Choosing the right clients for your business is essential for growth. If you target everyone, you won’t reach or satisfy the needs of anyone. But, it’s not always easy to identify the right clients, let alone vet them for viability. You’ll learn the basics on this page.
Primary vs Secondary Clients
Most businesses serve more than one type of client. Sometimes referred to as a core or primary customer, your primary client is the one you’ll address first with all your initiatives going forward. That includes things like creating company policies through marketing and product development.
Secondary clients are those who may use your products or services, but they’re generally not as active or as profitable as your primary clients.
For example, the SaaS company HubSpot caters to small and midsize businesses. These businesses are their primary clients. However, the company also does a lot of work with and for marketing agencies. Even though agencies bring value, it’s more about creating buzz around HubSpot and supporting their shared clients. Therefore, the agencies are secondary clients.
Sometimes it’s not quite so straightforward. In the case of LinkedIn, recruiters bring the most revenue, accounting for 65 percent of the total as of a few years ago per Investopedia. Yet, LinkedIn knows those recruiters wouldn’t be there if the individual professionals weren’t leveraging the platform. It caters to members. If you have a basic LinkedIn account, you are its primary client.
Identifying Primary and Secondary Clients for Your Business
As you work through the information on this page, you’ll likely find that many different client types fit into the brackets you’re creating. That’s because some are primary and some are secondary. Of course, you already have primary and secondary clients if you’re running a business. However, it may help to make notes of all those who fit your criteria as you go, so you can walk away with a clearer idea of how the different groups fit into your overall big picture, which ones to focus on most, and why.
How to Choose the Right Clients for Your Business
There are many different ways to find and choose the right clients for your business. Three of the most common and effective methods are outlined below.
Look at Your Current Clients
If your business is already in operation, your current client base will likely point you in the right direction. Remember, however, that you can’t just look at all your customer data in one swath. Instead, you want to pick the data apart.
Let’s say your CRM data shows that 60 percent of your clients are male, and their average age is 45. It’s easy to think this is your primary client. But, perhaps if you drill down the data, you’ll learn that these clients only place an order with you once and then leave. Maybe it’s your 30-year-old female clients that place repeat orders and are, therefore, the ones you want to work with more.
If you don’t have CRM data, you can also look at web analytics or even make notes about the people who come into your physical location.
Consider What Types of Clients You Don’t Want
Many business owners don’t consider who they don’t want to serve, but it’s just as important as defining who you do. The criteria for this bracket will vary from one business to the next.
For example, if you run a high-end brand, you don’t want to attract budget-conscious clients or those who come to you asking for discounts right away. If your products or services are geared toward established businesses, you don’t want to attract startups. If your business offers some kind of free or introductory service, and doing so cuts into your profit, you don’t want to attract people who never move up to your paid service.
You may be able to identify some of these clients based on your personal experience, but don’t forget to look into your data here too. If you’re using a CRM properly, you can tell which clients never convert, how long it takes a typical client to convert, and isolate the outliers to determine who you don’t want to attract.
Another trick that helps, particularly if you don’t have any data yet, is working backward.
Start by identifying the problem your product or service solves. Don’t think about the features or benefits. Look at it from a client perspective. What pain point would someone have to have to want what you’re offering? For example, if you run a trucking company, you might start with the idea that the client has goods that need to be moved. That’s a start, but you can whittle it down more. For example, maybe your ideal client needs a reliable transportation partner. You can take it a step further if you run a specialty firm. Perhaps the goods are frozen or hazardous materials. Drill it down as much as you reasonably can.
Then, consider who has the problem you solve. There might be many different client types here, so create a list.
Next, identify the demographics and traits for each client type you’ve listed. Make note of things like specialty, years in business, and location. It’s a good idea to jot down what they value as well. For example, they may place orders based on price, perceived value, quality of service or product, or expert knowledge.
Lastly, consider who you can best serve. You may find yourself crossing client types off the list entirely at this step. You’re also likely to find that some of those you’ve listed benefit from your products or services more than others. They’ll be your contenders for primary clients.
Ensure the Clients You Choose Are Profitable
You’ve probably discovered that you can help many types of clients, but it’s not always in your business’s best interest to do so. They’ll need to bring value to your organization to be considered primary clients.
The lifetime value of a client is determined by multiplying their average order value, order frequency, and lifespan. The greater the lifetime value, the more resources you can devote to attracting and retaining the client type.
Payment terms, or the conditions of your order/ purchase agreement, include things like how long a client has to pay their invoice, if money is due upfront, how large of an order a client can place, late fees, and any other guidelines you establish. You’ll want to look at it in two different ways.
First, consider payment terms on a broad scale for each client type you’re considering serving, both in terms of industry standards and what kinds of terms a typical client within that niche would need. Then, vet individual prospective clients by the same criteria. If they need longer terms or more flexible payment options than your company can provide, you’ll either need to remove them from your prospect list or find an alternate way to meet their needs, such as invoice factoring.
When you invoice clients for work or goods after they’ve been delivered, you’re extending credit. It’s important to check into the creditworthiness of individual clients before agreeing to any kind of extended payment terms for this reason. If you’re working with one, your invoice factoring company will usually help with this step.
Work with Your Ideal Client More with Help from Viva
If the clients you want to work with need longer payment terms than your business can reasonably accommodate, their payments can be inconsistent, or you need a cash injection to launch your growth initiatives, invoice factoring from Viva can help. It’s like getting a cash advance on your B2B invoices without putting pressure on your client relationships. Request a complimentary rate-quote to learn more or get started.