A lot of businesses develop products with certain clients in mind. Through a loss of focus, early successes and/or lack of controls and desperation they can end up servicing clients who will not benefit the most from their value proposition or less than ideal clients.
Identifying your ideal client is about much more than just identifying the people with the ability to pay or whose need gets satisfied the most by your value proposition. It is identifying the client who is most likely to complete the sale and who exhibits the right kind of behaviour for the cash flow in your business. The ability and will to pay are bare minimum requirements for a client to be a Most Wanted or Most Valued customer. ,I often find many clients who keep providing their services to clients who don’t pay them or clients that keep them helluva busy for little to no money. This is when you actually finance your clients business by giving them value, goods and services prior to them paying you. When these guys don’t pay it often is the case that not enough controls were put in place to:
- Verify how well these clients pay their other suppliers;
- Research who they are. Who owns the business?;
- The schedule of goods and services they offer;
- Where relationship they have with their clients and suppliers;
- Who are the key individuals in that business that can influence when you get paid;
- What strategies can you undertake profitably for them to pay you faster and;
- Who they are doing business with, amongst other factors.
Around these factors you can start building the bedrock of the rules that will then determine which client is most desirable to you. When working on a prospect list, doing this homework will go a long way to ensuring that you do not spend long hours trying to recruit a client who will be a cash flow nightmare in the future. Regularly informing yourself on how well cash flow is managed in your client’s business is vital. What’s even more interesting is that this last bit of information is obtainable free of charge and very easily through simple activities that your team can undertake with your oversight. In most business you will find that ideal clients normally contribute 80% of your sales and the undesirable the rest yet they you have to swap the ratios around when calculation the time intensity it takes you to service them.
Even when you do not provide credit or have a debtors book, understanding, approaching and spending money on your ideal client can often result in client behaviour that improves your cash flow. A case in point is when you rehabilitate a client to paying you upfront for work being done. It is not always possible but can be achieved by employing simple yet powerful strategies.
In conclusion, the saying that the customer is king, is true in many aspects but not every customer deserves a seat on your throne. Only those clients who exhibit the kind of behaviour you are looking for are allowed on your majestic pulpit. Before prospecting for clients you need to understand who deserves to sit on that throne. Business large and small would do well to heed that and focus on maximising their ideal client’s utility of their service or goods offering.
Ntuthuko Zwane, is a Business Evolutionist and Cash Flow Management and Funding specialist at HMZ Capital. HMZ Capital offers workshops to businesses that seek to improve their cash flow by influencing their selling process.