Engineering your client list—that is, choosing to work with those customers who epitomize your ideal customer persona, while pruning those who are not a good investment of your energy and resources—is a savvy business strategy.
If you look objectively at your customer list, you will probably notice a recurring theme: a certain percentage of buyers don’t fit your model customer persona. In other words, they probably don’t need, want, or value your products or services. Perhaps there are some consistently present bill payment issues. As the owner of a national collection agency, that is often where such relationships hit my radar and why I have come to understand the value of a carefully engineered customer list.
Many business owners are afraid of pruning their customer base for fear of creating an income shortfall. The reality is that a customer list focused on the best customers resolves workflow issues and time constraints caused by customers who don’t bring value to your business—leading to greater profits!
More Is Not Always Better
When a service business is over-staffed, it tends to take on customers, work, and orders it really shouldn’t, just to keep employees busy. But it is better to keep staffing levels low enough to be selective about the new business you do accept, while very effectively servicing your ideal clients. Why add more staff to manage a growing client base if a large portion of those new clients create stress and diminish your income potential? That’s an inefficient use of your resources.
Before adding more staff, divert your resources towards nurturing your existing high-value clients, while using reserve energy to pursue more of your target customers.
It’s Not Just About Money
When choosing which customers to prune, it can be a mistake to focus specifically on low revenue-generating customers. If these clients fit neatly within your ideal client parameters, you have already classified them as having the potential to generate better margins for your business. And customers who represent payment issues may be trainable. I can think of many instances in which clients sent accounts to my collection agency for recovery, and the customer returned with massively improved payment habits. Not always, but often enough that it’s worth a try if the customer is otherwise a fit.
A well-engineered customer list empowers your business to grow because:
- Saying no gives you the ability to choose customers you appreciate and whose values resonate with your own; and
- You and your staff ultimately have more attention and availability for the right-fit clients with which your best margins and greatest enjoyment reside.
Be Professional and Courteous
Pruning your customer list is never easy, and it’s important to do so with professionalism and courtesy. Do it right, and you’ll get the best of both worlds: you stop wasting resources courting customers who bring low value to your company, and you won’t insult anyone who may harm your reputation through negative online reviews or word-of-mouth.
Advise these customers that you are unable to assist them further and provide next-step solutions, such as another product or service provider that may be a better fit. It’s always a best business practice to try and end a relationship on a helpful note. Making it clear that you care about their ongoing success is important.
It’s Not Personal
Remember, engineering your customer list is not personal. It’s about adding value to your business and helping customers to find a better fit. Let’s face it: not every customer (or supplier) is a keeper and those that aren’t can be a major drain on your time and talent.
While you’re at it, you may find it helpful to have a strong, ethics-focused collection agency in your corner to manage any payment issues. I’m happy to help with accounts receivables advice and to help resolve payment issues with maximum retention of good customers.
Be wise, be savvy and know when it’s time to let go.