In business, it’s about the quality of your customers, not just the quantity.
There are good customers, high-maintenance customers and not-worth-it customers. Any small business owner recognizes these categories.
Each group requires specific strategies, the most important being your tactics for pleasing your best customers. Maybe you define them by the Pareto Principle — the 20 percent who drive 80 percent of your revenue. Or you might define them as the customers who keep recommending you to their friends and writing glowing online reviews. The precise definition doesn’t matter, as long as it’s accurate. At LeadMD, identifying our ideal customers lets us understand how to accelerate their loyalty and engagement — and where we could find more customers like them.
Replace Assumptions With a Data-Driven Process
A lot of marketers think they know what their best customer looks like — the products they buy; the services they like; their demographic profile. But customer bases are always changing, and only an ongoing data collection strategy can accurately track that evolution.
The first type of relevant data is cold, hard numbers, based on your metrics. What’s the revenue baseline that qualifies a great customer? What are the criteria that identify a fertile engagement? The other type is what I call in-head data. It includes both your team’s knowledge of your customer as well as the customer’s feelings about your product or service.
Your sales representatives are a great go-to source for customer knowledge. Gaining customer feedback is a little trickier. The best solution we’ve found is strategic surveys throughout the buying and selling process. Net Promoter Scores (NPS) have been particularly helpful in identifying fertile opportunities for future growth. Transcend typical survey questions and explore the nuances of each purchase and failure. We look into customer satisfaction and loyalty, the likelihood of future purchases and why someone opted out mid-way through their buying journey.
Don’t make the mistake of only focusing on the “didn’t convert” side of the fence. While you should analyze losses, understanding the ‘why’ of conversion is also important. What does the customer value? Will they refer friends and colleagues? Those answers will signal the presence (or absence) of a truly great customer.
Balance Resources Strategically Between All Customers
Without question, all customers should receive great service. Attentive, enthusiastic service should be the baseline for every customer, even the “bad” ones. You can’t afford to have brand detractors. But you should take that great service to an even higher level for your best customers, so they’ll take your brand to a higher level with their sphere of influence.
Let’s say that you’ve categorized your customers into A, B, C and D levels. Obviously you’ll want to motivate your A customers to stay loyal and recommend you to their network. For us, we always consider ways that we can strategically partner to maximize the impact for both businesses. Whether it’s joining forces at a trade show or co-branding an infographic, every customer is different. It’s important to listen and take a tailored approach.
Your B-level customers have the potential to join the A group with the right nurturing. For us, this nurturing takes the form of strategic conversions where we determine professional and personal goals, then work to achieve them. This approach ensures that everyone feels like part of the winning team. It deepens both loyalty and engagement and effectively moves customers from B to A.
While you’ll probably keep C-level customers at your baseline of impressive service, your D customers are different. The smart strategy here is to identify them as D-level and maintain a positive brand image. At the same time, use this knowledge to turn away future D-level prospects. Often, entrepreneurs feel obligated to chase whatever money comes their way. But in assigning resources to accounts that will never pay off, you’re taking away resources from the accounts that will.
Reward Value With Value
The common denominator for customer retention is hyper-value. Look at your A and B clients and figure out what’s going to make them view you as the best option in town.
How can you differentiate yourself from competitors? What’s the precise need you’re solving, and how can you make that solution better? We worked to establish superior response times and have an internal process that is based on accountability and consistent communication. In fact, every client gets an entire team dedicated to their success.
By establishing a value exchange equation that clearly benefits your best customers, you’ll make it hard for them to justify going elsewhere. Often, this comes down to communication. Your approach might spell out hyper-value — you state the problem, how you’re going to solve it and the benefits the customer will see — but the customer may boil everything down to just price, which sets up an opportunity for a competitor to present a better deal.
This indicates a communication breakdown. The customer is defining value in one manner, while you’re attempting to demonstrate it in another. Listen for those people and educate them on exactly how you’re offering value on multiple levels. If the prospect isn’t aligned to your same values, it’s a bad fit. Even if you win the customer, they won’t stay. If you look at any successful brand, you’ll see that their value messaging would fall flat when up against a customer who doesn’t share their goals. We’ve found that the key is determining these alignments early in the process so we avoid an even more painful misalignment after money changes hands.
Every customer wants to feel like they’re your only customer. By scoring your best customers’ traits and developing strategies for each buyer category, you can eliminate those who don’t belong while expanding the pool of great customers.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image credit: CC by Alan Cleaver