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Customer Loyalty Is Mostly About Choosing the Right Customers

I know the title of this post might raise some eyebrows, but it’s true – most businesses have the exact clients they’ve chosen.

photo credit: LexnGer via photopin cc

photo credit: LexnGer via photopin cc

Now, you may not exactly love the clients you’ve attracted, but that’s because you don’t realize the power you wield when it comes to “choosing” your clients. Far too many business owners feel powerless in this regard and subject themselves to serving “anyone with money” or worse “anyone they hope will pay.”

I recently asked a group of business owners to tell me some of the attributes of their ideal clients. After we got through the requisite “they have money” and “they aren’t a pain to work with,” we wandered into some much deeper and meaningful territory.

This was a group of dance and music studio owners and for many the most important attributes had to do with mindset and behavior – “They ask lots of detailed questions” and “they see art, music and dance as ways to support healthy children.”

Wow, all of a sudden we had stumbled upon something extremely valuable. See, while all agreed that the real benefits of their service were self-esteem, wellness and better study habits, few did anything to promote and amplify those messages.

Eventually, they discovered that in their ideal clients, this was the common thread and yet, they feared that if they led primarily with the mantra of “healthy children through art,” they would turn away the “let’s put Sally in every possible competition” people.

And, of course, I had to remind them, that’s precisely the point.

While the “let’s put Sally in every possible competition” people did indeed have the money, they were hard on the staff, frequently disruptive and gone as fast as they came.

The real message here is that in order to build a business that truly can thrive you must understand who you are equipped to serve best and you must do everything in your power to attract, serve and choose them over all else.

You Get All the Ideal Clients You Create

Recently, I conducted an all day workshop in the West Texas town of Coleman. The event was organized by the town’s Economic Development folks and championed by a long time Duct Tape reader Greg Martin.

During then event I outlined the Duct Tape Marketing System in great detail.

ideal client

photo credit: mallix via photopin cc

As any long time reader here knows one of the first steps in my system is to narrowly define who makes an ideal customer for your business. The endpoint involved in this step can be best summed by this statement – How would I spot your ideal customer?

The path to this endpoint involves lots of study focused on your most profitable customers that already refer – the maim reason to start here is that profitable client are usually profitable because they have the right problem or are the type we can serve well. Because of that fit they usually have the kind of experience that leads them to refer.

The trick of course is to understand why that is. Understand why they are profitable, why they are such a good fit, why they work so well, why they don’t come for low price, why they let us show them how to get value.

The reason to go to this amount of work dissecting and narrowing our focus is two fold. First off, we want to do what we can to attract more of those ideal folks. But, it’s just as important in terms of figuring out how to train, educate and work with every client in a way that makes them ideal.

When you better grasp what makes a great client great, you’re more equipped to create the intentional processes that can turn a not so ideal client into one that behaves like one.

The net effect of all of our marketing is that we get the clients we deserve or create based on how and what we communicate before, during and after the sale. Understanding that gives you complete control of the outcome.

Shortly after the Texas event I received the email below from event organizer Martin and I’ve reprinted it here as he sums this idea up as well as I could have.

I had an interesting discussion with one of our fellow Small Biz Workshop attendees a few days ago.  During our conversation, we got on the topic of the Ideal Customer.  He said something that started me thinking, and it was likely something that most of us are struggling with as we consider the ideas we heard in the Workshop.

“The Ideal Customer is a nice concept and I wish we could focus on just the best customers.  But, truth is, in our market, we have to pay attention to all of our customers.  In our world, our Ideal Customer is the next one to walk through that door.”

I knew that he was somehow not grasping the point John was trying to make.  I also knew that I didn’t have a better answer for him in that moment.  But, later that evening, I had an epiphany…

The Ideal Client is a concept worth considering and worth pursuing.  And, here’s why.  There is little doubt that the gentleman I was talking to could go over his client list and quickly point out the “great” clients or customers.  He knows exactly who they are, simply because he lives and breathes this business every day.  It’s quite likely that he could pick 4 or 5 and say “If I had 100 or 1000 customers just like this group, my business would run more smoothly, we would grow, and we would be more profitable.”

