Selecting & securing profitable customers
By Pavlo Phitidis
Knowing how to focus your sales efforts on the most profitable customers can accelerate the growth of your business exponentially. It is a critical exercise because, with limited resources on hand, you need to focus your efforts, to maximise your impact and build your business’ momentum. On this week’s The Money Show with Bruce Whitfield, we outlined a useful technique for positioning your business:
Know Your Customer
As the owner of a growing business, you may feel tempted to try and be everything to everyone. This impulse is rooted in wanting to generate an income as quickly as possible, but it’s never a good idea to try and solve every problem, for every potential customer that comes your way. Finding, and knowing, the customer that you are best suited to serve, and who would be most profitable for your business, is vital.
A Technique for Positioning Your Business
We used this technique with a group of technology entrepreneurs and, through it, you’ll be well equipped to find the right kind of customer for your business, and solve their specific problems. This technique will help you to build your business to be customer-centric, rather than product-centric, by positioning your business correctly. To showcase this technique, we’ll focus on the product of a tin of baked beans.
1. Understand the essence of your product or service
Undertaking an in-depth analysis of your product will help you to better understand and define its capabilities and suitability for customer groups. Create a brief, feature-filled definition of your product, isolating what it can and cannot do, what it looks like and how it works. If we look at a tin of baked beans, we may ask the following questions: What does the tin look like? How many beans are in each tin? What do these baked beans taste like?
2. Define the groups of customers you could serve
Once you understand your product, look towards discovering the types of customers it can serve. Define who the people are that your product can serve, by detailing their demographics; lifestyle; likes; dislikes, and needs. We’ve outlined four definitive customer groups who may enjoy or eat our tin of baked beans:
- A mom with 6 kids
- A competitive athlete
- A busy business executive
- An artisan worker
3. Understand the problems that they experience that you can solve
Each of your defined customer groups will have unique problems they face, that your product could solve. These are some of the unique problems each of our chosen customer groups may face:
- Mom: needs our tin of baked beans to stretch as far as possible, and for it to be easy to use when her children are hungry.
- Athlete: needs a healthy, high-protein meal, that has muscle building capabilities.
- Business Executive: needs a convenient, on-the-go meal that’s nutritious and easy to make.
- Worker/Labourer: needs a filling, hearty, energy-boosting meal.
4. Plot your customer groups onto a matrix
Plotting your customer groups onto a matrix may sound complex, but it’s really a simple, four-block graph, that helps you to define your most profitable customer group. You’ll assign your customer groups into each quadrant by showing which group:
Has high or low profitability: Which of these customer groups can I serve immediately, with the product I have right now? How useful is my product to them?
Has a few, or many, members: How many of these customers are out there?
Through this, you’ll discover your ideal customer: the most reachable and most immediately profitable customer will be in the top right quadrant. For our tin of baked beans, that turns out to be the Business Executive.
5. Craft your marketing and sales messages to focus on the top right quadrant
You can now focus your marketing strategy and messaging on your most profitable customer group, and find ways to communicate with them, in line with your business positioning.
6. Be disciplined, focus and persist
Focus most of your marketing effort and budget on your most profitable customer groups, and remember that persistence is the key to momentum. Wealth, and the development of a successful business, is a cumulative exercise and not an overnight task. Once you’ve established a solid marketing effort that focuses on your ideal customer, you can look at apportioning some marketing effort towards the other customer groups, and perhaps even think about new product developments that may serve them best.
Do you need help with figuring out your ideal customer is, or positioning your business correctly? Aurik can assist, as we work alongside you to build your business into an Asset of Value.