Most established companies have a very clear vision of what makes an ideal “sweet spot” customer. Quite often, trading experience in market leads to influencing new businesses on what makes for best clients.  Nearly every company I work with have a detailed Business Plan and quite often these plans have a list of prospects that are going to be targeted as part of an initial Sales & Marketing strategy.  Of course it is very important to have a strategic plan on how best to enter markets and grow share - but it is also very useful to adopt an opportunistic frame of mind about who to sell to and  how to sell to them.

Common Reasons for choosing “The right type of customer”

There are a number of factors which make some customers better than others – but there is one factor that is universal regardless of your industry and proposition – “A paying customer is the best type of customer”.  Every company trading in today’s economic climate has to be realistic and recognise the challenges of cash & cash-flow in the market.  These days it is even more pertinent to consider payment terms when dealing with a new customer or market vertical.   Just because your new customers may intend to pay within the agreed terms, it is possible that they will not be in a position to do so. This is as a result of perhaps them being put in a cash-flow deficit situation by their own customers (a spiralling epidemic in Ireland today).

In the absence of a credit relationship with a new customer – a best approach is the build a payment model which sees an amount (or all) funds account before you deliver your product/service.  The request of prepayment or a tranche payment schedule is not unreasonable (regardless of your size of business) in today’s marketplace. Too often, early stage companies are over keen to make sales and win market share and because early stage sales revenue is important for growth – its strategically imperative cash is collected in line with cash collection forecasting. 

Another valuable strategy in today’s climate is to try and increase sales from existing customers.  Typically repeat revenues from clients are more profitable than new customer sales – due to the “cost of acquisition” being bare on first/previous orders.  So it’s important to maximise revenues from your client basis.  One way to do this is by being “customer intimate”. Understanding your customer’s business model and trying to understand how possible changes to your customer’s business can sometimes open opportunities to sell more/a wider range of your product/service.  So having a different and focused mindset for present & future customers can help you maximise on sales/revenues and make sure that each customer is a good one!