I’m guessing if I asked you if you’d like more time and better profitability you’d nod your head and answer with a resounding ‘of course’! I mean who wouldn’t right? Well what if I told you there is one foundational ingredient that is the basis of achieving that, and it is the one ingredient great companies know about and use … would you like to know what that is?
OK enough with the suspense…
It is choosing your customer. Now before you rush off and say … ‘yeh I know that’, let me ask you to write out, in detail, a description of your ideal customer. Write it out as a single avatar for each customer segment you believe you serve. How clear are you really? You see great companies know in explicit detail, who their Ideal Customers are. They think about them as individuals not groups of people.
Let me give you an example. Meet Rob. Rob is an ex-Proctor and Gamble MBA executive who decided he wanted to work for himself vs ‘the-man’ and now owns and operates a very successful Business Brokerage firm. Rob is a driven guy, he’s smart, educated and brings credibility to his role as a broker and as a result had some quick success in building his firm.
After some time though, he found himself working harder and harder, and yes the income was also increasing but the effort to get it seemed to be getting out of balance.
When Rob engaged me, one of the first activities I had him do was write out a description of his ideal customer. He did it and it was one sentence long. I asked him to go back and think about the best client he has had to date and write as detailed a description about that person as possible.
The result was remarkably different. The second description included the client’s values, his interests, family profile, things he likes and the things he fears. It described his experience in business, and what was important to him after the sale of his business. Once we understood his ideal client it was very easy to start designing his business to more closely align with this person.
Next I had Rob go through his client list for the past 3 years and identify those who most closely matched the description he had created. Once he did it, we added up the income generated from those clients vs the others and you guessed it … the result was astounding. Over 75% of his income had come from a small group of ‘ideal customers’. And the kicker was these customers were also the easiest for him to service. They were more sophisticated, had better advisers and valued his service more.
The reality is if he had only serviced these clients over the past 3yrs, yes his income would have been a bit lower (maybe) but he would have had A LOT more time. More time perhaps to service more of those clients or time to spend with his family.
The second lesson here is; that Rob knew this stuff from his Proctor and Gamble days, yet through the ‘busyness’ of running his business he’d lost sight of some of the basics.
How often do you come up for air to assess how well you are covering the basics? Taking some time to look at the big picture can be some of the most valuable time you spend in your business.
When most people are asked to focus on a single customer they get extremely nervous. They feel like they are excluding a massive part of the market and subsequently minimising their opportunity for sales. In reality the exact opposite is true. It is almost impossible to excel in servicing a wide range of customers. Everyone has different needs and values.
Decide who you are going to be ‘best in class’ at servicing and who’s values most closely align with what your business offers and how you do business. It may be more than one category of customer but it is not more than five.
Have fun with it, and enjoy the freedom this focus will bring you.
Jamie is an advisor to business owners who want to step up and build great companies without sacrificing their life doing it.