Yesterday we talked about finding sustainable advantage in our customer bases. Today, lets’ chat about how to identify which customer profiles best help us leverage that advantage into our future. First, one basic premise.
All customers are not created equal.
I know, that’s heresy. But it’s true and we all know it. $100K from one customer may be quite profitable, from another we lose money. Developing a special service or feature for one customer may set us up for future distinction, for another we may build a costly one-hit wonder. Our most beloved customer may be a losing situation – while the biggest pain in the butt may be the one who best points to our future opportunity.
So how do we pick the customer profiles who are the face of our future?
Here are some key aspects to think about. Be honest, be accurate and above all, check your assumptions at the door.
Is this customer/segment profitable?
Of course it is or we wouldn’t be selling to them, right? Maybe. You’d be surprised how many segments that were once profitable aren’t anymore, even when we think they are. Take a hard look at all the soft costs involved in continuing to service each customer profile. While we’re at it – take a hard look at margin trends around each profile – if they’re taking a downturn we might want to determine how we add value to turn the tide. If not, think twice about the future with this profile.
Are we going the same direction?
Wishing that our favorite customer segment was ready to move into our future is a great thing. But if they are commoditizing while we’re specializing there probablyisn’t a profitable fit in the future. Step back and evaluateif this segment is in sync with our future. If it is, focus on ways to ‘go viral’ in this customer segment, beyond the customer base. If not, well, find a graceful transition path and part as friends. Continuing to expend resources on fragmented segments will jeopardize our future.
Is this sector an area that I want to commit resources for growth?
So we just penetrated a new account, the first in the segment or industry. We’ve learned along the way that we need revamping of our product to better serve their requirements. Before we jump right in with that enhancement, ask if the investment is worth the payoff. Look at the long term opportunity, not just the revenue we’ll get in the next 12 months. Reacting to a tactical market today can cost us leadership tomorrow.
You’d be surprised how many people will look at the numbers for a sector, see growth and jump right in. But do those growth numbers apply to our solution? Segment adoption of our products isn’t determined by mere segment growth. That segment may be growing like a weed in the spring rains, but if they aren’t ready to adopt our solution – all the growth in the world doesn’t make them an opportunity. Don’t depend on big market growth numbers that don’t apply to
what you’re selling. Find the market that’s ready to adopt your solution – focus on that specific growth, not the broad segment nubmers.
Once you identify your brightest customer opportunities-take the best care of them possible.
Focus on them, support their evolution with your offerings, learn everything you can about them.Then – take what you learn and start looking for segments that are beginning to behave as those customers do. Find the next generation of prospects seeking to solve the same sorts of problems, those who can benefit from your knowledge, experience and offerings.
They’ll be your next opportunity for growth – their new problems and solutions represent your next advantage.
