Identifying your customer base is one of the keys to operating a successful business. Without targeting the right customers, your product or service may be outstanding but still fail to succeed. This is why companies place such investment – of their time, resources and cost – into market research, making sure they understand what their customers want and who their market is.
However, it’s not just a matter of identifying and targeting the customers in your market. Successful businesses’ due diligence extends far beyond this in order to understand exactly why their customers are compatible with their company objectives and what such partnerships can bring to their business.
The best approach to this is to identify your company’s buyer persona. This is a representation of your ideal customer – determined through a combination of data analysis of your customer base, market research and your company’s strategic development objectives. Useful markers to help you evaluate this include looking at customer demographics, trends, behaviours and motivations.
An effective buyer persona will help guide how your company develops its products, allocates its time and resources, as well as its marketing and outreach.
Before you onboard customers, it’s important to take a step back and review whether they meet your customer acceptance criteria. Do they fit within the buyer persona you’ve established? Are they aligned with the type of companies your want to engage with? Do they contribute to your strategic objectives?
Customer partnerships are an investment and, like all investments, they need research and consideration.
Being able to onboard your customers rapidly is, of course, good practice. However, this shouldn’t be at the expense of your due diligence responsibilities.
This fine balance can sometimes lead to internal conflict, for example between sales teams, who are keen to secure a sale rapidly, and their compliance colleagues, who want to make sure of a customer’s credentials.
While it’s important to close sales, it’s also crucial to follow the principles of Knowing Your Customer. This means conducting thorough due diligence. In some industries, such as banking, this is a highly regulated area to safeguard against financial crime. While other industries may not be vulnerable to such serious repercussions, it’s certainly in their interest to have effective know your customer onboarding processes.
Installing rapid customer onboarding software can help significantly – enabling you to cement customer relationships while automating your compliance needs.
When working through the customer acceptance process, there can also be conflicts between sales and finance departments when it comes to offering new customer deals. A tension can exist between the sales team’s objective to draw customers in with attractive deals and the finance team’s obligation to make sure the company doesn’t leave itself exposed.
One of the most vulnerable positions in financial management is the balance between offering attractive credit terms and protecting against bad debt – when a customer doesn’t pay for a service or product.
To safeguard against internal conflict, it’s best to have in place a transparent and robust customer acceptance policy, rolled out across all segments of your company. By ensuring all teams are fully aware of their buyer profile and the business’s risk parametres, this should help your company take a fully aligned approach to securing new business without damaging either its relationships or its financial security.