The intention of this exercise is to evaluate the financial impact your existing customer has on your business to decide if you need to align resources towards a new, ideal customer.
Who is this for?
You will benefit from this exercise if you are working to get your business out of the red, your teams are navigating a period to re-adjust, re-orient, re-organize, and re-prioritize, and you found your way back to the most fundamental principle of your organization: the people you serve.
How does this work?
You will look at the difference between a current customer and an ideal customer to (1) see how your financial scenario is manifested by the people you serve, and (2) begin to envision what would become possible if you were to align your resources with the ideal customer.
Existing Customer Profile
Answer the following questions from the perspective of a specific customer you currently have as a customer (or perhaps paid you some amount throughout the last 365 days), and is generally someone who gets a lot of value from you and your business.
IMPORTANT: if you don’t answer the questions from the perspective of the same customer – if you find yourself providing answers from different customers – it’s going to skew your results. Stay focused on one customer at a time.
- What is your name?
- How old are you?
- What city do you live?
- What’s your life like right now?
- Which products of ours did you buy this year?
- What value did you get from those products?
- What are your hopes and dreams?
- What are you afraid of?
- What makes you feel happy?
- What makes you feel sad?
- What is your biggest obstacle right now?
- Why haven’t you overcome it?
- What types of solutions exist for something like that?
End scene! Nice work.
Next, fill out the following from your perspective as the founder. In the last 365 days
- if you were to describe your experience serving this customer over the last year, write down the brief narrative / the story that articulates what it was like for you
- what is the total revenue this person has paid into your business?
- total revenue = $
- what is the total number of hours you invested in serving this person?
- hours = #
- what do you get when you multiply the total hours you invested X your hourly rate?
- hours x rate = $
- what do you get when subtract #3 (hours x rate) from #1 (total revenue)
- total revenue – (hours x rate) = profit/loss from this customer
Outcomes and next steps
If your answer to #5 is a negative number, it means you spend more money serving this customer than this customer brings into your business. Are there are other customers similar to this one? If so, you may be at a decision-making moment: continue to bleed money, or stop.
What do you choose?
If it was difficult to answer from the perspective of the same person for every question, it may mean you attempt to serve a wide-range of different customers, from different walks of life, with different needs that come up at different times, and as the founder you’re in the middle of a situation where you are pulled in many directions. Perhaps there’s a feeling of being spread thin even if when have your full attention on the business.
Aligning with an ideal customer
You likely already know if you’ve been running operations that cost more money than they bring in. If you’re like me, I go as long as I can without looking at that problem. It’s not a desirable fact I want to become conscious of! There have been times when I stay there and never leave because it’s easier to completely neglect the numbers so I don’t have to think about it. It becomes an internal conflict of ‘doing good’ vs ‘doing good business’.
“Everyone deserves my service — especially those who can’t afford it — they need it the most.”
Yes, this may be true!
However, the problem may not be as much about whether they need your help – they likely do need your help. The problems come when they will (1) need the most assistance in getting your solutions to work for them, and (2) whether they pay you a portion, if anything from what they take from you and the business.
Unless you have an endless supply of capital to give away to those people, this model will not stand.
Ideal Customer Profile
Let’s create your ideal customer profile. Go back to the list at the top, and answer all the questions from the perspective of an ideal customer who has been with you for the last 365 days. After you’re done, look at your answers to #5. Write them next to one another so you can see them in the same place.
- What becomes possible if you continue on the path of serving your current customer? (hint: if you’re currently in the red from this customer, what becomes possible is more debt!)
- What becomes possible if you prioritize serving the ideal customer for the next three months? Six months?
What do you choose?
Doing good by doing good business
What if you didn’t have to choose between doing good or doing good business? What if you could have both?
What if you tried serving the ideal customer? What if, for now, you focused on serving those who can afford your value? Those who happily pay whatever you ask because they appreciate receiving highly valuable, enriching experiences? That’s what you do – that’s what you create – that’s what your value is all about.
What will it feel like to have room to breath?
What will it feel like to know you’re in the green, making more money than you can spend, and improving the lives of your customers? All at the same time!
From that place, I wonder what becomes possible through your new, big ideas around reaching more people – the people who need you the most – amplifying your impact, and changing more lives.
What would that look like?