Here comes the epiphany part…

The probable reason those 4 or 5 are “Ideal” is because they pay on time, they are NOT especially price sensitive, they come in regularly instead of waiting until there is an “urgent” need, and because they refer others.  But, and here’s the big “but”…

The question to ask once you have identified this small group is; “Why do they pay on time, why are they not terribly concerned about price, why do they come in regularly, why do they refer your business to others, what do they say when the refer your business to others?”

For example, they may not be price sensitive because they Trust you and because they Value the service you provide.  Even if you are selling a retail product, there is still a service component in the way it’s delivered to you, the experience you have in the store, the availability you provide, the comfort level you have that you weren’t “sold” something you didn’t need, etc.  Same for the other aspects that make them great clients.  They understand the value you are providing.

And now, the “a-ha” moment.  Yes, you are in a limited market.  So, you DO need all the customers, not just the Ideal ones.  But,….  By understanding what makes your Ideal Client tick, you now have the opportunity to educate the “other” clients and move them along the path to becoming Ideal Clients.

Your clients that are less than ideal are not that way because they choose to be.  They just don’t know what your great clients know.  It’s possible that your great clients learned what they know from someone besides you and you are now reaping the benefits.  Maybe they did get the information from you, but it was by accident or it was because you have a closer “relationship” with those clients.

The point is, finding out “why” they behave in an Ideal Client manner is fantastic info for you.  Once you have that information, you can systematically begin making sure that all of your clients know as much about how to be good clients as that small group of Ideal Clients knows already.

Just my two cents.
Greg Martin

So, with this in mind let me ask you this – what kind of client do you deserve?

Who Would You Choose to Be Your Customers?

Much has been said in marketing circles about target markets, demographics, psychographics and other ways to define who and what makes an ideal customer.

personas

photo credit: Fulvio’s photos via photopin cc

The notion mostly implies that you determine the makeup of a market that your business seems suited to attract.

The thing that’s always bothered me about this simple approach is that it sort of has a lowest common denominator element to it – who can we attract?

What if you changed this point of view to something more like – whom do we deserve to work with?

Have you ever considered the following question? – What qualities would our ideal customers have?

I’ve spent the last few years evangelizing this idea of an ideal customer. For me the idea implies behavior as much as demographics.

And here’s the other thing, don’t you deserve to work with customers that appreciate your unique value?

Now some might suggest the idea of choosing your customers as somewhat egotistical, but it’s not at all. If you want to work with the leaders in your marketplace, then you better up your game so that can deserve to do so. It’s actually quite a humbling and centering idea.

I was talking about this very idea with a long time friend the other day. Eric Morgenstern’s firm, Morningstar Communications has experienced tremendous success and his roster of client reads like a “most desired” list.

Eric heard me share my thoughts on ideal customer during a presentation to a group of business owners and he later told me how behavior plays an extremely large part in the clients they seek out and, perhaps as importantly, those they don’t.

“Our clients are nice, smart and successful. Two out of three is not sustainable.”

“We’ve observed:

  • Companies that are “involved in the community” tend to value effective communications, and our high level of service.
  • Companies that are “lifelong learners” tend to value effective communications, and our high level of service.
  • Companies that are true leaders believe, “. . . an educated customer is a great customer.”

Those are correlations that help us assess each individual prospect.

So much is a gut feeling . . . about the organization and its leadership, based on expertise and experience.”

So, gather the troops and start asking about ideal customer behavior, traits and qualities that define success.

Begin by exploring personas that you don’t want to work with. Persona is a term that takes its meaning from the idea of a theatrical role. In marketing the term is used to describe the common characteristics of a customer group much like the make up of a character in a play.

