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Good customer fit. Why it's critical to your business growth

  

We’ve discussed defining your ideal customer. In this video and post we look at why good customer fit is critical to your business growth and why working with bad fit customers holds you back.

We’ve all been there. You’ve said yes to work that on the surface looks like it should be well within your capacity and ability. The customer has given you a bit of a hard time on price, it could be that they like to negotiate or that they didn’t fully value your service. You’ve done the deal and got on with the work. Then they turn out to be a nightmare.

You’ve done a good job, but they’re not satisfied. They expect the earth, but not to pay for it. They always know better and don’t listen to your expertise. They cut corners to save money and then complain that things aren’t right.

More often than not these problems are the result of saying yes to a bad fit customer.

Why is customer fit critical to business growth?

Customer fit is critical for business growth, because by only working with good fit customers you maintain your capacity and reputation to work with more of these customers.

If you fill up your capacity with bad fit customers, you won’t have the capacity for the right customers when they come along.

Added to that you’ll be undermining your reputation with the right fit customers, making it harder to attract more of them.

What’s more is that working with the wrong customers can massively damage the moral of your team. At best it gets them down and reduces their capacity. At worst they leave and you have the time and costs of replacing them and getting the replacements up to speed.

When do you come across bad fit customers?

The most common scenarios for coming across bad fit customers are either:

When you have a new customer knocking on the door, wanting to spend money with you.

Or

You have them in your existing customer base, because your business has evolved since taking them on.

What are the challenges with focusing on customer fit?

There are always challenges when focusing on customer fit.

Challenge 1 - Cashflow

The biggest challenge that we typically come across is cashflow.

When someone wants to spend money with you, it’s really difficult to say no. At the end of the day it’s business that you can service and money you can earn. As a business owner turning down work and cashflow is tough.

Cashflow is also a major concern when you’re looking at cleaning up your customer base. Certainly you don’t want to introduce unnecessary cashflow issues. That’s why most opt for a gradual approach to cleaning up their customer base.

Review your customer base and identify the poor fit customers. Then create a strategy to move your wrong fit customers on to find a better match for their needs.

If you are worried about cleaning up your customer base, think about whether you need to increase your capacity to service your right fit customers.

If you do, you’ll probably find that letting some or all of the wrong fit customers go, can be a much better and cheaper alternative to increasing your capacity by recruiting.

Challenge 2 - Uncomfortable conversations

If someone wants to do business with you, it can be uncomfortable to turn them down. They’ll naturally be a bit disappointed.

It might also make them even more keen to do business with you. This can make it even more of a challenge to say no to them.

Ideally have some trusted alternative providers or solutions you can give them as a option. That way you’re offering them a good service and you can say no with confidence that you’ve helped them on their journey.

Challenge 3 - Ending a relationship

With existing customers it’s likely that you have a good and long relationship with them. So getting in touch to let them know that you can’t work with them any more will be tough.

As the saying goes, breaking up is hard to do.

In the same way as challenge 2, be prepared. Do your homework and find them an alternative solution that will better fit their needs.  

By doing this you’re offering great customer service and there should be no hard feelings that the relationship has come to an end.

Tips for getting customer fit marketing working in your business

Get your team involved in the process

Your frontline team will have a good sense of the right fit customers and bad fit customers as they’re working with them everyday.

Get them in a room together, let them know your plan and why it’s important.

Define your customer fit

Work together to define your best fit customers and your bad fit customers. When you have understood the definitions, review your customer list as a team.

Organise your customers by fit

Identify which customers are in each category or where they are on the scale.

Work on a transition plan to focus on right fit customers

When you’ve done that, come up with a transition plan to do more business with the right fit customers and less to no business with the wrong customers.

Keep in touch

If you found the content in this video useful, please subscribe at www.tjgshow.com for more regularly weekly vlogs on important business growth topics like this.

  
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