As an entrepreneur, many small business owners are hungry for business and they will go to extreme lengths to make a sale. They’ll bend over backwards believing that all customers are good customers and a sale will bring in cash to their business. However, in my last post, I’ve briefly covered how not all customers are created equally. If you get the wrong customers, you may see an initial increase in revenue but in the long run it will eventually become detrimental to the growth of your business.
Unfortunately, many small business owners have a hard time identifying whom their best customers are or simply don’t worry about it at all. Obtaining the right customers can help improve and grow your business while the wrong customers can create unnecessary problems and headaches. Quite commonly, the wrong customers will take up too much of your time and resources while preventing you from obtaining better customers. Having a process in obtaining the right customers is essential. Otherwise, it can hurt your bottom line.
Identify Your Business Model
Before you start searching for the right customers, you’ll need to create a business model and lay out your financial objectives. Since things rarely go as planned, your initial business model will constantly need to be revised to ensure profitability.
Part of your business model is identifying your costs, revenue, differentiation, and value proposition to customers. Tom Taulli provides a great structure in how to develop a great business model. As such, the purpose of identifying your business model is to find the right customers that fit into your criteria. Be practical when developing your business model because it would be foolhardy to have a business model that attempts to cater to everyone.
Identify Your Ideal Customers
After identifying your business model, you should have a general sense of who your ideal customers are. You should be able to categorize your ideal customers based on their demographics (e.g. age, sex, income, location & etc.). For example, if you open up a classy sports bar, your ideal customers will most likely consist of males over the age of 21, with a normal to high income, which live locally. If you are having a hard time identifying your ideal customers, looking at your financials should help point out the customers whom are spending the most and paying on time. Find out what characteristics your best customers have in common to help you get started.
If your current customers are not the customers you’re looking for, then it may be time to revise your business model. It is important to identify your ideal customers because your future marketing strategies will be designed to attract more of the right customers. If your current customer base is giving you more problems than expected, you’ll need to identify what is causing the issue and decide whether to cease doing business with them. As an entrepreneur, you may be inclined to accommodate each and every customer, but deviating too much from your business model will lower the quality of future customers.
Reach Out to Your Ideal Customers
Depending on your business model and the demographics you are targeting, you’ll need to know where to get more of the right customers. You’ll need to create marketing strategies that target that population. If your small business involves selling baked goods, you may decide to advertise in front of a gym because the members are hungry after their workout. If the demographic you’re targeting are young, you may decide that your business needs to advertise via social media. Specifically, if your ideal customers are in their teens, you may decide to market your business on Tumblr or SnapChat. Accurately identifying the right customers will ensure that your marketing dollars are spent in the right area and you’ll be able to attract more of the right customers.
Keep Your Best Customers
As with many things in life, quality is valued more than quantity. Many veteran business owners will tell you that quality customers are generally a pleasure to work with and easy to do business with. Therefore, having quality customers will allow your small business to focus more of its time and resources in attracting more of the right customers. To keep your best customers, you should offer them preferential treatment and other advantages solely to them. For example, if you have an ideal customer that routinely makes big ticket purchases from you, you may nurture this relationship or decide to give them an incentive or credit to purchase more.
As a business owner, you’ll need to constantly re -evaluate who your ideal customers are. You may surprisingly find that a different demographic of customers have now become your business’s best customers. The goal is to constantly attract your most profitable and best customers by eliminating the dead beat customers (i.e. not paying on time, causing problems, and etc.). Focus your marketing and sales effort towards your ideal customers.
If you follow these steps, your business will not only be able to acquire more customers, but you’ll also be making your business more efficient and allowing your business to grow and become more profitable. Focus on the direction you want to take your business and the message you’re sending out to customers since you want to find the right customers for your business.
This article originally appeared on Servora Blog and has been republished with permission.
Read more: Five Tips On Finding Your Next Customer