A client of mine did this exercise for his design and consulting business and was able to complete sketches of the kinds of clients they did not want to work with in such a way that it made it much easier to define what ideal looked like.

He used personas with names like Lottery Winners and Destined to Be Small to frame qualities that made up red flag customers. He even went as far as to identify customers that he was no longer going to work with.

That’s the funny thing about getting some clarity around this idea – until you know who you must work with, who you choose to work with, it’s far too easy to take work and customers that drag you away from the work you deserve to be doing.

Saying it doesn’t make it so, but until you are working towards defining, understanding and nurturing who you truly deserve to be working with success will elude.

Chasing the Wrong Prospects Is the Basis of All Pricing Problems

The problem with casting a wide net and attempting to attract anyone that sort of needs what you do is that sometimes it works.

Look through your client roster and tell me about your most troubling clients. The ones that came to you based on price, left and came back for the same reason, beat your staff up and always wanted one more thing. These are the ones that demanded you lower your price to meet competition and of course you threw in some extra services and tolerated their demands for customized arrangements.

These clients that weren’t a good fit kept you from charging what you’re worth or having the confidence to turn away business based on price.

Chasing the wrong prospects is the basis of all pricing problems.

One of the most important components of any marketing strategy is the clear understanding of a narrowly defined ideal client – lacking this you will always struggle to compete on price.

Below are five elements that must be considered to properly remain focused on an ideal client for your business

Target ideal

Of course the first step is understand what ideal means to you. I always get to this quickly by asking clients to consider a client that they could honestly describe in these terms – “if I have ten more clients just like that, life would be great.” We all have dream clients and if you can stop and understand what it is about them that makes them so, you’re on your way to having the definition of the ideal client.

Everyone focuses on things like demographics and these elements are important, but the biggie for me is shared behavior. Is there a common behavior, such as leadership participation in their industry trade group that signals ideal over above things like business size and need.

Share the picture

Once you have the characteristics of an ideal client you need to create as detailed a sketch as you can and come up with a description you can use publicly to help attract prospects that see you are focused on them.

Create a test

Once you start casting for ideal clients you need additional ways to make certain you’ve done your job. I own a marketing company and sometimes people are attracted to what they think I do, but in reality they aren’t a fit at all. We use a qualifying process that helps us communicate how we work best while requiring prospects to submit to a process that demonstrates their commitment to getting the solution we offer.

In a way this process presents some friction that helps keep those that aren’t serious about working in a manner that we know works at a distance. If a prospect won’t sit still for a valuable initial process they probably won’t sit still as you try to get them a result.

Demand education

Your marketing process must be designed to educate, build trust, demonstrate how your approach is different and build value for your proposition. It’s important to demand that your prospects get this education.

I know this sounds a little harsh, but the quickest path to the wrong client is to create a client that doesn’t have the proper expectation about how you work, what you expect of them, and why what you do provides so much value. It’s your responsibility to create this education and your duty to make certain that your prospects get this education. The goal is mutual fit and that takes work

Raise your prices

Do everything I’ve mentioned above then start looking the ideal prospects directly in eye and charging what you’re worth – a rate I suspect is not what you’re charging today.

Get the right client, educate them properly and say goodbye to pricing problems.

How to Discover Your Perfect Target Customer in 5 Steps

One of the most important elements of a marketing strategy is the development of an ideal target customer profile. Effectively understand who makes an ideal customer allows you to build your entire business, message, product, services, sales and support around attracting and serving this narrowly defined customer group.

Image See-ming Lee SML via Flickr CC

When working with businesses that have an established customer base I can generally identify their ideal customer by finding the common characteristics found in their most profitable clients that also refer them to others. I’ve written about this kind of ideal client discovery here.

Today, however, I want to address the needs of the start-up or business with very little customer experience. Finding and serving an ideal customer is equally important for a business just getting started and establishing a focus on discovering a narrowly defined ideal client from the very beginning will save months of wandering in the dark trying to be all things to all people.

