Focus + Discipline = Success in Choosing the Best Customers
By Bill Capraro, Jr.
Published January 24, 2005
While companies are becoming profitable following the economic swings of the last few years, there has been a downside to this positive development. Some have become profitable because they have slashed costs and acquired an odd-looking mix of smaller customers. Their customer lists look like a crazy quilt. How can they be more selective as the economy continues to pick up?
Well, many have succumbed to a common temptation. In their zeal to stay in the black, they may have lost focus and discipline. They have agreed to serve customers they would not normally choose to serve. Are they profitable now? Yes. Will it last? Most likely not.
Demonstrating focus and discipline in selecting the right customers is the key to lasting profitability. Here's what we all can learn.
Strive to populate your customer roster with companies whose values and expectations align with your product or service offering. Re-focus on what your business plan says is the optimal customer mix. Do more research. Insist that your team pursue and win only those customers likely to be steadily profitable over the long term. Know who is buying, what they are buying and why by using Customer Relationship Management (CRM) tools. It can prevent a customer list from becoming a hodgepodge.
How do you practice focus and discipline? Follow these steps:
The customer service and personal attention given each customer is the key to business success. That personal attention begins with the first contact. The phone is answered "live," and an experienced professional is always on hand to answer questions or find the answers. Customers or prospects will never get lost in a telephone tree; instead, they will find knowledgeable, experienced people.
Focus on involving your customers in every step. Listen to every word. Give customers a voice in new product development and their interest in you rises. Good advice comes from customers.
One way to measure good advice is by forming a customer advisory board. It is a group of customer companies that aren't afraid to tell you how you are doing, alert you to gaps in your product offering, and most important, tell you what your competition is telling them. The customer advisory board is invaluable in the understanding of what you do and how it is perceived. They make sure you are focused on their needs better than anyone else.
The same goes for research. When you conduct research at the ground floor, their involvement surges. Involved customers keep buying. Even indirectly, you should ask prospects and customers what they need. A robust customer satisfaction survey program consisting of different topics can enable you to continually evaluate and improve various functional areas within your organization.
Focus on informing your customers at every step. Customers enjoy working with companies that keep them informed with concise, ongoing communications. Plus, show them the courtesy of asking how and when they prefer to be contacted.
Focus on keeping your customers and employees happy. About 80 percent of a customer's perception of a company comes from interactions with employees. Customers can easily spot a happy employee. It rubs off through their voice, responsiveness and quality of work. Happy customers tend to spend more, pay promptly and require less service, and thus are more profitable for your business.
How do you cultivate happy employees?
Innovative companies establish a core set of values that are extremely important to the daily management of the company. Among those values should be passion for customers and passion for employees. The latter can be achieved by executives making it a point to know as many employees as possible on a first-name basis. Also, recognizing the contributions and achievements of your employees, both quota and non-quota, is very important and can drive significant behavioral changes and better attitudes about work in general.
I'm a huge believer in the concept of empowerment. On the first day of employment in my organization, new hires receive their own "empowerment card." During an employee's tenure, he or she receives the training and tools necessary to exhibit superior performance on the job. Because of our business model, we recognize that our people are one of our principal assets, and we endeavor in every way possible to impress that upon them.
Finally, focus on generating results that encourage your customers to demonstrate their loyalty. They will come back for more and refer others to your company. A focused approach coupled with the discipline to maintain that focus is the solution. Serving your customers optimally now and selectively signing on great customers going forward can bring success despite economic swings.
Try it. You will see paybacks on your initial investments in selecting only the right customers for your business, along with greater profits over the longer haul.