Targeting the Right Customers for Exponential Growth

“Everyone” Is Not Your Prospect

It can be tempting to see the world as full of potential customers, but trying to satisfy everyone is a really road to ruin. It’s just not possible to please everyone, or even to serve everyone well, so it’s better to focus on those customers and prospects that you can please. Targeting the right prospects accelerates profitable growth by reducing waste while increasing revenue.

It Pays to Know Your Customers

If you’re like most executives, you probably feel that you have a pretty good handle on who buys from you and why. But do you really know which customers drive revenue growth and which customers drain your profitability?

Time spent chasing the wrong prospects increases frustration and wastes time and money, making success more elusive. When companies concentrate their efforts on the most profitable customers, they close sales faster and improve marketing efficiency, alleviating the stress of trying to serve customers who just aren’t the right fit.

It’s a bit like driving a Ferrari in stop and go traffic downtown vs. the experience of driving one on the autobahn. You company is the Ferrari, and driving it in the wrong environment is no fun at all!

Knowing which customers are worth pursuing and which to leave behind can have a profound impact on your business, so it pays to know your customers well.

Who Is Your BEST Prospect?

The answer is not your target markets or who your typical buyers are, but the person who is the ideal customer for your business. Who are they? If you’re not sure, think about customers like these…

  • They’re the ones who are most likely to buy because your message resonates so well and your brand holds unique appeal to them.
  • It’s is the person who’s head starts nodding in approval when they the story of your business, because it aligns so effortlessly with their own issues, concerns and objectives.
  • It’s the person who is loyal and comes back again and again.
  • It might even be the person who you think is not ideal, but who generates lots of profits for your business through referrals, add on fees or regularly paying list price.

There are a number of ways to identify your ideal customers. The best way to start is with a little research and analysis, but first you need to set aside any preconceived notions so you can have an open mind about who buys from you and why. It’s not always the most obvious choice.

An Example from Arby’s

I listened to Arby’s former president, Hala Moddelmog, as she described the company’s efforts to rebuild the Arby’s brand. Her story is an excellent example of how you zeroing in on the right customers for your company can make all the difference:

Like many restaurants, Arby’s suffered greatly from declining revenue during the recession. To speed up their recovery, they wanted to get an up close and personal look at their best customers to restart revenue growth.

They started by surveying over 6,000 Arby’s customers to learn how they felt about that brand. That alone is not exceptional, I’m sure many of you sample your customers as well to see what they think about your company. But Arby’s went much further.

When the surveys showed that approximately 18% of Arby’s customers represented a whopping 2/3 of revenues for the chain, they knew they needed to learn more about the key group. Using the skills of an anthropologist and sociologist, Arby’s invited themselves into the homes of some of these customers, and not for a short little visit.

The company spent two to fours hour with these loyalists, often buying them lunch or dinner in the process at a restaurant of their choosing. The effort to cozy up was highly instructive for Arby’s.

While some of the expected patterns for demographic and psychographic profiles didn’t pan out, a picture emerged of Arby’s ideal customer: a “salt of the Earth” person that loves Arby’s for its freshness and “honest” approach to food, and they were real regulars, eating at the chain several times a week.

Using what they learned about these customers, Arby’s was able to develop targeted ad campaigns. They didn’t appeal to everyone, but they DID appeal to the right buyers, pulling in new patrons that met Arby’s profile of its most loyal, high volume customers.

The results showing clearly on the bottom line: Arby’s enjoyed nine consecutive quarters of same-store sales increases, while earnings increased over 70%.

Anyone Can Do It

You don’t have to be running a major business or even selling direct to consumers to put this concept to work. Here’s another scenario featuring a much smaller, B2B firm selling IP phone systems. The owner, Mary, was targeting local businesses with a budget above $25,000 and at least 10 employees. She spent a lot of time prospecting and pitching, with a very low close rate, which was extremely frustrating.

To address the problem, Mary sat down and reviewed her company’s sales activity for the past year, and discovered a few patterns:

  • While the deals that closed most quickly were to buyers who had already done their research, a lot of time was wasted on educating prospects that weren’t well informed and never ended up buying.
  • Her best buyers were not who she expected. Instead of the IT managers she was calling on, her best customers were actually small business owners who understood the bottom line value of her systems.
  • Clients who were in rapid growth mode needed to improve productivity to increase profitability quickly. They were the most decisive, with a very short sales cycle.
  • Finally, Mary realized that finding a prospect with an established budget was less important than one who had the authority to invest as needed to generate a significant ROI.

As a result of this exercise, Mary established 5 key criteria for her ideal customers and began rating every prospect against it.

Prospects who met 4 or 5 of the criteria were worth pursuing, with a much higher close rate.

If a prospect scored a 3 out of 5, they could potentially be a good client, but the path would be much longer and the odds of success were lower.

Prospects meeting just one or two of the key filters were not a good match.

Mary also adjusted her sales approach. When prospect was not a good fit, she referred them to another firm that could better meet their needs. She focused her efforts on finding the four- and five-star prospects. As a result, she spent less time on meetings and proposals and closed a much higher percentage of the deals she quoted.

Whether your firm is large or small, this simple process of identifying and catering to your best prospects can work wonders to increase your sales and marketing ROI.

When to Let Go

Now that you have a better focus on the best sales prospects, you’ll probably be able to think of some existing customers that you would not go after today. This is a common problem.

