When you’re running a business, it’s easy to have the mindset that every client is critical to the business. We know how expensive and difficult it is to acquire clients. It is equally hard to retain and wow your clients. Unfortunately, if you are acquiring and retaining the wrong clients rather than core clients it can make matters even worse for your company.
Companies who acquire and retain their ideal clients are more profitable, the clients have a higher level of satisfaction and the employees are much more engaged in the client success.
Three Strikes and You’re In…
I have a client that says yes to every possible client, even the ones that lose money. In a recent example, they had a prospect that could generate a six-figure sale where the prospect would be offering my clients products as a gift to their customers. They were ecstatic.
As the opportunity unfolded, it turns out the client wanted a fairly sizeable discount that was far beyond what was reasonable for that size of sale. Strike one! Then the prospect asked for a special website to be set up where their clients could redeem their gift. While the client had the ability and resources for this request, this was going to cost several thousand dollars and shift limited developer resources off a key priority. Strike two! Lastly, my client finds out this is most likely a one-time deal as the client does not like to use the same partners more than once. Strike Three! Yes they took the deal and made very little in profit and missed the target date for their key priority.
If this client was truly focused on the client who would grow their business for the long term they would have thought differently. Below, we’ll discuss the three types of clients you have and how they benefit or harm your business’ outlook and bottom line.
Three Types of Clients
The book, The Must Have Customer approach, outlines three types of clients that you need to consider as you run your business.
Core Clients – These are your best clients, the ones you want to gather and retain to keep your business doing its best. Core clients value your products and services, and are willing to pay an appropriate price for the value they’re receiving. They tend to retain your services for a long period of time and generate the most profit for the business.
Opportunistic Clients – These clients are looking for an opportunity for themselves and see your products and services as a commodity. They’ll expect you to not only match, but be lower than competitor’s pricing. They’ll also ask you to provide them with products and services that are outside of your sweet spot, cutting into your bottom line and increasing your overhead. They have no loyalty to your business and are generally your unprofitable clients. They’re a distraction to getting things done and cost you money.
Must-Have Clients – These clients could become your core clients but are currently doing business with your competition. This is the group you need to focus on to profitably grow your business. They are your future core clients.
Firing the Wrong Clients
Because opportunistic clients make their decisions based on price points while demanding special services, it is virtually impossible to gain their loyalty and return business. Trying to turn them into core clients who truly value your products and services is virtually impossible, so fire them. They are only distracting you from acquiring the right clients.
Attracting Core Clients
To attract core clients, you need to know who they are and why they value your products and services. Once you understand that, it’s time to focus on potential clients who share their needs and values. By clarifying this, you’ll know who your must-have clients are and can focus on attracting and retaining those clients.