Your Best Customers

Who is the best customer for you? Knowing the characteristics of a good customer for your particular company versus a bad one will benefit your business tremendously.

Generating a description of the ideal customer will help you to seek out more of the same while weeding out the least profitable ones. The following exercise will help you get started.
Start out by listing your five best customers. Next to each, describe as many characteristics and identify as many demographics as possible. Helpful characteristics might be: how do they operate; how do they think; how big is their company; what level of financial success are they having; do they have multiple locations; how did they become your customer? Key demographics to identify would be time in business, number of employees, annual revenue, credit profile, and geographic location.

Next, do the same for your five worst customers. These are those customers who are the most difficult to work with, hardest to please, and generate the least profitablity compared to how much time and effort is required to service them.

Once this is complete, compare your best customers to the worst and identify the distinguishing characteristics and demographics. Then ask yourself what prospecting methods could be employed to find more of these best customers and avoid the worst customers? By profiling your best clients it becomes much easier to identify and target additional desirable prospects for your company. Good quantified prospects have a higher likelihood of turning into good customers.

Don't have enough time in the day to do this? There are companies that will do all the work for you, assuming that the majority of your customers are other businesses. Most of the big data sources such as InfoUSA or D&B offer a profiling service. They are very easy to use- you simply provide a list of your best customers (just the name and address of the company-no sensitive data required) and they will generate a demographic profile of each of these companies. They can then take this "best customer profile" and query the entire database of businesses (currently there are between 13-14 million individual companies in the US) in order to identify how many other companies fit the profile. You can then purchase this data for your prospecting efforts or even narrow it down further before purchasing (say you are only interested in those companies that are in your state, etc.).

If good customers start with good prospects, then good prospects must come from good market research.

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.