Metzner Schneider Associates, Inc.

Searching for the Ideal Customer

The ideal customer is one who pays full price for your product or service, buys everything you offer, requires the absolute minimum, lowest cost interaction, consumes the minimum number of resources, continues to come back to you exclusively without requiring any action or promotion on your part, promotes your offering to others on their own initiative, and never complains. Unfortunately, very few if any of these people exist.

The reverse is also true: the least desired customer is the one who only purchases at the lowest possible price, utilizes the most expense sales channel, uses every last bit of the product or requires maximum handling/servicing, will switch providers for the slightest advantage and only considers purchasing from you after you have expended considerable marketing and promotional effort, then bad mouths you to others and demands refund and compensation. Unfortunately, there are more of these than anyone would like.

Neither of these customers is likely to generate profitable incremental business, for opposite reasons. So, neither of these customer types should be a focus of your marketing and customer communications efforts.

The ideal customer is giving everything he or she can. No matter what you do, there is no more. Therefore, any amount of money spent towards that individual reduces the overall contribution. The only dollars justifiable to target towards them from an economic standpoint are to maintain behavior if any of it is potentially at risk; a reinforcement "thank you" message or a no-cost opportunity (such as providing information, access to new products or services) to recognize their value.

The least desired customer, even if profitable after all his consumption of resources, is unlikely to be maximizing the return on your marketing and customer service dollar. If he purchases, that is fine, but you would never want to encourage continued patronage at any additional expense, and might be better off letting one of your competitors take him off your hands and deal with the hassle and cost.

The place to invest your resources is between these two extremes, where you can realize a return on the money invested. The trick is to determine how to find them, and how to spend the least amount of money necessary to generate the greatest contribution. Many companies take the approach of casting the widest net possible. They blanket the media, whether broadcast, print, mail, or electronic, hoping to catch as many prospects as they can. While this effort may succeed in sweeping up profitable customers, it also runs the risk of trapping those that should be thrown back, and still missing the most valuable ones. There is also an inherent assumption in this approach that every potential customer's need or interest is the same, and therefore he will respond to a general appeal.

Alternatively, those that target too narrowly may find a greater portion of the ideal and less of the undesired, but may still miss top prospects and risk spending against those that would have purchased anyway. While potentially meeting an exact need, opportunities to expand the universe of customers will be foregone.

If you have invented the better mousetrap, customers will flock to you, but only assuming they need a mousetrap and know where to go. If you have introduced a product or service that people did not realize they needed and has not been offered before, you have an education process to first reach those that can use it and communicate its value. But in that event, you have first mover advantage, with no immediate competition, to make a sale. If your product is a pure commodity, you must have the advantage of brand, location, distribution, or price, to ensure initial and repeat purchase.

If you are in an established business, chances are your offering has elements of all of the above. To obtain as many customers that approach the ideal, you must determine what mix of marketing approaches to use. The good news is, the answer is probably already within your control.

The most valuable resource available to any marketer is your existing customer base. Within lies the richest information about prospects and good customers, as well as bad. The trick is extracting that information in a meaningful, useful way.

To do so requires the proper balance between three disciplines: research, tracking, and modeling. Research has to go beyond the statistical, which yields data but not necessarily information, directly to determining what specific customers say they want, need, and most important, intend to do. While self-reported data has inherent limitations, it is still the best way to gauge intentions. Tracking allows you to match what a customer says he will do with what he actually does, which helps to validate the self-reported data. Finally, modeling will allow you to determine what the customer should be doing, in comparison to what he says and what he does.

By applying these tools to your existing customers, determining how you found them or they found you initially, you can better target your search for those that will yield the greatest return. Conversely, you can also avoid investing dollars against current or prospective customers that offer no opportunity for sustained profitability.

While limiting your customer base to only the ideal may be ultimately unachievable, you can greatly improve your chances of finding the ideal by realizing that your current customers are not just a source of sales, but also the source of your best available marketing information..

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