Laser Focus and The Perfect Client

Laser FocusIf law enforcement officers were business people, they would never struggle with questions like, “Who is my Perfect Client?” or, “Will I run out of customers if I focus on a select niche?” They would just know with confidence who they’re after. Take this extreme example from my past.

It was early January of 1993 when Officer Harlan Graham of the Iowa State Patrol pulled me over north of Decorah, Ia.  Having wrecked my car the week before and now traveling seven miles over the limit, I was an easy target.

As I sat in the squad car and the officer wrote up a collection of what he assured me would amount to nothing more than warning tickets, lights began to flash and an eerie whine sounded from a box on the dash.  So I did what I do: I began asking questions.  “What’s that?”

“That’s my radar,” came the quick reply, “and the whine tells me a car is approaching.”  Sure enough, just then, a car emerged from the heavy mist, doing the precise 55 miles posted as the speed limit.

“Let me show you,” Officer Graham then said, throwing the cruiser into drive and pulling onto the highway.  With that, we were unexpectedly on patrol, with him explaining the finer points of how the radar worked.

Just then, a van approached at 63 miles an hour, 8 miles over the limit.  Time for another question. “Tell me, how do you make the decision between giving a warning and an actual ticket?”

“I always give tickets starting at 8 miles over.” Then, suddenly, and with what I would swear was a hint of ornery in his voice, “Oh… you want him??”  And with that, Officer Graham reached down, flipped a switch and the dense fog began to flicker a brilliant white and red.  I think I nearly swallowed my tongue as I realized we were pulling a u-turn in the highway to take down the van and give the hapless driver a ticket.

My point is simple.  Harlan had ruthless criteria for what “clients” he was after.  Furthermore, he had absolutely zero fear he would ever run out of clients. (Yes, I asked.)  After meeting Harlan, it seems absurd to think any officer is ever wandering the streets with any less resolute internal guidance. Taken in the context of a law enforcement officer, the question of whether or not getting focused is valuable seems instantly and recognizably obvious.

Yet business people do struggle with questions of focus and their implications every day. Focus can feel limiting instead of empowering. The fear and confusion is natural, but let me be the first to assure you that if it seems absurd to imagine Harlan without focus, it should be no different for you in your business.  Getting focused on your best possible clients, finding more of them, and executing a sound plan to win them over is your best plan for dynamic business growth.

The Perfect Client
Imagine you could buy a police laser gun you could point at the head of a potential client and it would instantly tell you whether they were a match for you.  What dials and settings would your laser gun have?  Put another way, what is the profile of the typical client you want and is most worth winning?

Where are they located?  Within your city, your state, your region?  Or further away?  What size is their company, typically, and what is their budget for your product or service?  Moreover, how much of your competitor’s service or product are they typically using when you find them?  Perhaps most importantly, put yourself in their shoes: what is their actual motivator for considering your product or service.  That is, what pain do they feel that you solve?

Finally, a question too few think to ask themselves. Would your radar gun tell you how well the client pays their bills?  Reliable payment is a prerequisite to be a “Perfect Client,” right?  Yet many businesses end up acting as banks because clients don’t pay.

When I go through this exercise with my clients, I like to ask how they came up with their answers.  In particular, I like to make sure the answers hold true when I look at only the most profitable clients for the past year.

The point here is to ask what it would look like if you took your knowledge about your clients a level beyond however good it may be right now, as well as if you were even more proactive about choosing the clients that you find and do business with rather than settling for what business comes through the door.

Finding Them
You’ve formulated a good picture of your ideal client base.  Now let’s get specific.

How many of your Perfect Clients are out there?  What are their names? Who are the contact people you need to call? In sessions, people are often shocked as I wait for actual answers to these questions.  Yes – actual numbers, names, and lists.

