For several years now I have used the metaphorical language of “bull’s eye” and “one-degree’r” around our office. This Saturday morning I searched our blog to see if I had written about it before. I had not. Wow. I’m sorry. This is among the most unnatural and yet most valuable things a business owner does for his or her team. They say “No. That’s not a bull’s eye customer, employee, or partner.” They say, “that’s not a bull’s eye situation.”
Most people –which includes 99% of employees– want to work hard and take care of customers. Many small business owners think this way, too. They naturally say, “yes, I’m here to help you” when someone asks if they can do this or that thing. This is usually a great trait for citizens and friends. It’s an important cultural baseline for our many service businesses. I am sure it is valuable for your business, too. However, there is a flaw in this spirit of service and help when taken to it’s extreme. And prospective stakeholders will test those boundaries. You, the owner, must define the boundary of your company’s best-fit, most valuable stakeholders–and discipline and reinforce that vision in all interactions, every day. You must fight against misfits and design ways to disengage from them early and efficiently. Make it safe for your other stakeholders to help you in this mission.
Because, when you stray from your bull’s eye stakeholder you require abnormal and extra effort and usually deliver subpar experience to the misfit stakeholder. I use “stakeholder” because this misfit is true of customers, employees and other partners (investors, vendors, distribution channel partners, etc.) Think about it. If you, the business owner, have done right (on purpose or by luck) to produce an insightful solution to a customer’s problem with a certain type of product or service, produced in a certain way, by certain types of people; then why would you think you could just superman out some ideal solution for some misfit customer request?
But it is oh-so tempting!
Just say no. Say no with words, but say no with your processes. Truncate sales and marketing efforts on misfit customer types. Just eliminate all the effort. Plow this desire for the sale or for service into another bull’s eye. The ideal customer must be brought back into focus continuously. Aim at solving their problem efficiently (low cost, high value, fair price, high profit margin.) Dominate your special ecosystem. Lock in every stakeholder. Make your place the best place for each of the best type of candidate. Celebrate their off-putting traits because they simply don’t matter. We can deliver so much value to this or that group of people despite our flaws –because we know who we are and we stay focused.
Define what constitutes a one-degree-off-from-perfect situation. This will help you define the boundaries of your ideal stakeholders. How do the gears fit perfectly together? This one-degree’r group should get no more, no extra and no different treatment than your bull’s eye customer. But, in a strange turn of events you can put in less effort! The reason you can and should do this is because you know their lifetime value is less. They are an accidental customer. They will leave when they figure out they are not an ideal fit. You are okay with this because they can be made profitable by underserving them, and their contribution margins can help you develop even better solutions for your bull’s eye stakeholders. They must not cause you to change –at all. (until they do, but that’s another blog post. Remain disciplined!)
The two degree from bull’s eye customer (one more ring away from the bull’s eye) is usually expensive and demanding. Even after a ton of work they still frustrate your employees. They clog up your vendors. They mess up your distribution channels and maybe even make your bull’s eye customers mad. This category ought to be blocked from entry. They are not welcome. If they get in it’s a failure. Refocus immediately. If you’re “nice” you can make recommendations for them to someone else, maybe a competitor that is less disciplined than you that you want to burden with this misfits? But, don’t bother thinking too much about this group. Just get away. They’ll usually be mad about your inflexibility, maybe even beg to work with you. However, this is a trick. They’re lying to themselves and to you. Stop them. Save them and save yourself the trouble. Get refocused on your best. Tell them to change in particular ways that annoy them. They are going to talk smack about you behind your back. Orient them and give them ammo for what to say. Have them say horrible things about you that sound great to your bull’s eye people. Make your misfits referral sources, too. Do this early and often.
I call this “the right kind of stink.” It repels the misfits and attracts the flies. We sell to flies. Make it the right kind of stink. Have those who are repelled send you the ideal.
The above mental model forms disciplines and habits in other stakeholder areas as well. I love to ask prospective vendors what their ideal customer profile is. Describe it in detail. I’ll usually dig on it until it gets uncomfortable. If they really know their sweetspot then they enjoy it and we probably wind up working together. If they don’t get it, or have it nailed, then I usually tell them, “I want to be in your sweetspot –or I want to be >30% of your revenue (so I can control you.)” My being honest about what constitutes our ideal vendor is important to me, too. Some vendors are perfectly fine with us controlling them for a season. They’ll subjugate themselves to us for the sake of cash flow or in order to step change their business. I occasionally make a single customer my master. I might even tell them this. “You are now my singular, ideal customer, and will get my highest priority.” What I don’t say, is that I intend to change in time, but that is secondary to what I have for them today, and what they need from me today, that is now what I am focused upon. This is the fastest way to grow a company. I never learned this in business school. In school, I learned that customer concentration was a risk and should be avoided. But, growth requires risk. Pick your risks strategically. Plan your actions. And focus.
Your employees should not subjugate your business to an outsider without your permission. Be watchful of this. Define your bull’s eye for each stakeholder and how they fit together. Be disciplined by reinforcing this language every single day.
Owners must confront employee fit and misfit discipline, too. If you allow misfits to remain in your business your ideal employees will eventually leave. Or worse, they will stay and drop their performance to the level that you tolerate. This will frustrate them as they feel underutilized and annoyed. It will be your fault and some might even tell you to fix them. Do fix them. But don’t give them what they ask –unless what they ask is to get focused–and to get focused on the right insights that produce profits for everyone involved. If an employee has a good, well-reasoned insight like this consider firing your worst immediately and giving part of their wages to this person. Celebrate focus by focusing your resources on your best fit situations. Aim only at the bull’s eye. Tolerate the one-degree’r by putting in less. Refocus on the bull’s eye. Get better.
Eliminate two degree situations swiftly.
P.S. – Hitting the bull’s eye repeatedly puts you into world-class status. Business results do not distribute on bell-curves. Profits and valuations go through the roof in blockbuster 10x or 100x fashion. The exceptional experiences of the bull’s eye stakeholders, assembled in alignment across the entire business, will produce a flywheel effect that spins up larger and faster and more efficiently than you can imagine… and I have a big imagination, and I’m still blown away by just how big and how far and how fast things go when you say no to misfits religiously.