Why You Can’t & Shouldn’t Chase Every Customer

We know the feeling – you can’t wait to get your first customer. It doesn’t matter who they are or how you got them. All that matters is they bought what you’ve created! And chances are if someone told you there are more of them on Saturn – you would figure out how to get there. At the end of the day – a customer is a customer, right? Not really.

“At the end of the day – a customer is a customer, right? Not really.” 

When we become entrepreneurs, we are creating something we believe in. You hear many of us say, “There are so many customers that need our product or service.” In fact, sometimes we say, “I don’t know of anyone who wouldn’t want our product.” While this may be partly our excitement talking, or maybe just the influence of our pressure, passion pleasure or pain, it is also a dangerous path. Don’t get me wrong. Your market, product or service may be new or different. It would seem that the opportunity to attack broad markets, and to have no limits on what markets to chase, would be a good problem to have.

As entrepreneurs, we chase revenue wherever we can find it, often without fully considering whether we are winning the customer base we really want or whether we are taking time away from the customers we should be chasing. At IncentOne, one day it was health plans, the next it was employers, the next it was distribution channels. In the beginning, you are willing to talk to anyone about your service because you are looking for positive feedback and validation. I am sure that when I took an Amtrak train to Boston, I tried to sell my health reward solution to the Amtrak employee that ran the concession stand. We have this desire to go after any customer that shows interest—even if the customer is highly unlikely to need or want your solution. “We can go everywhere. We will go anywhere.” This is often the revenue strategy of the entrepreneur. Your perspective is, money is money, and we need more money.

It is natural to chase revenue. It is also natural to believe that everyone wants your product or service. But this isn’t as harmless as it sounds.

Problems With Chasing Every Customer

• First – you have limited resources and your scarcest resource is time. Every minute you spend on one activity is a minute you don’t spend on another
• Second – every new type of customer you chase requires you to learn the market, find those customers, create the right marketing message, hire people with market knowledge and develop credibility in that market. Doing that for one type of customer is hard enough. Trying to do it for multiple customer types is impossible.
• Third – it is natural that you will encounter resistance from customers, especially if you are doing something new. It will take time to learn how to overcome objections or to help customers understand the value of your offering. If you are not committed to a path, you are likely to turn to another path when you do encounter the resistance as opposed to creatively working through it and learning what you need to know about that market segment and how to tailor your approach to the market. Going after every customer opportunity, or market segment, or responding to the inquiry of the day, seems like the fastest path to revenue, but often can be a real distraction from gaining traction in a market.

Focus on specific customer and go deep

Pick a market and go after it. Debate with your team and advisors what that market should be. But once you decide what it is, learn as much as you can about it and be committed to making a name for yourself in it.

Why? When you focus on a single market or customer type, you gain critical benefits:

• Market Knowledge. You develop a depth of understanding about a market that can be the difference between gaining traction and getting lost in the shuffle.

• Reputation. In a cluttered world, staking a claim and being successful in a specific market builds your reputation. Assume you could have five customers. If you have them in five separate markets, it is hard to build a reputation. If you have them in one market, you can show proof within a known segment. Once you do, you gain a reputation. Once a reputation is established, it is easier to develop a name for yourself. Once you develop a name for yourself, you can bring that reputation to other customer segments.

• Expertise of Resources. You can hire or leverage sales, marketing and product resources that have experience in that market.

• Efficiency. When you chase multiple markets, you are constantly wasting effort creating and recreating sales and utilizing new marketing messages and tools.

• Value Propositions. The value your product or service offers a specific market becomes second nature that everyone in the organization understands.

• Marketing and Distribution Channels. These channels are likely linked to specific markets. Each new customer demographic you introduce requires you to manage another set of distinct channels. Focus on one customer identity reduces the number of channels you have handle.

• Overcoming Objections. Closer access to customer feedback, objections and purchasing patterns help you align your offering and overcome objections for ongoing success.

Here’s a simple example. Let’s assume that you are designing jewelry and decide that women whose names start with the letter “B” are your perfect customers. When you do that, you can learn where the “Bs” hang out, where they shop, what they do at night and you can attend the annual “B” association meeting. When you meet someone whose name starts with the letter “C,” and they love your jewelry, you have to resist the temptation.

Even though it will feel good to get positive feedback, or even make a sale, if you start to chase customers whose names start with “C,” you have now created an inefficiency that is difficult to manage with scarce resources. Soon you are chasing the whole alphabet, aren’t good at any of them, and are not really sure why you chase one versus another.

This is a difficult balance to strike. You want to be able to respond to feedback from customers, investors and others. The reality is that if you don’t pick a target customer, you will probably do all of your markets poorly.

Make sure you pick a market and get to know it inside and out.