Find Your Niche: Focus On Your Best Customers

Posted 23 Nov '23

Why Business Owners Should Selectively Cull Customers

In the demanding world of trade businesses, whether you're a mechanic, builder, cabinet maker, electrician, plumber etc, the art of customer selection is crucial to a trade business’s longevity and the satisfaction of your team.

Consider this common scenario: You receive a call from a customer, and your immediate reaction is to frown. This emotional response is a clear indicator that the customer may not be ideal for your business. In all honesty, if YOU are finding them difficult to deal with, then they’ll be much worst for your staff!

It’s crucial for small trade businesses to prioritise customer relationships that are mutually beneficial and respectful. Customers who are consistently late with payments or who don't appreciate the value of the skilled services you provide can drain your time and resources, detracting from opportunities to work with customers who understand and respect your trade and business values. Rod Sherrington, the Managing Director at Trinity Advisory, underscores the importance of this process with compelling evidence from his own business and from those he has coached.

“I’ve seen first-hand how truly life-changing it can be for those business owners who are brave enough to fire bad clients and focus on nurturing and growing their best clients – the ones they love to serve and who in turn love the service they receive. They’ve not only seen growth in their profits, but a vast improvement in employee satisfaction and company culture.” Rod said.

Rod says that businesses should apply the 80/20 rule. Generally speaking, 80% of your profits come from 20% of your ideal customers. But on the flip side, 80% of your pain come from 20% of your less than ideal customers.

According to Rod, most small business owners would benefit from reducing their customer base by as much as 10-20 percent each year, knowing that these customers are most likely costing your business more money than they are making, as well as wasting your valuable time and cause you and your team unnecessary stress!

This strategic culling is not about losing business—it's about focusing more intently on your core and most profitable market, the ones you love to serve and who love what you do. It's about refining your offering and your aim so that your marketing efforts hit the mark more effectively, attracting a higher quality of customer.

This selective process empowers businesses to replace those customers who do not fully appreciate their value with those who are more aligned with the business's values and strategic goals.

Rod explains that this method of client refinement is known as 'niching.' For trade businesses, niching is especially advantageous as it enables them to specialise and build a deeper level of expertise. Higher quality work enhanced problem-solving capabilities, and the leverage to command greater prices for specialised services are just the beginning.

By catering to a niche, trade businesses can achieve resource optimisation—maximising time, labour, and materials. This efficiency translates into cost savings and improved profit margins, bringing predictability that is crucial for inventory management, staffing, and financial planning.

In the competitive landscape of trade industries, standing out is key. A niche focus provides trade businesses with the opportunity to offer unique services that generalists simply cannot match. This specialised approach creates a competitive advantage in their particular slice of the market.

Deepening relationships with your top customers is also critical. By understanding their ongoing and future needs, you can tailor your services to provide greater value, fostering loyalty and potentially increasing your business's profitability through repeat engagements.

Rod’s advice to business owners: “Do not be afraid to assess and, if necessary, cull your customer list to focus on those who value your work and contribute positively to your business's success. By doing so, you'll have more time to invest in customers who are not only a pleasure to work with but who also help secure the financial health and growth of your business.”

“I’ve taken this approach in my own business and seen dramatic results. For example, At Trinity Advisory, we’ve moved beyond traditional accounting, offering our clients tailored business advice and coaching services.  We specialise in serving local trade-based business owners wanting to get off the tools and gain greater strategic direction for their business. We guide these owners towards the freedom and lifestyle benefits that come with true business ownership, significantly improving their work-life balance, and reigniting their love for their business. We do this by offer clients quarterly meetings to provide timely insights on their financial and operational performance, identifying gaps and suggesting actionable steps, and coaching them through their 5-year roadmap to create the business they desire.  You can see evidence of our unique transformative services on our website via client video and written testimonials.”

If you’re a small business owner who needs help developing strategies to identify and attract your ideal clients and scale your business for profitable growth, then get in contact with the Trinity Advisory team today. Our team of expert Business Accountants, Advisors and Coaches are here to help!


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