How to be Selective with Customers you Take On

“You can’t market to everyone.” I remember this phrase by my college entrepreneurship professor quite well. At first I doubted her, thinking, well why couldn’t I market to everyone? What’s wrong with having everyone as a potential customer? Wouldn’t that be any small business owner’s dream? If only running a technology consulting company were that simple!


Years after college, I’ve quickly begun to realize why she was right – and why most experts on the topic generally suggest that you at least be somewhat selective on what clients to take on. Not everyone who calls/emails for work will be profitable for your business. You’ve likely come across this truth on your own already with a client who took forever to pay a small invoice. Or perhaps a customer who expected “everything for nothing.” These kinds of customers are anything but: they drain you of the time, energy, and financial flow that allows you to handle the rest of your client load effectively. My advice for small computer business owners? Be selective, don’t take on everyone under the sun, and market your services effectively for the potential clients you are actually trying to reach.

A stellar article from the June 2011 issue of Inc. Magazine honed in on this principal very well. J.J. McGorvey penned “When Slow is Better” which describes why charging a higher rate to a smaller set of clients is better for the long run. More precisely, McGorvey went into how white-glove-treatment service businesses would be better off by maximizing revenue from a higher rate because of the specialized attention they provide. The theory behind the concept is to provide a top notch experience, or service, to the customer and charge appropriately for it. There is a quality-speed trade off that can be extrapolated for application to the technology business sector which most small business owners already take into account, albeit subconsciously. You can either serve more customers with a lower quality of work, or less customers and a higher quality (and hence a higher rate). The latter is better time and again.

Whenever I have a discussion with someone about this very issue, there is some dark veil that always has to be overcome. It’s as if losing a customer is always a bad thing. There are many reasons why this isn’t the case, and why I actually advocate for being picky with who you take on. This question has even been raised in the Technibble forums on threads that ask, for example, if looking for new customers at a flea market is a great way to drum up business (you can find one such thread here). Are the kind of clients you want to market towards generally at a flea market to begin with? I’m going to make sure I say generally because I will admit that I frequent my local flea market. But I’m visiting the flea market with one intention in mind: to find deals, and great ones at that. Don’t position your business in the same category of dirt cheap or you will end up having to uphold such an image to these new “customers.”

How should you ensure that your company’s marketing structure and pricing reflect who you want as a client? Here’s a few simple things to remember.

Who are you marketing to? I showed earlier how you can’t expect to market to everyone. It’s a lofty goal that will only force you to run a business model that is unsustainable and unprofitable. When you think about your company’s image and marketing strategy, don’t try to foresee every possible client. Focus on who an ideal new customer is and what they entail. This can be a broad range of people, but don’t settle for everyone – ever. As a matter of policy, I almost never turn down a referral, even if that client is not an ideal one. Why? Because their business was garnered through good word of mouth, which I consider one of the keystones to my success thus far. Taking in a referral that doesn’t always fit the mold of what you want in a client isn’t a bad thing. Remember that an entirely new customer that found you through normal marketing is along the same lines of plucking business through a cold call: they have no baseline for what to expect from you and are merely choosing to go with you due to either price or wording used to gain their attention. Therefore, set their expectations properly and “fish” for clients that match your expectations.

What are you charging? I won’t delve into a discussion on exactly what you should be charging, as I did so in a previous article. However, keep in mind a few good principals on rate. Be mindful that your rate directly represents a few different aspects of what you bring to the table, including your level of service, experience, and overall quality. The “pizza techs” as we call them who work for $25 per repair generally provide the kind of work that their final bill reflects. Do you think someone that could actually provide excellent service due to experience and knowledge would truly charge that little? No, because the market would allow them to charge appropriately. Don’t let such business models throw you off – you aren’t competing with these individuals. The clients you want to bring in know generally what price range they are looking at, and a few dollars up or down will not sway them hopefully. If price is the sole factor that such a customer is judging their computer company on, is this someone you see as a great client? I wouldn’t say so. Simple price-minded individuals are merely deal-hunters that will take their business to whoever waves the lowest price at them. Don’t settle for such customers because there are loads of others who will have some level of loyalty to your company that isn’t fostered on price alone.

Don’t be afraid to part ways with bad customers. What’s a bad customer? That definition is up to you, to be honest. To my company, a bad customer is someone who will only call once every year or so and expect loads of discounts for legitimate work. It could also be a client who takes months to pay a bill but wants next day turnaround. Or it could be someone that routinely asks me to order product which they end up changing their mind on and returning – using my company as their Best Buy replacement for “buy and try” product testing. These are all customers that I would pick out and kindly part ways with, letting them know that I cannot service their needs effectively and it would be better if they tried giving competitor x or y a call. It’s as simple as that. Remember, just as customers have a right to choose who they use, as a small business owner you also have the same choice. Fair treatment needs to go two ways in a company-customer relationship.

Give your best customers the extra treatment they deserve. I always go the extra mile for clients that are a pleasure to work with, pay on time, and bring in a decent amount of billable time. It’s a definite win-win because they feel like you care about them and they are more likely to continue bringing in not only more service, but potentially new customers as well. Shave off the travel from an invoice here or there, consider that last 30 minute phone call complimentary, or throw in a free upgrade on a product purchase. These little gestures will go a long way with building a better trust relationship and keep that client from considering someone else when lower prices or other incentives are waved in front of them. Keep long term customers coming back based on strong relationships and not one-time deals.

No one ever said that running a successful computer business was an exact science. Much of what we do requires a fine tuned mixture of experience and calculated risk. Even though we can’t predetermine the success of everything we set out to do, it’s much more manageable to set boundaries that you can control, and in this case, that boundary is what potential clients your company markets to. Don’t get caught in the endless hole of bargain-bin pricing. You will attract a whole variety of clientele that will recognize you as such, and recovering from such a reputation-changer is a very tough task (it’s why Apple sells $1K+ systems with ease and Dell is lucky to do so). Set your goals appropriately, and you will build a client base that truly appreciates the value you bring to the table.

Questions? Comments? Shoot me an email at info(at)firelogic(dot)net and I will do my best to respond!