Is Your Small Business Targeting the Wrong Customer?

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You've met with a potential client, had a couple of great conversations by phone, and followed up. So why isn't your prospect ready to start work? The problem may not be you. It may be that you're talking to someone who will never buy what you're selling.

There could be many reasons. Maybe you're talking with a serial researcher who may never make a decision. Or perhaps the person has no budget to spend or an unrealistic understanding of what services like yours cost to deliver. It's easy to waste hours by spending too much time with tire kickers, so the sooner you recognize you're talking to the wrong customer and move on, the better. Here's how.

Know how to spot your ideal clients

Regardless of your industry, your ideal clients will probably have two characteristics: They're great to work with, and they're profitable. In many cases, they may also be repeat buyers.

Look beyond these factors to identify if there are any common threads in your customers' industries, company size, or location, so it's easy to spot them when they're in front of you. You can use popular accounting software programs like FreshBooks and QuickBooks to sort your clients this way. You may spot some interesting patterns you had not noticed, like one particular state where you get a lot of business.

Look a little deeper. If, for instance, you sell marketing services and most of your clients are big companies, peruse the job titles of the clients who have signed contracts with you. Perhaps buyers in these firms tend to have a certain level of seniority in their organization. This doesn't mean you should ignore prospects with more junior titles, but if those junior buyers seem to be moving slowly, you may need to involve more senior people on their team to move a project along. (See also: 8 Common Myths About Starting a Small Business)

Ask qualifying questions

Learning as much as possible about why clients are considering buying your product or services can save you from spending a lot of time with someone who is highly unlikely to move ahead or won't turn out to be a good fit.

I do this when people ask me to ghostwrite books for them — a process that takes a lot of time and energy for both the author and myself. In our first conversation, I might ask: "Why do you want to write a book?" If the author is eager to share ideas they're passionate about with the world and says they've already done a rough outline of the book or lectures on the topic, those are positive indicators.

However, if someone says that colleagues, a spouse, or friends keep nudging them to write the book, I'll suggest a smaller project first to make sure they are truly motivated. Even if someone has the budget to hire me, I don't want to work with someone who is likely to lose steam and see the project fail.

There are many other qualifying questions you can ask to weed out people who are not serious. You might, for instance, ask if they need a project by a certain deadline — which will naturally give them an incentive to hire you. You might also ask what their expectations are. If they would like to receive certain services you don't offer and that you don't want to start providing, that's a disqualifier. (See also: 6 Helpful Tools to Manage Your Small Business)

Be transparent about pricing

Many business owners hesitate to talk about what they charge because they're afraid of scaring clients away. That can be a big mistake. Many potential clients could be price-sensitive, so being direct and upfront about what you charge, by sharing it early in your conversations, can save you a lot of time.

If someone's budget is too small to afford your highest-end products or services, be prepared to suggest other creative alternatives. For instance, instead of the yearlong retainer contract you usually offer, what about a three-month version? That way you won't have to turn away clients who you might otherwise enjoy working with.

Watch out for clients who don't value your time

When you hire outside professionals — whether to do your social media or clean your house — do you expect them to donate their time? I didn't think so.

One sign that you're talking to the wrong clients is that they want you to "prove" yourself by doing a project for free. Someone who does not understand that you need to get paid for your work now will never respect your time and is likely to become a nonpaying client later. If prospects want to get a chance to see what it is like to work with you, suggest they work with you on a very small, paid project instead. (See also: How to Get a Small Business Loan)

There's one exception. If you're selling clients access to a service many people haven't tried yet, such as a specialized type of fitness class, there's nothing wrong with offering one free trial class or even a discounted monthly membership to make sure they know what they're buying. Just make sure you're offering an experience they will value enough that they want to come back when they have to pay full price.

Relying too heavily on bargain hunters for your cash flow could lead to a crowded atmosphere that drives away clients who would be willing to pay you a little extra for some elbow room and tranquillity. Experiment until you find the right approach to attract great new customers and keep your ideal ones coming back. Once you find the right balance, you'll enjoy your business a lot more.

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