An organization needs customers to serve. Without customers the organization has no reason to exist. The ideal customer:
- Has the problem the organization solves. There is no point selling a solution for which the prospect has no need. If a prospect does not need the solution, organization leaders might be tempted to solve a problem other than the one which the organization offers. The organization can do this but it essentially means building yet another organization which drains resources from core activities while adding risk and complexity.
- Finds the problem strategic to solve. Every prospective customer has many problems. No customer solves all of its problems at the same time. Instead, either explicitly or implicitly, they determine which of all their problems are most important to solve and allocate resources to solving them. Successful organizations sell their solution to prospects for whom it is strategic to solve the problem it addresses.
- Has resources. If the prospect does not have the scope and scale of operations to support paying a fair price for the solution, or if they are otherwise resource constrained say, for example, due to market or economic conditions, it makes no sense to cultivate them as a customer.
- Can be reached. To make a sale requires direct access to the person in the prospective customer organization who will make the decision to allocate resources for the solution. If the buyer cannot be identified or reached the odds of a sale are low no matter how compelling the value proposition.
- Is good to work with. Some customers are better to work with than others. Cultural differences, regulatory restrictions, complex laws, geographic barriers, and many other obstacles can make it not worth the trouble to cultivate a specific organization as a client.
The above five characteristics of an ideal customer can be used to decide who to sell to next. For example, of all the prospects to sell to next, put a priority on those who have the problem the organization solves, for whom it is strategic to solve it, that have sufficient scope and scale to justify paying a fair price, where the decision maker can be reached, and who is a pleasure to work with. If more than one prospect meets all the criteria, put the priority on the one that offers the most follow-on sales potential.
While the advice above may seem self-evident, it turns out that leaders of most early-stage ventures do not follow it. Instead, they almost always sell principally to organizations where there is a key contact that they happen to personally know. That is, they use can be reached as the primary criteria to determine who to sell to next.
When they run out of sales prospects in their personal network, they then generally set out to make their network bigger by joining clubs, trade groups, community boards, etc. They may get another sale or two but they also get exhausted and eventually learn that a plan to increase sales capacity by extending their network is not a good long-term solution.
Their next step is often to bring on board members and “rain-makers” with deep Rolodexes and who know a lot of people. This may also lead to more sales in the short run but is not an approach that can scale to any size. (Along these lines please refer to this note on boards.)
While using access as the primary way to decide who to sell to next comes, naturally it is also the least scalable and the easiest of all the ideal characteristics to change.
Successful ventures identify who would be foolish not to buy their solution because they have the problem in a big way, it is strategic to solve it, and they stand to lose the most from not solving it and to gain the most by solving it. That is, the best organizations identify those who come the closest to being the ideal customer and then network directly to those buyers. If needed, they can always find someone who knows or who otherwise has access to the target buyer and who they can hire or retain on a part time basis to make the connection.