Your Business's Good and Bad Customers - dummies

Your Business’s Good and Bad Customers

Part of Business Plans for Canadians For Dummies Cheat Sheet

Good customers are the ones who bring a smile to your face, the ones you like serving, the ones who appreciate you, the ones who keep you in business. You want these customers to keep coming back time and again. But how do you keep them all satisfied? Success is a matter of knowing who your customers are, understanding their backgrounds, and fulfilling their needs better than the competition.

Your business can measure and describe its good customers in several ways:

  • Track where your customers are, breaking them down by country, region, province, city, or neighbourhood.

  • Figure out who your customers are, including their age, gender, occupation, income, family status, and nationality.

  • Discover more about how they live — their hobbies, most frequented social media sites, favourite sports teams, restaurant choices, and vacation destinations, for example.

“A bad customer? Isn’t that a contradiction?” you ask. Not at all. Bad customers simply cause you more trouble than they’re worth and don’t fit into your company’s values and strategies. Bad customers do the following:

  • Ask you to serve them in ways that aren’t practical for your company

  • Distract you, causing you to veer away from your strategy and your business plan

  • Purchase in such small quantities that the cost of doing business with them far outweighs any profit that they generate

  • Require so much service and attention that you can’t focus your efforts on more valuable (deserving and profitable) customers

  • Remain dissatisfied with what you do, despite all your best efforts

The pundits have come up with a principle that you can apply here: the 80/20 principle. In this case, the rule says that if you survey all your customers, 20 percent of them account for about 80 percent of your business. Your good customers make up that 20 percent. You obviously want to keep them — and keep them happy! But look at the remaining 80 percent of your customers, and you may discover some that you’d rather hand over to the competition.