5 low cost ways to identify and find more “best customers”

It’s a lot of work trying to please all of your customers, isn’t it? The fact that it is such hard work might tell you that something is inherently wrong with that strategy. Effective companies focus primarily on pleasing their best customers, not all of them. They also spend their marketing and sales dollars on prospects that look just like their best. I was recently reminded of this and the 80/20 rule, or Pareto principle, when reading an excellent business and lifestyle book, The 4- Hour Workweek by Timothy Ferris.

You spend time and valuable resources building the best products on the market and then aim to provide world-class service for your customers. However, providing service is also very expensive so let’s ration it. I met one of the founders of LOVEFiLM (similar to Netflix for US readers), William Reeve, at a Customer Loyalty show in the UK who spoke on this topic. His company measured the number of calls for service per month per customer and grouped customers by the expense they drove. If you called too often, you were valued differently, as a perfect customer buys the most product at the least cost for you. Smart.

Here are 5 stepping stones to sanity when it comes to understanding who truly are your “best customers” and finding more of them.

1. Do they buy your most profitable products?
• You need to know which products have the best profit margins and then look at the customers who love those products. Then love those customers more and find out why they buy. Without this knowledge, the rest is unimportant.
2. How often do they call customer service?
• Monitor the frequency and complexity of customer service requests. It’s a fact that very successful companies use this a as a way to weed out costly customers. It’s OK to fire a problem or non-profitable customer.
3. When asked, do they speak favorably about your company?
• Survey your customers on a regular basis and listen to their feedback. I am always learning new things from my customers, from applications for my products that I never considered to reasons why my competition might be a better fit in certain situations. Ultimately, I want my customers to be a reference without any prompting from me.
4. Do you know what they look like?
• Use your CRM or customer data to determine the demographics or firmographics that identify the customers that meet #1-3. You will need this data to search for look-a-likes.
5. How do we find more just like them?
• There are many great databases you can use to find more prospective “best customers” once you know what they look like. You could go for the proven, traditional compiled sources like D&B, Acxiom or Hoover’s, or newer organically grown sources like Jigsaw or Cortera to find more of them.

Finally, make sure you screen any lists with a credit score when possible. The best customers are also extremely credit worthy and will pay you on time or even early. Cash is king. One tip – companies who are struggling financially are often the most eager to buy your products, as their options are more limited. Weed these high risk prospects out before you spend your first nickel marketing to them.

Have you found something that helps you play to win? Please drop a note in the comments or click on “contact us” to start a dialogue, we would love to hear about your experiences. – GK – www.kanuckconsulting.com