What makes a good customer?

Over the years, we have regularly asked ourselves:

What sort of customers do we want?

There are some who might say that any customer is a good customer. This is particularly true when you are starting out in a new business. With the qualification ‘So long as they pay!’ there may be some truth in this but as your business gets established, our question gets more relevant.

Let’s have a look at some of the approaches BSA has taken…

Fewer, High-Value Customers

Customers, where there is potential to do a lot of business and earn significant revenue, sound great and sometimes they are. In the early years of BSA, we took this approach, focusing on big customers. For a while, the plan worked well, we were able to build good relationships with our key contacts as there weren’t too many of them. We agreed on clear plans and simply got on with the work. At the time, big companies were sometimes a bit slow to pay but they were good for the money so as long as we could cover the wait, the income was reliable.

The realities…

High-value customers are great – while everything is running smoothly. However, even delivering a great service, as time went on, the cracks in our plan started to show.

The nature of BSA services meant that our key contacts in these bigger companies were typically departmental. Although they frequently had budget authority, they were normally working to deliver a particular element of a bigger plan so we had relatively little chance to explore opportunities outside of that plan. We were working to their brief. If (or more likely, when) the overall plan changed, there was a risk that our customer no longer needed us. There wasn’t a lot we could do about this, no matter how effective our work was.

In addition, we found that our key contacts would change jobs meaning our relationship with them was no longer helpful in driving business. We found could lose a client just because our contact moved on. Often, their replacement had different ideas – or perhaps simply wanted to be a new broom.

Perhaps the biggest issue with losing a high-value customer is ‘too many eggs in too few baskets‘. OK, not quite ‘all eggs…‘ but turnover (and bottom line) will take a significant hit.

If you lost a customer who delivered say 25% (or more!) of your entire turnover, what would that do to your business.

Many Smaller Customers

To avoid the too many eggs… scenario, maybe the answer is to avoid the big customers and focus on smaller companies. We turned to this approach. While the revenue potential from each customer is less but there are other advantages.

Typically we find ourselves working with the business owner. Certainly, they will have their own plans and ideas as to where they want to take their business. However, we are better placed to make suggestions and hopefully develop our role within our client. To maintain and develop our own business levels it meant a wider portfolio of customers. Having said this, the demands of each tended to be lower – normally!

This is where a ‘small company’ customer can start raising their own issues. Just because a company is small doesn’t mean the aspirations of the owner are small. They may be working 18 hour days 7 days a week and there is a danger they can expect something the same from their staff – and their suppliers! This may be OK if they are willing to pay your hourly rate for all those hours but trust me, they won’t.

Presuming that you can build a good portfolio of smaller customers, the financial risk to your business may be reduced but you may find yourself working harder than you would wish.

So what makes a good customer?

So, both bigger/higher value companies and smaller lower value companies have pros and cons as customers so what makes the best customer?

In BSA’s experience, a good customer comes down to one thing:

Our best customers have a good fit with our own objectives and ideals.

In hindsight, it might seem obvious but it isn’t about size, it is about how well you work together. Some say that in business you have to work with or for people you don’t like. In my view, it is MUCH better if you don’t! You don’t need to be best mates with all your customers but working with people you do get on with pays dividends. If they really value and benefit from your input and, in turn, they appreciate your advice, ideas and what you do, you have a great platform from which to grow.

Repeat this across your customer base and you are on to a winner.

Filed under: Business planning, Marketing Best Practice, Networking, SME Marketing

About David Wright

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Every business has a brand. Building yours can be the best way of adding sustained value to your business. A strong brand also builds market confidence and creates a great platform from which to develop sustainable business opportunities.

I combine professional marketing qualifications and experience with a solid understanding of real business to discuss and advise on building your business brand using effective marketing communication in a down-to-earth, no jargon way.

As well as discussing plans and strategies I am keen to 'get my hands dirty' and work with clients to make sure things happen!

  • Understanding you, your business, and what you want to achieve
  • Helping you choose the right tools for a practical marketing communications plan
  • Working with you to make sure things happen - and keep happening

My business goals are to achieve effective, long term relationships with clients, to deliver real benefit and to help clients drive their business forward.

Specialities:

  • Practical, joined-up marketing communication.
  • Professional, internet focussed business marketing.
  • Relevant content creation
  • WordPress training – take control of your website
I work on clarifying your goals then developing and implementing practical marketing to help you achieve them.

Extensive understanding on the internet and web marketing enables me to tap into highly cost-effective tools to achieve effective, sustainable marketing at realistic budgets.