Qualifying Customers

Do you take every customer that comes in? Depending on your industry, you may want to reexamine this policy.

Once upon a time, there was a local contractor (He Who Shall Not Be Named) who took every job, large and small, to keep his crew busy and money coming in. Looking at his results more closely, he found that over half of his jobs were small jobs that utilized more resources and time than a larger bid. Not only that, the time spent on the smaller jobs meant that he didn’t have the space to look for larger projects. And, some of the larger projects had had so many revisions, and he was so afraid of losing the customers, that he lost money on them.

This kind of slippage is really common, especially for service industries like plumbing, contractors, and electricians. It’s also seen in medical clinics, gyms and restaurants. Eventually, there’s a customer that’s more trouble than they’re worth. This is the one who causes otherwise good employees to jump ship. What if you could mitigate their effect by not letting them in the door in the first place?

How can you qualify customers so that you’re getting people who really want and value your services? Part of it is education – that’s where effective marketing comes in (and another month’s topic). The rest is having a transparent qualifying metric for incoming customers.

For our intrepid hero, HWSNBN, eventually put both a rigorous pre-sale inquiry and a pricing matrix in place before any contract was signed. The result was that he went from losing money and keeping his crew scrambling, to making money and keeping his team focused. Yes, there were some customers who had to use another contractor. Do you know how many contractors there are in this valley?

There’s no perfect way to qualify your customers. It depends on your industry, how long you’ve been in business, your reputation, your marketing plan, the overall business strategy….you get the idea. The best tactic is to ask leading questions – ‘What brought you in today?’ ‘How did you hear about us?’ ‘What did you have in mind?’ ‘Have you ever bought a widget before?’ And then listen, listen, listen. They’ll tell you whether or not they’re willing to fulfill their end of the purchasing deal.

You don’t need a fancy algorithm to qualify your customers. Just think about which ones are the most cost-efficient, and market to them – exclusively. There are enough businesses and customers in this valley to satisfy everyone.