Customers – finding, keeping and letting go…

A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him,” said M.K. Gandhi. As with many of Gandhi’s teachings, it is hard to disagree with him, but harder still to follow his simple advocacy of direct action.

Customer

Photo jm3 via Compfight

If your business involves direct interaction with the customers who walk in the door, Gandhi’s advice is a great place to start. However, it is just as likely that your business requires your going to the customer (selling credit cards, vacuum cleaners or consulting services), or shipping your product to customers you have never seen (software, books or mobile phones). Occasionally, as in the case of radio, television or newspaper columnists, it may mean “free” broadcast of your product and very little interaction with customers, if at all. In all these instances without a good number of paying customers, you will find it is hard to run a viable business.

The customer, someone who pays for your goods or services, is what defines your business. So how do you find customers — and having found them, how do you keep them coming back? Will there be times when you want to let go of customers — if so, how do you do it?

Finding customers

“Build it and they will come” may work in the movies, but definitely it is unlikely to work for most businesses. Even if you run a retail store, a barber shop or a restaurant in the most popular mall in town, finding a customer – especially the right, paying customer is non-trivial. And is best not left to chance. If you are not a retail store front but rely on direct or indirect sales folk or other marketing channels to reach your product or service to your customers, it is even more critical that you find the right customers and find them fast.

As an entrepreneur you have to recognise that first and foremost, you are a sales person – regardless of your job role or what it says on your business card. You will be selling to partners, employees, financiers, bankers, suppliers and most importantly to customers.

To find customers, particularly appropriate customers, you begin with understanding what it is you have to offer and who will be best served by it. This determines your target customer segment. For instance, “Mothers of young children will benefit from our childcare service” or “Companies with employees in more than one location will benefit from our Web-based HR tool.”

Now, it is relevant to address “How will I recognise this customer?” In other words, qualifying the appropriate customers within that segment. “Working mothers and mothers with more than one child will find our service particularly useful and be willing to pay for it.” “Companies, with more than 40 employees, offices in multiple cities, revenues greater than Rs 10 crore and profitable will be the most likely buyers.”

Once you have answered these two questions, then it is a matter of locating or reaching out to these qualified, target customers. In the example we have spoken of, we could reach the target segment of working mothers through hospitals or nursing homes, through children’s stores, through their workplaces, or even movie theatres that play children’s movies. And all this is without advertising, which I assume as a start-up, you will not be spending money on.

If you are selling to companies, it is important to go where these companies congregate, be it to a trade show or exhibition, industry associations and consortiums and to partner with companies offering allied services, so that their existing customers become your prospects. The most neglected and important way to find new customers is to ask old customers for referrals! Far too many entrepreneurs fail to do this and leave easy money on the table.

Keeping them

If you thought, finding good, paying customers is hard; keeping them can be harder still. The good news is that “It takes less effort to keep an old customer satisfied than to get a new customer interested,” as Michael LeBoeuf, retired professor of management at the University of New Orleans, says. There are three critical steps for keeping customers. Step one is providing them what they want, not just what you have to sell or offer. Step two is asking them for feedback and actually listening to them – not just to what they say and how they say it but most importantly to what they don’t say. No news is not always good news in keeping customers. Finally, step three is demonstrating through your actions that you have listened to them and improved upon your offering or service.

Letting some of them go

The hardest lesson I have found is that sometimes we have to let customers go. It appears to contradict LeBoeuf’s assertion, made in the previous section, that keeping a customer is easier (and hence better) than finding a new one.

If you don’t let go of the ones that are either not profitable, or not paying you on time and distracting your business with the overhead of running after them, you will find yourself in trouble soon. And these are the easy ones!

Even harder to let go are customers who are profitable, but don’t treat your employees well or with whom you have fundamental issues of values mismatch, the ones that supported you in your early days but are now sucking up all the energy of your company with little or nothing to show for it. And it is critical, that as an entrepreneur you spend time each month and each quarter reviewing and culling your customers.

Yes, you had better have other paying, profitable and prosperous customers to be able to do this – and that brings you full circle to finding new customers, keeping and growing them even as you continue to weed and cull those that are holding you back! So get out there and begin selling!

This article first appeared in the Hindu Businessline in March 2008.

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