Dealing with your nightmare vs. ideal customer

A definition of your ideal customer is one of the most powerful tools in your growth strategy.

If you closed your company today and could not longer serve any of your customers, restarted your company tomorrow, and only selected customers you wanted to serve, who would they be?

I could list those customers and clients from the top of my mind. This simple question clarifies things in a moment.

If you are a B2C business (or an employee of a company/division/practice that serves B2C clients), consider age, gender, income level, educational background, and location.

If you are a B2B business (or an employee of a company/division/practice that serves B2B clients), consider the industry, company size, and geographic location.

Also, don’t stop there. Describe their values and concerns, how they buy, why they buy, and so on.

Once you have an ideal customer description, you can filter customers by these criteria and determine where to allocate time and effort.

You will also start seeing those potential customers everywhere, like when you buy a car and suddenly start seeing it everywhere. It’s your Reticular Activating System (RAS) at work.

But what do you do with the rest of the customers?

As a business you want to grow, you don’t want to lose revenue. If someone is willing to buy from you, why should you say no to them?

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Understanding your ideal customer profile doesn’t mean that you “fire” all your other customers.

You can divide your customers into 3 categories.

One is ideal customers.

Two are nightmare customers. Those are customers who just aren’t worth the trouble. They bring drama and negativity, they don’t pay on time, they cost too much to serve and have unrealistic expectations. Even when you go above and beyond for them at great expense for yourself, they don’t thank you and instead complain, bring negativity, blame everyone, and demand more. This category of customers is one you want to avoid. I can usually spot such customers very quickly. I usually politely say that it is not a good fit.

And whenever I make exceptions…

I regret it every single time.

I remember with one customer like that when he applied to join one of our programs. I saw red flags and told him this was not a good fit and that we should part ways. He promised that he would not behave in a certain way and shared how much it meant for him to work with us. I kept him in the program, and not a lot of time had passed before all the drama came back, and it was clear not “firing” him (accepting him into the program) was a huge mistake.

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And then in the middle are all the other customers that you are happy to serve but they are not your target customers.

While the ideal customer category is very important to pay attention to, the nightmare customer category is just as important. If you don’t politely decline to serve those customers, they will drain all the energy and will to live from you and your company, and you will have no strength to help anyone.

A great success story (if you look at revenue only, but later led to a steep decline in the brand value) of selecting an ideal customer, focusing on that customer profile and how it impacted the business, is Burberry’s turnaround in the mid-2000s. It was orchestrated by Angela Ahrendts and Christopher Bailey. They identified their ideal customer to be the emerging market of millennials. Now it is obvious looking back. I am a millennial as well. Clearly, we are a great customer to focus on. But, at that time, many thought it was crazy because this market had yet to prove their willingness to pay and be loyal to brands.

This led to Burberry’s revenue growth from £995.4m in 2008 to £2.5 billion by March 2014. Adrendt then went on to join Apple as the head of Retail. They had a very clear focus on their ideal customer, the WHO they were focusing on. Every fashion line under Bailey’s direction focused on the millennial girl or guy. How do they buy? What are they looking for in a brand? What do they want to wear?

Of course, if someone who is not a millennial walked in and wanted to buy a Burberry hat or a Burberry wallet, they weren’t declining that customer. They would still sell the item to them. But that customer wasn’t a customer they were thinking about, designing products for, or designing advertising for.

Understanding your ideal customer is an important component of creating a sustainable competitive advantage for your business, so I am glad we could discuss this today.

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