When many businesses start, there is a temptation to sell to anyone who wants to buy their product. After all, this demand is a reflection of the ideas and ambitions that has potentially taken years to develop and you’ve shown that you’ve got something people want.
But how do you make sure that these customers are those YOU actually want to sell to?
This isn’t just thinking about credit worthiness by getting new customers to pay in advance until you give them credit terms, it’s whether they are the right profile of customer you want to do business with. Over a period of time you will have created a customer base that vary in many respects, but not all will be customers who are ideal. Far from it.
Ideal customer profiling steps
The first step is to identify what an ideal customer looks like for your business. What customer attributes are important to you? Is it volume/level of orders, speed of payment, reliability/on-time of delivery that need the focus (and how important are each of these). Some businesses track the amount of management time (including directors or owners) that the customer needs on day-to-day issues. The more time required, the more they are a problem customer.
Once you know what ideal looks like, you’ve got a pool of customers that you can rank in accordance with how ideal they really are by each attribute. This is the easy bit. The hard bit is how to turn the far from ideal to ideal!
By tracking and interpreting the data you’ve used to rank each customer by attribute, it gives clear information for management and sales teams to work on. If one customer’s problem is speed of payment, but score well on reliability and order levels, you could encourage prompt payment with a discount, or agree a payment plan to get things back on track in the short term.
By clearly identifying the ideal customers and taking positive action, your business can enjoy more rewarding customer relationships through greater profitability and less management headaches – both of which can enhance the value of your business.
Menzies Business Advisory Services
We passionately believe that every business owner needs an advisor who really understands their goals. Our strategic advisory team has vast experience of working with SME and owner-managed businesses.
By gaining a real insight into our clients and their business, we are able to assist and challenge the management to help those goals be realised. Your business is a complex entity, with challenges and opportunities in many areas. To help you gain the insight you need, watch our video introduction to our advisory offering.
Through years of experience within the team, we have developed a unique approach. Our in-depth advisory programmes use a variety of techniques and tools to help owners meet their goals. Whether it be profit growth, minimising risk, rapid expansion, long-term stability, grooming for exit or any other vision, our approach is uniquely tailored in line with every client.