How do you know which of your customers are worth your time and attention? What makes the difference between a customer who contributes to your bottom line and one who drains your resources?
Finding and keeping profitable customers is key to business success. In his book Getting Everything You Can Out of All You’ve Got, Jay Abraham explains that identifying your most profitable customers helps you focus your marketing efforts on attracting similar clients.
Keep reading to discover practical ways to analyze your customer base and find the patterns that lead to even more profitable customers.
Profitable Customers
Understand which customers are and will be most profitable to your business by analyzing your existing customer base. Once you’ve created a general overview of the customers you currently serve, it’s time to take a deeper look, exploring which of these customers pay the most for your products and services. According to Abraham, recognizing your most profitable customers helps you tailor your offerings and marketing efforts toward both existing and potential customers most likely to buy.
Once you’ve identified your highest-paying customers, Abraham recommends studying their buying and usage habits, and exploring their professional and personal backgrounds to find similarities among them (such as where they live and work). For example, customer records might reveal that your highest-paying customers are senior executives aged 45 to 55 at mid-sized consulting firms—they purchase annual team subscriptions for their departments, enroll employees in training programs, and maintain their subscriptions for years.
| How to Identify Your Most Profitable Customers While Abraham suggests that the most profitable customers are the ones who pay the most, other business experts argue that a customer’s profitability depends more on how much it costs to serve them. A customer who spends less without requiring additional support tends to be more profitable than one who pays more but needs constant attention. These experts say the most profitable customers tend to: • Place single large orders instead of multiple small ones. • Commit to their orders without asking for modifications post-sale. • Pay up-front rather than through installments. • Require minimal attention from sales and post-sales teams. Further, Abraham says you can identify potential customers by analyzing similarities among existing customers’ habits and backgrounds. Marketing experts expand on this advice by identifying four kinds of factors that shape purchasing decisions: • Individual factors: Occupation, age, economic status, lifestyle, personality, and preferences • Psychological factors: Emotional needs, susceptibility to influence, knowledge level, attitudes, beliefs, and prior experience • Sociocultural factors: Cultural background, social class, religion, family, and desired social connections • Cognitive factors: Willingness to consider new information and think objectively Keep these factors in mind as you work to identify new customers who are likely to buy from you. Rather than creating superficial customer profiles that overemphasize traits such as location and occupation, dig into their underlying motivations, decision-making processes, and social influences. This helps you understand the real reasons behind their purchasing decisions, allowing you to strategize more effectively. |
