At Hot Dog Marketing, what we hear from most businesses is their ideal client is anyone with money. No joke. While more work always sounds like a good thing, if that work isn’t coming from your target audience, it may be moving your organization further from its long-term goals rather than closer. Identifying your best clients can have a huge, positive impact on your business and strategy.
Before you get more clients, you should consider some of your best clients and what makes them better than others. Identify why those are the “best” clients and then pursue more clients with those same traits or characteristics. You might even take it a step further and cull some of your “worst” clients. Either way, examining your current clients can bring you loads of insight into where to steer your business.
Identifying Your Best Clients
80/20 Rule
You’re probably familiar with the 80/20 rule, or Pareto’s Principle, by now as it seems to show up everywhere. In a nutshell, 80% of results come from 20% of effort or input. For example, 80% of customer purchases are for only 20% of your products.
However, the 80/20 rule doesn’t only apply to sales. This rule can be extrapolated onto items like what type of projects only require about 20% of typical production time or labor cost? How about looking at what industry 80% of your clients are in? Or identify some of your worst clients by asking which 20% of clients cause 80% of your headaches?
Hopefully, at least 20% of work comes from your best clients, but if not, this is a good start to identifying who your best clients are and how to get more of them.
Gross Revenue vs Net Profit
This tip applies to your services and the clients who purchase them. Clients that only purchase your low margin products and services don’t provide as much value, even if the gross revenues are higher. High ticket purchases don’t necessarily translate to more success, especially if it comes with a higher cost of goods sold and ultimately requires more overhead.
Having $10MM in revenue sounds great, but not if that means having $9.9MM in expenses. Focus your efforts on the high margin items and clients that typically purchase them.
Easiest to Work With
After narrowing down who your best clients are by looking through the financial lens, now assess them through the customer support lens.
Your best clients will be the ones that respect your work, business, and personal life. Not the ones calling you at 2 am with an “emergency” that has to be fixed right then and there. Even if some of your biggest clients are the ones that cause the most stress and take the most effort to satisfy, there comes a point where it’s not worth it to keep them.
Instead, what about the clients that stick to agreed-upon timelines, budgets, and personal/professional boundaries? You know, the dream clients.
Best Client = Ideal Client
After analyzing which of your clients provide the best return on effort, highest margin, and the least amount of stress, ask yourself if this is the type of client that you want to serve. They should be in the industry you are focusing on and the right size for your business to service their needs now and in the future.
Additionally, consider whether your personal values align with their business. Much of business boils down to relationships. If you think a particular business or industry is a detriment to society, it’ll be tough to develop a long-term business relationship with them.
Your ideal clients are organized, communicative, in your target industry, and the right size to do business with you. Your best clients hit all those checkboxes, too.
Value Your Service
The final tip to identifying your best clients is to look at the clients that value your service for what its worth and even more. These clients don’t simply see your business as fulfilling a need. They are raving fans and believe that your service brings them much more than what they’re paying.
One way to identify these clients is that they leave positive reviews and even bring you referrals. They become mouthpieces for your business to everyone they know.
If you comb through your clients and assess them through each of these five aspects, you’ll end up with a business that is scalable, profitable, reduced-stress, growing in a direction you want, and with people who respect you.
I know it sounds like a dream come true, but it is possible. Identifying your best clients takes careful planning, some strategic decisions, and a long-term perspective. Hang in there and you can do it!
For more up-to-date content to help you during this time, check out our new series Zig When They Zag: Resources to encourage a growth mindset in uncertain times.