The 5 steps below can put you the path to discovering your ideal target customer.

1) Start with the Smallest Market Possible – This may feel counterintuitive to many just starting a business, but you have to find a group of customers that think what you have to offer is special. When you’re just getting started you may have very little to offer and in many cases very few resources with which to make sufficient noise in a market for generic solutions.

Your key is to find a very narrow group, with very specific demographics or a very specific problem or need and create raving fans out of this group. You can always expand your reach after you gain traction, but you can also become a big player in this smaller market as you grow.

2) Create an Initial Value Hypothesis – In the step above I mentioned the idea of finding a narrow group that finds what you have to offer special. Of course, this implies that you do indeed have something to offer that is special.

You must create a “why us” value proposition and use that as you hypothesis for why us. If this is starting to sound a little like science that’s because it is. You must always stay in test and refine mode in order to move forward.

Many people get caught up in trying to execute their business plan when the fact of the matter is the market doesn’t care about your business plan. The only thing that matters is what you discover and apply out there in the lab beyond your office.

3) Get reality in Discovery Test Sessions – Established, thriving businesses have the ability to learn a great deal every day from customer interaction. Since start-ups don’t have any customer interaction they have to create ways to test their theories initially and on the fly.

The key to both making and affirming your initial assumptions is to set-up what I call Discovery Test Sessions with prospects that might easily fit into your initial smallest market group. These are essentially staged one on one meetings.

This can be a little tricky since you have no relationship with said prospect. I often find that there are industry or trade groups that may contain your initial target market and by joining these you may have an easier time gaining access to this group.

Another possible option is to offer free sample products or beta test relationships to those willing to provide you with agreed upon feedback.

The main thing is that you start talking to prospects about what they need, what they think, what works, what doesn’t and what don’t have now. This is how you evolve your business, your features and your assumptions based on serving a narrowly defined target.

4) Draw an Ideal Customer Sketch – Once you’ve trotted out your hypothesis and tested it with your narrow group, you’ve got to go to work on discovering and defining everything you can about your ideal target group.

Some of this information will be commonly understood, such as demographics, but much of it will be discovered in your test sessions and though some additional research in more behavioral oriented places such as social media.

This is a great time to start your CRM thinking by building custom profiles that include much richer information than most people capture. I wrote about the new breed of CRM that is making this easier to do than ever.

5) Add Strategy Model Components – the final step is to apply this new ideal customer approach to other elements of your strategy.

The thing is, when you discover your initial ideal client it should impact the thinking about your basic business model and overall business strategy. All great business models are customer focused and now that you have a picture of this customer it’s time to consider how this alters the other aspects of your business.

Consider now how this discovery might impact your offerings, your revenue streams, distribution channels and even pricing.

Consider how you can reach this market, who you can partner with and what resources you either have or need to have in order to make an impact in this market.

I can tell you that my experience suggests that you’re never really done with this exercise. As your business evolves, as you learn and grow, this model will evolve as well, but perhaps the continual process of discovery is just as important as what you discover.

Mirror, Mirror on the Wall, I’m My Ideal Client After All

I believe that most businesses are uniquely suited to serve a narrowly defined ideal client.

Ideal ClientDetermining just who that is, and making their description a central theme of all of our marketing communications, is one of the foundational elements of good marketing strategy.

There are countless ways to research, measure, analyze and theorize about your ideal target client, but experience tells me most firms don’t have to look very far to find a thorough profile of their ideal customer.

I’ve found that most small business owners, independent practitioners and even salespeople tend to attract people with whom their share common characteristics.

In other words our ideal customers are often people we simply like and understand. Over time it’s simply too hard to build relationships with people you don’t enjoy spending time with or don’t share the same view of what service, value and fairness looks like.