If you’re looking for some tools to get you started, one of the best places to head is your public library to make friends with the people behind the research desk.  They may have library-only access to paid resources like ReferenceUSA and Dunn & Bradstreet business searches, as well as databases that will connect you to business associations in any industry you’re working with. For call contact information, also try online sites like Jigsaw.com or ProspectsDaily.com

Again, the goal is to determine how many Perfect Clients really exist within our territory.  Think why this is important.  Often, people don’t get focused because they’re afraid “focusing” somehow equals “limiting my business” and that means “I’m shooting myself in the foot. Or head.”  By taking the time to find out just how many clients in our territory match our criteria, not only are we performing a valuable safety step of validating our market focus, but often the result is a surprising realization of just how much business is out there.

Now go get it.

Your Plan of Action
Winning business means going and actually solving the pain of those clients you just identified. How are you going to do it? Will it mean letters, calls, visits, or something else?

Be more specific with your plan than feels natural at first. I don’t like hearing things like, “We’re going to divide up the list and have the sales people call” – that’s not a plan.  Try this: “Bob is going to assign each salesperson 20 names by the end of today.  They have until Friday to call through their list.  Their goal is to set four appointments for within the next two weeks. We’ll know call campaign results by close of business Friday.”  THAT’S a good start to a plan.

The point isn’t really what you plan to do but that you plan to do something and that you do it with precision and intention.  Our consistent theme here has been intention, purpose, and proactive actions make the difference.

Everybody Needs a Laser Gun
The Perfect Client concept sounds simple, and it is, but it is amazingly powerful.  Taken to its fullest extent, it really is the laser gun for your business, driving you to the level of proactive action you need in order to get ahead.


Dustin Walling is Principal of Dustin Walling Associates, a Seattle-based management consulting firm providing strategy and operational consulting.  For article topics, questions, or comments, Dustin can be reached at http://www.DustinWalling.com.


Free Guide: Action Planning Step-by-Step
Instant Action Plan Report
Quickly and painlessly identify your most impactful issues and craft action plans using our step-by-step process.

Building a Culture of Profitability

Have you established profit as a goal and planned for it? You should...
photo by: Penny Mathews

Every once in a while a product comes a long that makes you shake your head and ask, “But how do they make money?”  This Christmas, one lucky recipient on my list is receiving a telephone device that promises free domestic long distance charges for the life of the unit for no fees beyond the initial purchase price paid by yours truly.

That’s an extreme example, but even in companies where the business model is obvious, profit is often elusive.  We struggle to assemble the secret sauce that results in profit, whether that’s the right products, the right marketing and sales efforts, or – most critically – a culture of profitability.

The concept of a culture of profitability need not be confusing or squishy.  Achieving it, however, is definitely a process to be planned for and tended.  In short, a culture of profitability is cultivated when profitability is fully appreciated, established as a core goal, planned in, and proactively managed at all levels.

Appreciating Profit.  Really.
It’s simplistic to stop at saying that profit is needed to keep the doors open, and this would be a failure to understand its importance and the consequences of its absence.  Consider a few additional points about profit.

Profit attracts clients, vendors, and business partners.  Think about it.  Do you want to have worked performed by a shaky contractor, consultant, broker, or other professional who may not be around tomorrow?  Would you lend your money to a break-even business?  Clients, partners, and vendors all seek out stability to protect their pocketbooks and reputations.  Profit is one measure of that stability.

Profit is necessary to make the business attractive during an eventual sale, as well as to compensate owners including non-employee, investor owners.

Finally, profit is the basic goal of business management.  It is the mark of a professional and the measure of leadership’s competency.  In short, profit is required and must be embraced.

Sometimes lack of understanding comes from surprising places: profit shame.  Convince me you’ve never felt disappointed that you haven’t produced more profit for your hard work.  Going the other direction, tell me honestly that you’ve never once softened or sweetened a deal because you were afraid of being seen as greedy, even though you swore you wouldn’t.  Or that you’ve never felt a lack of confidence in pricing your work or product.

Feelings of unease surrounding profit can often make us act on emotion despite intention.  More dangerously, they can cause us to ignore profit out of fear and confusion.  The act of recognizing this allows us to confront it rather than shy away.  The average leader lets emotions get the best of them and allows profit to manage them; the exceptional leader understands and manages profit.

