The Most Important Question That Your Business Can Ask: Who Is My Ideal Customer?
Author: Russell SmithAugust 3, 2011
A business without customers is a business without hope. Our small business accountants from Leeds look at the most important question you can ask — and how to ask it.
We may be small business accountants from Leeds, but that doesn’t mean we are all about the numbers. Much of our time is spent offering sole traders and limited companies advice on how to move forward, towards a better and brighter future.
We support businesses in a multitude of ways: from advising their next marketing move, to how to best meet their financial targets. However, there is one question that we always ask the clients we support — one question that the majority of them have never thought the ask.
“Who is my ideal customer?”
Why Do So Many Businesses Forget to Ask This Question?
Most businesses we’ve worked with have never thought about their ideal customer. This seems strange.
Customers are the lifeblood of any business. Without them, you have nothing but services or products to sell that nobody wants. So why not put more of an emphasis on who the best customers are?
Well, from the experience of our small business accountants in Leeds, it would seem most businesses see their ideal customer as the one that pays.
When you start your business, you have no customers and all you care about is finding some. If you were to focus on finding ideal customers at this point, it would take your business a very long time to get off the ground, so instead, you look for anyone that fits your client requirement of ‘has money, will spend it’.
That’s fine, for now.
But as you evolve, you bring in new customers; some are good, some are bad. What this confirms for you, though, is that your business is in demand. Now is when you should be asking yourself “who is my ideal customer?” Yet, so many businesses don’t.
Instead, the continue to focus on the numbers, building a large client base, no matter who they are. This isn’t always the best strategy, however.
Why You Need to Hone in On Your Ideal Customer
It seems almost taboo to talk about the ‘quality’ of a customer, but it is actually very important that you do.
We understand the counterproductive nature of putting restrictions on your customers; why pass up an opportunity to make a sale? The problem is, as we’ve mentioned, you get good customers and bad customers.
Now, a good customer isn’t necessarily a saintly figure who is easy to work with and takes all your advice without complaint, but they are somebody who uses your services, offers repeat business and doesn’t take up extra resources.
Conversely, a bad customer could be the nicest person you’ve ever met, but they may only buy one product or briefly use your service.
Bad customers, though, can have a profoundly negative impact on your company. If you are taking on anyone you can get, you’ll soon notice that while sales look good, profit isn’t reflecting your consumer numbers. This is because a bad customer doesn’t add much value to your business. They take up a lot of resources in acquisition and setup, then only stick around for a brief time. If these consumers aren’t your ideal consumer, it is really tough for you to provide them with value, which means you won’t keep them for long.
Back to the good customer. A good customer may take longer to acquire than a bad customer, but they’ll have a much more positive impact on your business. Being an ‘ideal’ consumer, you can offer them true value. You also won’t end up wasting more resources appeasing unhappy, bad customers who aren’t getting the value they are looking for.
A sprinkling of good customers can be more valuable and less resource-consuming than a boatload of bad customers.
Steve Jobs once said: “I’m more proud of the projects we haven’t done than the projects we have”. By that, he simply means that putting off the easy projects that would have brought in the wrong kind of customers allowed Apple to hone in and focus on their ideal consumer, resulting in them becoming one of the biggest companies on the planet and arguably the most recognisable of all.
Mimicking this sentiment, David Maister, world authority on professional services firms, has previously commented saying: “strategy is about saying no”.
Advice from our Small Business Accountants in Leeds: How to Find Your Ideal Customer
Our small business accountants from Leeds have had first-hand experience exploring the definition of the ‘ideal customer’. As a business ourselves, we’ve had our fair share of good and bad customers and know exactly how to seek out the ideal from the less than.
To find the ideal customer, the first step is understanding what makes them ideal. Simply, it is your ability to offer outstanding service, products or value that ensures customer retention and profitability.
So how do you find outstanding customers to offer outstanding value to?
Get Into Your Customer’s Head
To give your customer what they need, you need to know what they are after. Get into the mindset of your customers; only then can you truly understand whether you offer what they need. A good way to know what customers want is through the feedback and surveys of current clients participate in.
Elongate the Acquisition Process
The more data you have on a prospective client, the better equipped you are to know if you can offer them value.
Don’t Sell to Just Anyone
As a business, you can say no. If you don’t think you can offer true value to a customer, don’t take their money. It will only lead to poor profit margins and negative reviews.
Communicate Your Intentions Pre-Sale
Make sure clients are aware of exactly what you believe you can bring to the table, allowing them to make decisions on the value you offer. If they believe what you offer will bring genuine value and you can realistically hit your targets, you should have a strong working relationship.
Engage with Your Industry and Learn from Experience
Experience is a valuable tool in avoiding bad customers. As you grow and learn, you’ll find you become better at identifying what makes a good customer for your business and what makes a bad one. But you aren’t alone; others in your industry will have similar experiences. Creating a community, networking and learning from each other is a powerful way to make sure you are only onboarding the best clients for your business.