Not all customers are equal. That may be now or even in the future, although that could change. The secret is to deeply understand what your “Ideal Buyer” looks like and this isn’t just in a literal sense. We’re talking about their behaviour and thus their relationship with you as the provider of a product or service.
Defining your Ideal Buyer Criteria (IBC) is what your entire business model should be based on and a major part of that is not trying to be everything to everyone. Your profits, need to be based on a series of geared functions, all defined as valued phases that engage with your buyer. Ideally each phase performs as a revenue generator, although this is rare.
That said, managing costs is applied throughout a business yet the hardest role is to define the cost of service. This in essence is the purpose of defining who your ideal customers are. Over servicing them easily erodes your profits.
At the other end of the process, marketing are geared with maximising their spend and generating optimal inbound interest. They too, need to target, attract and deliver Ideal Buyers to the selling teams.
Selling teams then have the task of qualifying the buyer is ready to engage, and focus on progressing them towards a closed sale.
Customer care then close the loop and fulfil the buyers expectation, presumably on time and on budget. On budget, infers the ideal cost of service is defined and met. Further support may be available and again costed out.
If we revisit the steps outlined above and reverse engineer the process, we basically define who are our most happiest and satisfied customers, and who are your most profitable. Your business model should be based on targeting and attracting more of them.
The results can be highly rewarding;
- Faster attraction and progression to a sale
- Higher perceived value (less time haggling over price)
- Better customer satisfaction and retention
- Smarter align with upsell and cross-sell
As difficult as it may be, defining your Ideal Buyer, means you may find you have some “not-so-ideal-buyers” already engaged. That’s fine… you know they exist and therefore have the insights to act. In some cases, that may mean putting less effort ( and cost) into retaining them. Alternatively, you may find a segment that doesn’t suit your medium to long term goals. Again, this is fine you just need to work out how to let them down gently.
For clarity, having “not-so-ideal-buyer” engaged, doesn’t mean you dump them cold or treat them badly.
This may be an opportunity to innovate, pivot or partner to ensure “your” brand (reputation) is not tarnished. In fact, managing these types of opportunities can be a very positive thing.
Defining your Ideal Buyer Criteria takes plenty of time, to look for relevant data, analyse it, question it and question your business plans on a few occasions. It can be stressful, and polarise the leadership. This doesn’t mean it’s too hard or complex. It means that addressing the issue as valued as it can be, is not a 10 minute job. It’s a serious task and one that can offer a 100% improvement in bottom line revenue.
Doubling your revenue needs more than defining your ideal buyer. Learn more about Ideal Buyer here.
A final point is the current and future view of a customer. Your Ideal Buyer Criteria, needs to be modelled on the immediate value you need from customers. That said, a tier 2 or 3 customer could grow into a tier 1 customer. Be mindful that when defining your customer segments you consider the future value potential of current customers. The benefit, assuming all things balanced, will be a very highly geared relationship in which you as a provider have been part of. In the current climate customer loyalty still exists, but you have to earn it and keep earning it.