Even if you are selling at record levels, and selling to the wrong customers, your business will struggle. Business growth is not revenue growth, it’s profit growth and lifestyle related. Making a good profit, and enjoying your life. That’s success.
What’s the “Wrong Customer?”
They are high maintenance, low profit or no profit, demanding, slow pay or fights paying, never seeming completely satisfied, draining company resources type customers. Sound familiar? If you recognize this profile, you need to understand why you sell to them.
Decisions in business are generally made with one of two foundational emotions… fear, or confidence. If you are selling to the wrong customers, chances are you are using fear based decision making.
One primary fear that slows your business growth is the understandable fear of a lack of revenue (not being able to pay the bills) or missing your projections. It can manifest itself in a shotgun approach to sales and marketing that produces a mix of customers, some being the “right” customer and some being the “wrong” customer. You would think that any customer that buys something would be the “right” customer, but, this is not the case and it’s important to recognize because just a few “wrong” customers can kill your profit and attitude.
So how do you change this? By developing high-profit customer profiles and then focusing on selling to them. You may not change it at all if you follow standard business coaching advice.
Many business coaches talk about 5 or 7 areas (numbers) you need to focus on to increase revenue and profit, assuming that all this will help your lifestyle. Yet all you need is one focus area to become a confident and successful business. This one area will naturally improve all the other areas the business coaches talk about.
Here are those 5 areas (numbers) from a national coaching company’s website: “According to the “Five Ways,” all business is driven by five key profit generating areas: Lead Generation, Conversion Rate, Average Dollar Sale, Average Number of Transactions and Profit Margins.” Other companies expand this list.
All of those numbers are important. Yet they don’t address the absolute main factor in a successful business.
Attracting and selling to the “right” customer.
Let’s quickly address what’s wrong with the 5 numbers type approach.
Starting with lead generation, many business coaches focus on this as a business’s base number that drives all revenue. That can be a mistake. Yes, increasing the number of prospects you talk to can add more sales, but if those sales aren’t the “right” prospects, it can cause a business to actually lose money and their sanity. It also assumes an almost unlimited marketing budget to generate those leads, something I rarely see.
Increasing a closing percentage or getting more business from the “wrong” customers won’t be productive either.
The most important area a business can change to become more successful (more profit and a better lifestyle for owners and employees) is attracting the “right” customer.
Hence, attracting the “right” prospect is more important, and the first step in lead and prospect generation and I’ll tell you why.
When you sell to the “right” customer… all of the “business coaches key numbers” will improve naturally. Therefore:
– Leads will increase naturally through referrals.
– The closing percentage will improve because your “right” customers will buy far more often than
the “wrong” customers.
– Average dollar sale will take care of itself.
– The average number of transactions improves based on happy customers.
– You don’t need to increase your margins, the “right” customers buy at a fair value and are not
How do you identify your “Right” Customer? Chances are you already know who they are. You just need to stop selling to the “wrong” customers.
What’s your “right” customer profile?
Depending on your industry, these are the characteristics that might be part of your “right” customer profile:
– Job or purchase size
– Type of service or product they are looking for (the more unique the better)
– Income and expendable income
– Personality type (Yes it matters)
If you look at your past sales and pull out all the extremely happy customers, you may have found the research you need to find the same type customer in the future. Now add to each happy customer how satisfied you were in completing the project and look for the customers that have high marks in both categories. They will more than likely find that these have common project types. Or other obvious commonalities. You may have already identified your “right” customer just in this exercise.
You must also honestly acknowledge what you are good at. What jobs or projects do you really like? You will probably find that these are a large percentage of your extremely happy customers.
The “right” customer is looking for you. It’s your job to present your business as the “right” choice for them. You do this through a complete understanding of who they are and what they want. People buy what they want, not what they need.
Attracting your “right” customer will more than likely take a total review of all of your business marketing, sales, operations, and finance, and then making changes in those areas. By reviewing and assessing these areas, you can make a confident decision on exactly what products and services to offer and to whom.
Changes then can be made to your employee training, website, marketing materials, company mission and advertising to start the process of selling to better customers.
This is all part of a good Business Development Program, something we have been doing for many years with both small and enterprise sized businesses. If you would a free one hour consultation, please call me at 720-254-1234. Mike Bayes