In fact, there was an interesting case study in the Harvard Business Review a while ago about whether a company should fire one of it oldest and “best” customers because they had become a loser in terms of revenue for a couple of quarters.

Unless you’re running a charity, the goal is for every customer to yield positive returns. However, sometimes customers do cost more than they spend. When this is the case it can be hard to decide when to cut your losses or keep the relationship alive.

Knee-jerk decisions to dump a client in the face of a bad quarter, unusually high support costs or other potentially transitory issues could turn out to be expensive in the long run.

Instead, follow an intentional process to assess the true worth of the customer.

Customer value comes in many forms

We traditionally think of back and white, dollars and cents profit and loss. This seemingly simple measure of customer return on investment (ROI) can be misleading because it does not factor in intangibles that can make a customer relationship better or worse in the overall mix.

Even with tools like activity based costing, which allocates operational costs to customers relative to order volume, the numbers can be deceiving.

What additional factors should you consider when weighing when to let a customer go? Here are 5 things to assess before making this important decision:

  • Prestige – What is a big name client worth in terms of the visibility and prestige the relationship brings to your firm? Putting a number on the value of a marquee customer can be hard, but it’s worth considering.
  • Influence – How valuable are relationships with the executives of the company in question? Are they industry leaders who influence others? Will damaging those relationships hurt your business in the larger context of your industry?
  • Advocates – Is this customer the one who agrees without fail to beta test new offerings? To serve as a referral or provide endorsements and testimonials? These are important contributions to your future business and may be hard to replace.
  • Early Adopters – Is this company more innovative than others in your portfolio? Do they always say, “yes” to the newest offerings, enabling you to sign other, more reluctant accounts?
  • Customer Lifetime Value – Is there solid long-term potential or significant upside from future sales? A customer struggling due to a temporary setback might be worth keeping or even helping.

Take all of these items into account when assessing who to keep and who to let go. There’s no clear scorecard to tell you when to part ways with a customer, but if you look at the big picture, you’ll be in a much better position to make a sound decision.

Make the customer evaluation process as consistent a part of your business as annual employee performance reviews or strategic planning sessions.

Adopting a disciplined approach to evaluating your customer base will enable you to regularly prune underperforming customers that are not strategic assets, creating room to do more for those that are the ideal fit for your business.

It’s Hard to Say “No”

Being selective about new business leads to shifts in thinking about the context of opportunities. You will need to say “No, thanks” to opportunities that aren’t a good fit.

It can seem counter-intuitive to walk away from active opportunities just because they don’t line up with your profile. You and your staff may feel frustrated at what feels like leaving money on the table.

That is, until you see the power of the profile at work.

Pinpointing your best clients can dramatically improve sales results and accelerate business growth if you apply the concept diligently. Once you understand who your best prospects are, you have to learn to walk away from those that don’t fit the model, because they cost you money in the long run.

This is a challenge for many businesses, especially when sales reps are incentivized to fill the top of the funnel and any prospect will do.

Moving to an ideal client profile requires filtering prospects. The sales funnel will be narrower at the top because you’re being more selective and not everyone will make the cut. You can expect a much higher close rate from prospects that do enter the funnel, so performance metrics for your sales team may need to be adjusted.

Once the profile becomes part of your regular sales qualification process, closing deals will become easier because you are working with the right contacts from the start. Instead of dealing with endless objections, you’ll be illustrating value and sharing successes.

A number of my clients have benefited from using their Ideal Client Profile to tailor not only their sales process, but also to focus marketing messages and educate referral sources. In fact, building a profile of your preferred prospects is a great place to start when you are repositioning a business or trying to reinvigorate growth.

Amplifying Your Reach

There are several benefits of working with the right customers. For example, it improves satisfaction because you are better able to serve them. Happy customers spread the word, attracting more customers like them. This creates an ongoing pattern of accelerating sales cycles and increasing profitability.

This is especially valuable for any business that depends on referrals or recommendations – and most do these days. With online reviews and the viral nature of business communities, doing business with the right customers has a huge downstream impact on both brand and reputation.

Here are four ways to ensure that you can take advantage of these benefits…

  1. Train your sales and marketing staff on how to appeal to your best customers through your formal and informal communications. Your sales presentations, collateral and advertising should address hot buttons for your target prospects.
  2. Use what Michael Port calls the “red velvet rope” to filter out prospects who don’t fit the mold. If you need highly responsive customers, say so. Provide examples and case studies that highlight the kinds of customers your want to attract.
  3. Tailor the way you do business to the needs of your best customers. Test every aspect of your customer experience to be sure it works for them. Incorporate their feedback to improve the quality of your interactions and entice them to not only return, but to tell their friends or colleagues.
  4. Exit gracefully from relationships that aren’t working well. When a contract is up or a major decision point arises, respectfully part ways. Do customers a favor and connect them with another firm that can better meet their needs, and they’ll still appreciate you.

Finally, for the best results, avoid a hit or miss implementation. Stick to your guns and apply the approach consistently to enjoy the full power and impact of laser-focused targeting.


Building positive relationships on sound foundations with the customers you serve best creates a ripple effect. It widens your circle and expands the market reach of your business. Unlike ripples that fade as they spread, over time, the incremental gains from targeting the right customers will compound, creating powerful momentum for long-term growth.

If you enjoyed this article, you might also like my ebook, “Meet Your Ideal Customer,” available on Amazon.

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