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4 Traits Make Sure You Have the Right Customers

July 9, 2010 By Jan Triplett 1 Comment

Pennies-group-from-http-www.flickr.comphotossjsharktank4630355374-

A penny saved and earned. Photo by ssjsharktank.

Everyone wants and needs sales to have a profitable and successful business. But, sales from the wrong customers can kill a business.  If you doubt me, read Angel Customers and Demon Customers by Larry Selden and Geoffrey Colvin.

What should you look for? Basically, there are two options:

  • Low hanging fruit — the most responsive, easiest sale, shortest sales cycle
  • High value  —  the most lucrative, harder sale, longer, requires more thorough sales process so longer sales cycle

How do you decide who is right and who is wrong? Focus on customers who are worth your sales staff’s time and efforts. The right customers have the following four traits. They:

  1. Add more value than just the dollars they spend.
  2. Contribute to the reputation of the company by their presence or referrals.
  3. Are enjoyable to work with.
  4. Match the culture of the business.

There are major benefits from concentrating on finding and keeping the right customers. If you have hired the right sales staff, they will close more new sales and better sales if they can point to and use what they learned from existing  “right” customers.  They can get upsell and get new sales from existing and even former customers when they are starting from the best.

If you are worried about reputation and the value of the company, the right customers are your best answer. With the right sales process and continued high touch attention and reinforcement, they bring in others like them. Why? Because, they can’t resist bragging or sharing their good fortune.

You will get customers who are not a good fit. If they are really a bad fit, even if money is tight, fire them. They take energy away that is not replaceable. They take time that you can’t afford to waste. They are not satisfied and they attract others like them.

A Case Study of Angel and Demon Customers is Still Relevant

New money can learn from experience. This is the back of the new 2010 penny. Photo from Flickr by bad9brad

Wall Street Journal staff reporter Gary McWilliams, in January 2005, wrote an article, The Customer Isn’t Always Right on Best Buy’s efforts to attract and keep the right customers. Its CEO Brad Anderson said he wanted to separate “angel” customers from the “devils”, the 20% that drove profits down.

To do this, its store clerks were given hours of training in how to identify desirable customers according to their shopping preferences and behavior. This was based on an examination of sales records and demographic data and sleuthing through computer databases to identify good and bad customers.

Other changes were also put in place. To lure the high-spenders, it stocked more merchandise and provided more appealing service. To deter the undesirables, it cut back on promotions and sales tactics that tend to draw them, trimmed them from marketing mailing lists, changed store policies based on the “bad behavior” of  “demon” customers that cost the stores time and money. The trickiest challenge was to deter bad customers without turning off good ones. But, the results were worth it, with sales gains running nearly double of what they were before this policy was put in place.

Penny balancing act. Photo & sculpture by jmweirick. How well do your company finances balance?

Certainly, the economic situation has changed. But the premise remains valid. In good times or bad, focus on the best and forget the rest. You may not be as big as Best Buy or think like a mass retailer but can you afford 20% losses from the wrong customers?

What can you add to this discussion?

Find a penny; pick it up. All day long you’ll have good luck. Good business advice. Photo by nrossi

What are you doing to protect your business from attracting the wrong prospects and keeping the wrong customers? Please share your successes so that we can all benefit from what you have learned. I would like to do a followup post based on reader input.

Filed Under: Growth Readiness Tagged With: angel and demon customers, Best Buy, Brad Anderson, business killer, case study, culture, customers, Focus, Gary McWilliams, high touch, marketing, profit, reputation, retention, right and wrong customers, Sales, sales cycle, sales gains, sales staff, sales training, The Customer Isn't Always Right, time waster, upselling, value add, Wall Street Journal

About Jan Triplett

Jan Triplett, Ph.D. CBTAC is an inventor, entrepreneur, author, and activist. Co-founder of an award-winning certified green business that focuses on improving the triple bottom line (profit, care for people and care for the planet) for small business clients.

Comments

  1. Pamela Picard says

    July 9, 2010 at 10:48 am

    Hi Jan, nice post. I referenced it on a new blog I am publishing to bridal industry professionals who want to book more weddings with less work. http://bridal-blog-talk.blogspot.com. It’s fledgling. For an update on moi, have a look at my personal blog – http://reinventing64.blogspot.com. Basically I’m a blogging fool and love it! Love to catch up with you and Dan one of these days! xo Pam

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