Strategies for Managing Directors

The Right Type of Customers Kim Radok September, 2014

Irrespective of whether we are talking about your private acquaintances, sporting friends or business customers; you need to be careful of your associations. The reasons for taking such care are, (i) you are in part defined by your associations, and in turn these affect (ii) your personal, sporting and business life expectations.

In our personal lives especially, you are equally defined by the people you associate with and those you choose to avoid. Sporting clubs seek players, supporters and members who share a mutual ethos and code of behaviour. At times, Clubs will ask those people who do not share the same ethos and expected behavioural traits, to leave. The same situation applies to your business. As a business owner, you should be trying to attract those suppliers and customers which add value to your business by association.

Therefore suppliers are just not selected because they deliver the right product or service in a timely and efficient manner and for a fair price. Suppliers are also chosen for their public profiles. In today's world and the advent of social media, using a supplier which does not fit in with your customers' ethos, can be a very expensive exercise.

In regards to customers, we define the right type of customer as those:

(i) which are easily accessible to ascertain why invoices remain unpaid;

(ii) are willing to work through issues when things go wrong;

(iii) pay within agree terms in a timely manner;

(iv) don't raise spurious reasons to delay payment, and finally

(v) do not cause a poor public perception by association.

Alternatively if you accept any type of customer for the sake of another sale, you may easily attract the wrong type of customer and

(i) lose profits through reduced cash and increased expenses,

(ii) end up being a defacto debt collector, and equally important

(iii) be distracted from doing good business with your preferred type of customer. 

As a consequence, it often makes good commercial sense to identify and refuse to deal with the wrong type of customer. Make no mistake; you will attract the wrong type of customers when they sense, raising an invoice is more important than doing good business.

Picking the right type of customers which add value to your business therefore makes good sense and by association, attracts good business acquaintances.

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