Categorising the right customers - Harbak Business Advisory and Consultancy

Without consumers, you go out of business. It’s pretty simple!

Having said that, looking after them can be hard work. Some clients are great to deal with, but others can cause endless sleepless nights.

Whilst your clients are all important, not all clients are alike, and the characteristics of client groups are quite different. So, it’s important to tailor your strategies and methods for each group.

To do this, it’s important to segment your clients to help you understand which groups represent the most value to your business by categorising their most relevant characteristics e.g. needs, attitudes, behaviours, and location. Segmenting your clients will help you identify your most profitable segments with target services and communications. The 80-20 rule states that 80% of a business’s profits come from 20% of their customer base.

Ideal Customer Profile

To start, you can create an ‘Ideal Customer Profile’ to help identify your target customers. This can be done by discerning the value of each client by their economic value and their associated needs. A useful segmentation method is the A-B-C-D Client Model which can then be compared to your ideal customer profile:

  • A-List Clients

    These are the clients that you love working with and who love working with you. They are the first ones to refer you and are the clients generating a significant portion of your revenue. They also see the value in what you do and want a quality service, and are happy to pay for it. Look after these!

  • B-Class Clients

    These are your middle of the road customers where you only handle a small portion of their work. Despite this, this group has the potential to be developed into A Class client providing revenue in the future.

  • C-Class Clients

    C Clients are ok to work with, but may not be particularly profitable, and don’t individually contribute much value to your company.

  • D-Class Clients

    It’s probably time to say goodbye to these clients as they are causing you more pain than its worth. This group are late payers, low revenue and require a lot of effort. This can be a tough call when you are in start-up phase, however, this category of client is not where you need to spend your time in the long term.

It’s simply about putting your effort where you will most likely gain success. Once you have categorised, then it’s about drafting and implementing client management plans that ensure the “A’s” remain “A’s” and have actions to turn “B’s” into “A’s”.

Sometimes it’s hard to be objective about your clients when you have had a long and personal history with them. However, Harbak has over 15 years’ experience in business development and can help you define your clients into the above categories. Segmenting your clients also helps you know what to look for to attract more of these clients in the future, as you become more aware of the qualities you are looking for.

The Harbak team recently completed such an exercise for a small engineering firm that works in the infrastructure and mining sectors. Our objective eyes and our collaborative approach allowed us to secure more opportunities for the business. In the coming weeks, we will develop targeted sales and marketing strategies for each group. In doing so, our clients can focus their time and resources on satisfying their best clients, resulting in more referrals and an even longer A-List. We may be able to work with you too!

Keiran Travers the Founder and Director of Harbak. The company provides Business Management, Business Match Making (Business Development) and Advisory ServicesHarbak offers business management services for entrepreneurs, associations and small businesses. In outsourcing executive and financial management roles, Harbak can assure a low risk, safe pair of hands for this position. Contact Us at Harbak.