culture that he abides by.

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