How to Describe Your Business Plan’s Ideal Customer

By Steven D. Peterson, Peter E. Jaret, and Barbara Findlay Schenck from Business Plans Kit For Dummies, 3rd Edition

Every customer is important to your business, but the truth is that some are more important than others, and a precious few are absolutely essential. Your business plan should reflect that distinction.

The difference between good and great customers is huge. If you’re already in business, you know that some customers are more profitable, more pleasant, more apt to buy frequently, and most likely to spread good words about your business. Those customers are the ones you want to focus on and increase in number.

Your best customers

Ask you to do things you do well.
Appreciate what you do and willingly pay the price that you ask.
Make reasonable requests that lead to improvement and expansion of your skills and services.
Inspire your business to move in new and profitable directions.

Great customers are the ones who you want to go overboard for. Heap on the special services, pile on the appreciation, and do what you can to keep them loyal to your business. You’ll be doubly rewarded with repeat purchases and invaluable word of mouth.

Good customers are the ones who appreciate your offerings, buy your products, and pay your bills on time and with courtesy. But they can be transitory — here today, and gone tomorrow. And what often lures them away is a better offer. They may never become loyal patrons because they value special deals more than they value long-term business relationships.

Your worst customers are prospects who are simply mismatched to your offerings. They’re excessively negative, unreasonably demanding, and maybe even abusive to your staff and your business systems. Watch for these indicators to flag customers you’re better off not having in your clientele:

They consume considerable time and attention yet buy very little.
They demand unreasonable concessions on pricing, service, or product alterations, and, if you consented, these concessions would harm your business.
They demoralize your staff.
They refuse to pay your fair price for your offering or refuse to comply with your billing and service standards.
They act dissatisfied no matter what you do for them.

Great, good, and worst customers affect your business in very different but predictable ways, following the 80/20 rule, which is also called the Pareto Principle or the law of maldistribution. In most businesses, roughly 20 percent of customers consume 80 percent of the time and create 80 percent of the problems, while another 20 percent generate 80 percent of the profits.

By identifying which customers fit into which group, you can spend more time with your best customers to greatly increase your profits.

Indulge in a little fantasy. Conjure up an image of your ideal customer, whether that customer is an individual buyer or a business. Imagine the sort of person who eagerly buys your products or services, raves about you to friends and colleagues, and returns to purchase from your business on a regular basis.

Get specific. Use the questionnaire in the figure to detail aspects that differentiate your ideal customers from all others.