I’ve said repeatedly on this blog and elsewhere that the definition of marketing is getting someone who has a need to know, like and trust you and when you accept and apply this notion to every element of your business building you come to realize this is best viewed as a two-way street.

Quite often, clients are ideal because we know, like and trust – or at the very least respect – them as well.

So, as you begin your quest to define and sketch to ideal client profile as a primary plank in your marketing strategy, start by spending some time in front of a mirror and then answer this question – would you buy from you? Does your marketing speak to a narrowly defined ideal client in ways that let them know that you get them?

So, what’s your experience in your business tell you to date? Does this have some truth for you?

Your Market Is a Person

Target Market as defined by Wikipedia: A ‘target market or target Audience is the market segment which a particular product is marketed to.

peopleThe concept of defining a target market is a bedrock kind of tool for any business. My experience, however, is that the clinical approach often taught in marketing courses seems to negate the fact that markets, whether B2B or B2C, are people. This rather obvious fact becomes even more relevant as social technology helps put a face on even the most virtual of client relationships.

Understanding the persona of your ideal client is the first step to creating a marketing strategy that will allow you to effectively carve out a market to build the kind of marketing momentum that can only be described as attraction. When you view your market as a real live image of a personality you can begin to speak to that person in a language that builds trust on the most personal level. But first you must know their story!

Demographics are a start

Look at your current customers. What are the common demographic characteristics shared by your most profitable, referral generating customers. Why this select group? Because there’s probably something very right about how you attracted this group that leads them to the emotional connection required to make referrals. Understand and catalog what you can demographically as a starting point for getting a clearer picture.

Narrowing your sights

Once you start to get a better view of your profitable customers, it’s time to take a good, hard look at the other 70%. You know, the ones you took on because you couldn’t say no or because it had been a slow month or that you’ve done some business with for years, but you don’t really do that kind of work any more. Every organization has those and I’m suggesting you purge them, (well, maybe some) but I do know that in order for your ideal customer approach to become a strategy, you need a very clear picture of the clients you don’t want and you need to start saying no.

Social media adds focus

Getting psychographic and behavioral data on a market is a common practice for marketers as it adds much richer information than statistical data can. Collecting this kind of information used to be expensive and more aggregate than personal. Social media adoption has altered this piece of the puzzle in interesting ways. People joke about people talking about what they had for dinner on Twitter, but that kind of information, while seemingly inane, is marketing gold. Append your entire customer list with everything you can know through social media and you will discover more about what motivates and drives your customers than years of research could ever tell – including which ones wield influence and love to connect and refer.

Visualize real people

Once you’ve done the research above on your ideal client it’s time to start getting visual. Write out a description of a real ideal client that you would love ten more of. Write everything you can think of – What they look like, what they think, what they want, what they fear, what they think fun, risk, and passion look like. Use photos of real people to help you create this total persona and then hang it on the wall for all to absorb. Maybe you need to do this a couple times and develop several distinct ideal client personality types, but imagine if you put this these images and descriptions on the wall and referred to them as you made sales calls, wrote web copy or brainstormed about a product innovation. It’s like having them in the meeting with you. In fact, go a bit over the top and create life size ideal client cut outs and invite Bill and Mary and Tom into your meetings. At least, it will add some fun to the meeting.

A database for your customer

Once you start to get a feel for accessing this level of personal understanding you can begin to change your concept of the client database. Instead of looking at it as a tool for you, flip it and make it a tool for them. In other words, start building a database that contains everything you can know about your customers and use it to make them feel special. Use it to note when significant things have happened, listen to what they are saying in social media and engage on a personal level, send them a birthday gift, or remind them that it’s their anniversary. Every once in a while, sit down with them and ask them to share. It might start with them sharing something about your products and services but, ultimately, if you take this practice to heart, it will turn to them sharing how you can help them achieve their goals.

I don’t know, it just seems like it’s way more fun to work with people who know you’re a person too.

Image credit: /cesco