To build a successful high-growth business model, you need happy customers. It is a reality that we all face as true business leaders. However, some customers are more difficult to please than others, which can leave your company hitting plateaus in revenue.
You can build a company with the best online presence, product(s) and customer service team, but you will learn that in order to exceed the million-dollar mark in sales within the first 18 months, some customers will complicate your growth forecast. Every customer is not a great fit for your business model and the earlier you identify those who will impede on your success during the growth phase, the faster you will increase sales.
The key to building a successful hyper-growth business model is by retaining existing satisfied customers and duplicating the process. Difficult customers are an expensive acquisition, which may never produce a return. It costs five times as much to attract a new customer, than to keep an existing one, according to Forrester's Research. However, acquiring difficult customers can cost much more in valuable and lost time.
Here are the five types of customers that will limit your ability to scale the growth of your company to exceed the million-dollar mark.
1. Tire Kickers
The perpetual tire kicker shops around seeking to find people they "like." Essentially, tire kickers will cost you millions in potential revenue by taking up valuable time throughout the day to ask "one more question," whether online (via email) or in-store. They are an expense to your team and the losses add up rapidly if you entertain them.
Solution: Ask your perspective customers about their commitment level and when they are looking forward to making a decision.
2. "Penny-Pinchers" and Price Driven Customers
Price driven consumers only invest in the price, not experience and quality. Price driven consumers also have a long term effect on the valuation of your company, which can also impact your ability to secure seed rounds from investors. They will drive down market share and the integrity of your business model.
In addition, they have done their homework by comparing prices with other competitors in the market, and use their findings to attempt to force a price match. Over the years, people have contacted my office to drive down our prices by trying to sell us on what the competition is charging for similar offerings, but we respectfully decline each time. Penny pinching clients/customers will damage the integrity of your company.
Solution: Prepare your team to limit the amount of time spent with one prospect and discuss value upfront.
3. The Indecisive Customer
The indecisive customer is least likely to ever commit to a decision without a high level of intense reservation. An indecisive customer requires additional convincing and encouragement, and once they make a decision, it will lead to a bevy of follow-up questions. However, they will cost your company time and money.
They require more acquisition time from your sales division to make a clear decision and the longer your company spends trying to convert someone who cannot make a decision, is less time spent on closing committed customers and referrals that will drive up the value of your business.
Solution: Create a clear FAQ form on your site, which will address their concerns so potential customers make an informed decision.
4. The Validation Seeker
The validation seeker spends time seeking the advice of others before closing the sale. They need the most time and will revisit the same topics repeatedly. The validation seeker wants to make a decision, but remains apprehensive until they solicit the opinions of others. The major issue with the validation seeker is the level of unsolicited advice that is necessary in order to finally make an informed decision.
Solution: If you believe there is a possibility of moving forward, request all parties to be present during the conversation, or copied on all email correspondence.
5. The Reference Checker
A few years ago, a potential client asked my sales director for 100 references for my company in order to execute an agreement after we provided five solid references, in addition the person who referred her. Needless to say, this is a common practice for skeptical customers.
I have also discovered that those who need an endless supply of references are often consumers of the lowest priced products and services. Their apprehension is time consuming and an inconvenience to your team, as there is a high probability that they will never convert into a customer. The never ending reference checker is seeking flaws in your business model to negotiate your prices, which will lead to fluctuation in your valuation.
Solution: Make sure you highlight the credibility of your company with clear testimonials online with contact details of satisfied customers.