A high number of unprofitable customers may mean your business can’t provide the best service to the clients who matter most to your bottom line. This is why it’s important to identify and focus on the kind of customers who matter most.

Create Client Behavior Profiles

Matt Sharp, who operates a gym and a marketing company in Lexington, Kentucky doesn’t want too many customers — he wants ideal customers. Causely, Sharp’s marketing firm, helps small businesses promote and manage their philanthropic endeavors. After marketing his services, he realized that small businesses which weren’t already spending $100 a month on marketing were unlikely to be interested. Immediately after filtering prospects by that criteria, his sales staff saw dead-end inquirers drop by 30%.

As Sharp probed deeper, he found that the businesses most receptive to Causely were those whose customers were primarily moms and millennials.

Based on this insight, Sharp was able to create a profile of the ideal customer to target. These short profiles highlight the characteristics and concerns of customers who will provide the highest lifetime value — the people who like your offerings, and keep coming back for more.

Ask Lots of Questions

Score, a non-profit that offers business mentoring services, advises companies to pull together lots of data about their best customers to develop customer personas. For consumer-oriented companies, this can include age, gender, marital status, and life stage. For B-to-B marketers, the data could include industry, years in business, and number of employees.

Along with collecting data, it’s equally important to get insight directly from your customers. Social media provides a treasure trove of comments. You can also speak to customers one-on-one, or in focus groups, seeking out what they like and dislike about your offerings. Score suggests these insights to get started:

• How do customers research product and services like yours?
• What factors into how they decide on their purchases?
• What newspapers, web sites, TV, and radio do they pay attention to?
• What made them buy from you the first time, and what kept them coming back?
• What do they get from you that competitors don’t offer?

It can be critical to approach this process with an open, unbiased mind, rather than guide customers to provide the answers you’re looking for. If you identify insights that surprise you — or even shock you — you’re on your way to improving your marketing.

Cut Through the Clutter

Based on this information, you can create a “persona” of your ideal customers that can guide your sales and marketing efforts. Many small businesses create a few personas that identify their goals, challenges and how their business can help, often including actual quotes from the focus groups as well as an “elevator pitch” that is targeted to each persona.

In Sharp’s case, he knows that his “ideal customer” always revolves around the two M’s, moms and millennials, and his successful marketing efforts always take them into consideration. He says this helps him focus his business efforts, target the right people, and lower the cost of acquiring new customers.