NotSellingForProfits_CRM to Screen Out Customer Bad Fits
Most companies invest in CRM because they think it’ll help them close more sales. But another great reason to put together a sound, end-to-end CRM strategy is to avoid some sales.

I know that sounds crazy. But hear me out.

It’s a cliché that’s repeated all the time: “the target market for our product/service is everyone!” That sounds great when you’re trying to raise VC money, or attempting to rev up the sales force during your sales kickoff. But in reality, the idea that what you sell is perfect for everyone is hogwash.

You know it. Your customers will know it, too. In this day and age -- especially with the advent of the subscription economy -- it is far better for you and for these customers if they learn it before they buy than afterward.

The Sale is Just the Start in a Subscription Based World

Here’s why. If you sell through a subscription model, or a recurring services model, the sale is just the start of your relationship with the customer. At the start of that relationship, you as the seller need to put a lot of effort into that relationship. This is when you deliver what you sell and figure out what’s needed to deliver it the right way, where you devote human resources to that task, and where you set expectations with the customer. All of that demands your resources -- a demand on resources that then decreases over time. Profitability from that relationship comes with the longevity of the relationship.

So, when you sell to everybody -- including customers who are not a good fit with your company -- you’re setting yourself up for problems. Not only will you suffer from unacceptable rates of churn, those churning will be the customers you’ve sunk the most effort into in the immediate past. At the same time, in trying to round up everyone, you fail to devote sufficient attention to potential customers who are the right fit and hold real promise for long relationships.

Two or three quarters of this high-overhead, low-retention behavior will destroy your business's profitability.

Finding the Right Fit

But it doesn't have to be that way. In your marketing efforts -- particularly your content marketing efforts --you can define yourself in terms of customers: which are great fits with your businesses, and which ones may not be. There's no need to overtly declare some prospects out of bounds -- provide them enough information about yourself and about their own circumstances that they have the luxury of self-selecting out as potential customers.

The next step directly involves your CRM system. Many businesses add fields to their CRM applications' interfaces to capture data that indicates a likely customer. Think about what you might capture in CRM that can indicate that a prospect has hurdles to longevity. These fields need to be superficial, initially --the prospect’s size, growth rate or the frequency of turnover of contacts, for example.

Later, with the input of other parts of your organization regarding characteristics of quick-churners, you can refine these fields. All this data suggest red flags that could result in an otherwise qualified lead being lowered in priority because of the prospect's likelihood of remaining a customer over time.

This is a tough sell to your sales department, because they are not measured on lifetime value of customers but on what they close. The travails of co-workers in implementation, support and finance are usually far from the minds of salespeople. But as we move to a subscription world, business leaders need to make sure sales understands that value of selling not to the easiest-to-close prospects, but to those prospects that promise the longest and most profitable relationship. That may require an adjustment of incentives and goals; it may also force businesses to finally confront the need for alignment across the entire organization and a refocusing on what the business’s goals really are and what they should be for everyone working in that business.

Times have changed. Customers can switch from your business to a competitor with greater ease than ever before. The relationship between seller and buyer is critical to keeping buyers and maximizing profit. So, while you're using CRM to hunt for likely new customers, don't forget to use it to suss out those who aren't going to be profitable over time.

Title image courtesy of Janos Levente (Shutterstock)

Editor's Note: To read more about CRM's relationship with customer retention, see Chris's CRM: Customer Acquisition is Nice, but Retention is Key to ROI