Profit as a Goal
When I started my first business – eager, idealistic, and a tad naïve – I remember deciding that I didn’t want profit to be “the motivator” of the business.  I still know what I meant, but hear me: Profit must be a primary goal of the business, front-and-center in the minds of all.

Profit starts from the top – the leadership. If you haven’t yet committed to profit as a primary driving goal of your business, pause and do it now. Producing products, serving markets, and helping people are all worthy goals, but not without profit in the for-profit business world.  Embrace profit and add it to your goal setting list for your strategic planning effort.

When profit is your goal, sales revenue becomes just one piece of the larger puzzle.  Production, operational, and other efficiencies becomes equally important.  Everyone in your company gets raised and leveled in stature and caused to become a team.

Your profit goal setting should include, at minimum, defining: gross profit, operating income, and net income.  These easily translate to gross margin, operating margin, and profit margin.

Using these standard items to set your goals carries another benefit, too: you don’t have to go it alone. Trade associations and specialists publish aggregated performance data by business type, size, and industry, giving you a ready-made benchmark to help set your goals and gauge your on-going performance.

I’ll stress again that profit is not just about revenue.  Profit is tied to nearly every decision you make.

Planning for Profit
When I was a kid – and therefore the internet wasn’t yet in vogue – the best written material for holding my attention was “write your own adventure” books.  The best companies don’t take what life dishes but instead write their own profit adventure, aggressively looking into the future at what’s next.

Break your profitability goals into realistic monthly steps.  This single action helps sanity check for unrealistic goals, and sets you up for practical step-wise planning.  Next, involve people from all levels of your organization in formulating written action plans for achieving your monthly goals.  Include all sides and edges of the coin: revenue generation, cost reduction, and process improvements.

There are critical reasons for getting the various levels of your organization involved.  For starters, typically, a greater number of decisions affecting profit are made on a day to day basis as you progress downward in an organization.  As a result, it’s absolutely critical to pull ideas from all levels as well as coach and congratulate all levels on how their decisions enable corporate goals.  The degree to which details about profitability goals are shared varies, but the need for open communication about ideas and impact does not.

Managing for Profit
Being profit-minded means having systems and processes in place to encourage profit.  That includes regularly – at least monthly – measuring your progress at achieving the plans you’ve laid out and correcting course.

Be inquisitive when you review your results. If you’ve performed well, don’t just accept it: ask why.  Discover the profit promoters that helped you do well.  Learn from them and write them down for future challenges.  Similarly, don’t accept falling short without a fight!  Discover the profit killers driving your shortfall, but don’t stop there.  Develop an action plan to right your ship.

Circle back to where we started: remember that profit extends far beyond revenue generation to controlling top line costs as well as operational expenses.  Most of all, don’t forget the profit killer most often overlooked: poor cash flow.  Your banker, CPA, and management consultant are all standing by to help you spot ways to create positive float, reduce AR lag time, and improve profitability.

Coaching yourself and your team to constantly turn stones for profit becomes habit.  Seeking these opportunities and capitalizing is what managing for profitability is all about.

Take It to the Bank
I have to assume the maker of telephone box I’m gifting this Christmas knows what they’re doing and has a solid plan for profitability.  Regardless, it’s a fun experiment to buy in and watch at the expense of someone else’s business.

Your business, however, can’t afford experiments.  Get comfortable with profit and make it a primary goal of your business.  Plan for it and regularly measure your progress.  And most importantly, don’t simply accept your results, but strive to understand and repeat or improve them, if even just a little.  Infect your team with this attitude, too, and soon you will achieve a culture of profitability.


Dustin Walling is Principal of Dustin Walling Associates, a Seattle-based management consulting firm providing strategy and operational consulting to small and medium businesses.  For article topics, questions, or comments, Dustin can be reached at http://www.DustinWalling.com.

 


Free Guide: Action Planning Step-by-Step
Instant Action Plan Report
Quickly and painlessly identify your most impactful issues and craft action plans using our step-by-step process.