Now, while I do believe it's true that all men (and women) were created equal, in business it's very important to remember that not all customers are created equal.
Let me explain...
What I am talking about here is customer segmentation, and identifying the 'best' customers for your business.
The old Pareto Effect (80:20 rule) comes into play very often when analysing customers — where it's typical to find 80% of your profit coming from 20% of your customers. This is WHY all customers are not created equal — some of them make you a lot more profit!
When I work with business owners on their Marketing, it's a typical request to be asked to "get more customers" for the business, to which I always reply, "no, you want to get more of the RIGHT customers". Sometimes this is a bit of a revelation (and a d'oh moment!). But as soon as you know in business who your 'best' customers are, you can start to be strategic in your Marketing (and usually by 'best' we're talking most profitable customers — but it can be other measures).
Before I make business owners work out their most profitable customers, I always remind them to look at this over TIME. It is the LIFETIME VALUE of customers that is important in analysing your customer base i.e. how much revenue and profit you will make from a customer over the lifetime that they buy from you, and not just the first or one-off purchase that they make.
It's not uncommon for a customer to 'try' a new supplier with a small transaction to help establish trust and a relationship that then, over time, can lead to more, and increasingly higher revenue or more profitable purchases. This is accepted buying behaviour which you need to understand. There's a great article on Lifetime Value here from the expert business Marketer Paul Gorman.
So once you've found out who your best customers are, what do you do?
Easy — you find more of them. It's as simple as that. You know who they are, you know what they buy, how they buy, what they pay — now find more of them. And if you don't know the answers to these questions, now is the time to ask your customers and find out the answers.
Remember you don't just want 'more customers', you want more of your 'best customers'.
Want to talk more about this?
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