Three categories of new customers (two good, one bad)

September 26, 2017 Matt Heinz

I believe that all businesses should have a well-defined target customer profile, but that doesn’t mean you exclusively sell to it.

In other words, there may be three categories of customers you pursue (or not):

  • Proactive: Those that directly meet your target customer profile.  You proactively pursue these opportunities daily.
  • Reactive: Those that meet some of your target profile criteria, and may not be worth pursuing proactively, but that you will work with should they come to you.
  • No Fly Zone: Those that meet none of your criteria or would be counterproductive to work with.

It’s important to know the distinction between these three.

The closer a customer is to the no fly zone, the more likely they will be unhappy, cause frustration to your team, be unprofitable and/or sour other better prospects unnecessarily based on their experience.

I believe it’s also important to define what does and doesn’t below in the reactive category.  This group can be a slippery slope but also provide high-margin business.  For example, which customers are you not prepared to proactively pursue (based on their size or distance perhaps) but otherwise look like your target customer profile and represent high margin business (without the same higher acquisition costs)?

Conversely, which prospects come to you asking for something too far outside of your sweet spot – which might either stretch your product’s capabilities or de-focus your team on delivering better/higher service to your core customers?

It’s almost always attractive to say “yes” to a prospect who wants to work with you, but sometimes that short-term sales impact can have long-term, negative impact on your business’s focus, reputation and success.

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