Do you focus on the right customer?
Are you sure?
I used to find it mind-boggling when companies had no clear definition of their target audience, or only a vague one. Yet, they are seeking (what they call) a company strategy, or even worse, skipping that and going straight to “marketing strategy”, whatever that means.
I’m no longer mind boggled, because lack of a target audience is so common. This is especially true for technical founders who focus on the product and the technology much more than on the customer. This could be in tune with the “Build it and they come” mindset, perhaps. Throwing ideas at the wall to see what sticks is a valid approach, but only if it is followed by mercilessly discarding those that don’t, and doubling up on those that do. “Bullets before cannonballs,” to cite Jim Collins. What does all of this have to do with the idea of a core customer, though?
A lot. Companies spend enormous amounts of effort chasing the wrong customer, or trying to make them happy. Just go through this simple exercise to see where your company stands:
- List your current customers.
- Take a guess (or even better, ask them) to rank their satisfaction, or happiness with you. Say, on the scale of 7, from 1 being “I can’t wait for this contract to be over” to the “I would cry my eyes out if you went out of business” 7.
- Now look at the support tickets, feature requests and attention given to each customer.
Unless you’ve done it before, chances are you are spending a lot of effort on trying to save the 2’s, 3’s (1’s are lost cause) at any cost. With that heroic effort, you may get them to what, 4? Maybe 5?
What would happen if you were to focus on the 5’s instead, and give them that same attention? Would they jump to 7’s? 6’s and 7’s are the ones you can bank on. They will give you the references and referrals you need to grow with less effort, they will become your marketing machine on their own.
Chances are that your 5+ crowd of customers have something the 1-4’s don’t. What is it? Those are the customers you obviously CAN make happy, you already know how.
Consider sunsetting the ones you somehow can’t make happy, try as you might. Focus your efforts on the other group, both in customer success and sales/marketing. It may mean a short term dip in revenue, but you’ll end up with a much healthier customer base, that is easier to grow. Bonus: You’ll also have MUCH happier employees.
Spend some time on defining who your core customer is – the one that will reliably buy at a profit. As many tools we use in Metronomics, this one is also rather simple:
- Describe the customer (it’s always a person, never a company).
- List their needs, and order them by importance.
- List the benefits you provide, and order them by importance.
That’s it. Do it once, and then evolve your ideal customer regularly over time. At least once a quarter, make sure the profile still fits, and change if needed. How much change will be needed depends on your industry, stage of the company and overall pace of change around you. Focus your efforts and attention towards those ideal customers, and you’ll see the difference basically immediately.
