As a starting business owner or a business owner in tough economic times you may think that you are happy with every customer that walks in the door, but after working with a range of customers you could come to the conclusion that not all customers are created equal. Unless of course you live in a perfect world, as a business owner you have to be selective in choosing your customers.

The other day I had an fascinating experience. I was invited by a business owner with a really interesting and a high tech intelligent product to talk about doing work for his business. I love complicated products as I know one of my strengths lies in making complicated products or services simple for the target audience. The meeting in itself was friendly and engaging, but what was a bit disconcerting was that this business owner kept telling me not to take notes because he was writing it down for me. He also told me several times that I didn’t have to understand the product for more than 40%. Making notes is important to me as I jot down questions and thoughts I have. It wasn’t like I was taking dictation. (Besides, his handwriting was even worse than mine.) Understanding the product as to what it does for the target market is crucial to me as a consultant, so I felt really confined by all these limitations.

The business owner wanted to build his brand and generate leads for his business and had set his mind on two ways of doing so. As a brand and marketing strategist I thought there were better ways and I also wanted to improve on the website in order to build the brand and generate leads. The website was off limits however. On the way back from the meeting I found myself torn. On the one hand I loved the smartness of the product and how successful it could be when marketed properly. On the other hand I felt this guy wasn’t taking me , my expertise, and my way of working seriously.

In the end I decided to send him a proposal about how I thought the marketing and branding of his business should be done; different from what he had asked. It was a test in sorts. He either liked my independent thinking and valued my expertise and then we would be a good match, or he wouldn’t and he would go with one of the two competitors he would be talking with. In the end the business owner decided to go with another agency as our proposal didn’t offer what he was looking for. He failed my test and I failed his. He wanted someone to do what he wanted.

We would have been bad for each other.

What I learned from this is that I should trust my gut even more than I do and that I should not have even bothered with the proposal. Apart from learning what I describe (which I already knew in my gut), it was a waste of time.

So select your customers and use the following criteria to do so.

Valuing your work

By that I mean do your customers appreciate what you do for them? Do they take your advice if you are in the advice business? Do they appreciate your hospitality if you are in the hospitality business? Do they like your perfumes if you are in the perfume business?

This is important for two reasons. First of all, if your customers are happy and let you know, you are happy as a result. You derive personal satisfaction if the customer you did something for, appreciated and valued it. It is why you are in the business you are in. You are helping to solve problem your customer has.

Secondly, happy customers say good things about you and this in turn helps you build your reputation and it spreads the word to other potential customers. Word of mouth, after all, is the most effective marketing any business can have.

Thirdly, customers who do not value your work could have a counterproductive effect. Let’s illustrate with an example. Say you are a consultant and you advice your client to solve a problem in a certain way. But he doesn’t listen to you and the problem isn’t solved but is even made worse. This not only is very frustrating for you as a consultant, but the wrong solution chosen may also rub off on your reputation as a consultant. This goes right back to the personal example I gave. If your advice is not appreciated it will only lead to frustration.

Being paid on time

This may seem trivial, but it is an important one for several reasons.

Not only is it frustrating if customers do not pay on time. It also costs you time to go after your money. Time better spent on other things to grow your business.

Not being paid on time also denies you from using the money to either reinvest or put in an account that accrues interest.

A third reason why this is important, is that customers not paying on time contribute hugely to businesses going bankrupt. You want to avoid that at all cost. So let go of the customers that do not pay on time.

No arguments about fees and prices

Although there is nothing wrong with a little negotiation, if it is not part of your business model because you have fixed prices, or if it happens every time with the same customer, you may have to wonder if this particular customer is worth the trouble. Because these negotiations take up a lot of time and also put their mark on the relationship. It of course also ties in with valuing the work that you do for the customer. If they think your work is worth it, why the argument about fees and prices?

Referrals

Do your customers send other – good – customers your way? If that is the case it means that your customer is actually being your sales person out there. A good referral has a lot of value. And a customer who sends referrals your way is worth his weight in gold.

Repeat and frequency

Are your customers repeat buyers and do they buy often? Granted, for some types of businesses you may have a customer only once. (Although that is another topic, think about creating other products or services, so that you get repeat customers who buy often.) Of course it is up to you to qualify how often is often and how much you are happy with. That also depends on your business. If you are in the hospitality business and you have a local restaurant often may mean that customers come to your restaurant once a month or once a quarter. But if you cater to nearby businesses, every week may be your definition of often. If you run a small hotel, often may mean once a year if it attracts foreign tourists, or often may mean once a quarter when it attracts national weekenders.

The fun factor

Do you actually enjoy having this customer? The enjoyment can be based in the personal connection you have with someone, but also – depending on your business of course – if they have interesting stuff for you to work on.

In the case I presented I really would have loved working on that product. Figuring it out and coming up with smart ways to market such an intelligent product would have been a party in itself.

Potential for growth

The last criterion is if your customer has potential for growth. This goes for B2B as well as B2C; will your customers grow in such a way that it will generate more business for you? One of the interesting things about the business owner I discussed at the beginning was that he had a product that had huge global growth potential. I was sorry to let that go.

Using these criteria

Of course you have to qualify these criteria for your business. How much potential for growth is enough? What is paying on time in your business? Create your own yardstick and use it.

You can use this yardstick to evaluate your current clients. Some of them you may want to get rid of after an evaluation like this. You can also use these criteria in your price setting or the development of your promotional plans.

And you can use this yardstick in the sales process. If you have to qualify leads for your sales funnel or make calls to prospects, these criteria may help you decide which may be worth your while and which are not.

Of course you may have determined other criteria that work for you in your business. I would be curious to hear them in the comments below.