Week 1
Choose Your Target

A client of mine, a large global bank, decided to conduct a review of their corporate banking relationships. This bank had been in business for over 100 years, and as you can imagine, had accumulated all manner of clients around the world. They discovered they had over 30,000 of them. Many were not profitable, however. Others were with companies that were a lousy fit with the bank's new strategy. Yet another group of these clients had developed marginally acceptable risk profiles. My client had become a hoarder of relationships. The result was a hornet's nest of problems.

Another client I worked with had a different but equally vexing problem with their client base. Over a three-year period, two large companies they served had dramatically increased their demand, and they now accounted for 60% of my client's revenue-a dangerous dependency. In addition, they turned out to be exceedingly difficult clients to work with. They demanded steep price discounts and treated my client poorly. Just as we set out on a strategy to broaden their revenue base, one of the two large clients came on hard times and cancelled half their orders.

My client survived, but it was a tough blow. The incident made them realize that their ideal client was a mid-sized company, not a large public corporation. When they refocused and also broadened their revenue base, their growth and profitability began to dramatically improve. And, their people were much, much happier.

As these examples illustrate, the composition of your client base is often the result of historical accident and short-term decision making rather than intentional strategic choice. Doing business with anyone who will write a check is an appealing strategy when you need to pay the bills or meet your sales target. But it's a formula for big trouble further down the road.

Good client relationships are like good meals-if you start with fresh, high-quality ingredients, you'll usually end up with a delicious dish. But try making a salad in January with those rock-hard winter tomatoes you buy in the supermarket-you know, the ones that are like golf balls. Ugh. It's not going to be great.

Pick your clients wisely from the start. Your chances of building long-term, rewarding relationships will vastly improve. The sale will go faster. Trust will quickly develop. You'll partner well together. Your client will get the results they seek. And you'll have a rewarding experience.

Let's walk through four simple steps that will help ensure you end up with the right clients.

Know your value proposition

To know which clients make sense for you, you must understand the value you are offering the marketplace. So step one is to develop a clear value proposition. Can you succinctly articulate how you help clients? What outcomes do they achieve when they use your services or products? Sometimes we forget that what clients actually buy is a business result that is delivered by the solutions you sell.

Michelin tire company is a case in point. In 1947 they introduced the long-wearing radial tire. Michelin heavily promoted the technological superiority of radials, but the new tire never gained traction in the US market-it was a flop. Finally, in the 1970s they began focusing their advertising on the fact that you could drive many more miles on a set of radial tires. Radials quickly displaced standard bias tires and now account for virtually 100% of the market. Drivers didn't really care about the technology in the tires-they wanted more mileage on them, and they were willing to pay extra for it!

Examples of value propositions

How would you articulate your or your company's value proposition? My principal one is this: I help companies and individuals build their clients for life.

Here are a few examples of value propositions (or in some cases, missions) from well-known organizations:

• "We help organizations across the private, public, and social sectors create the change that matters." (McKinsey & Company)
• "Remember everything." (Evernote)
• "To organize the world's information and make it universally accessible and useful." (Google)
• "We empower every person and every organization on the planet to achieve more." (Microsoft)
• "We ignite opportunity by setting the world in motion." (Uber)
• "Accenture solves our clients' toughest challenges by providing unmatched services in strategy, consulting, digital, technology and operations." (Accenture)

Some of the these are fairly broad, because these companies do many things for their clients and customers. The more focused your service offering, the more specific your value proposition can be. My friend Marshall Goldsmith, the executive coach and bestselling author, says, "I help successful people achieve positive, lasting change in behavior; for themselves, their people, and their teams."

Next, you have to identify your target clients. You should use three sequential screens or filters to assess whether or not a client makes sense for you.

Screen for strategic fit

Strategic fit refers to a set of criteria you have established to define your target market-that is, the clients who really need what you offer. These criteria could specify:

• Types of industries
• Company size
• Private, public, or governmental organizations
• Geographic location
• Wholesale (B2B) or retail (B2C) businesses
• Companies with certain well-developed functions that you specialize in (e.g., operations, IT, logistics, etc.)
• Other characteristics that would make these clients heavy users of your solutions and value (e.g., capital intensive vs. labor intensive, domestic vs. international, companies that spend a lot on training versus those that don't, how often they relocate their staff, etc.)

If you aren't clear on which prospective clients fit your strategy, you'll tend to take on any client who will pay your bill. The result will be a mélange that will eventually dilute your performance and impact.

One of my clients decided to use their reward system to encourage adherence to their target client definition. They made a list of 1,000 companies, and their people only got credit for sales to those organizations. That sounds harsh, but it dramatically focused their efforts and improved their profitability.

Large multinationals with comprehensive offerings can, of course, go after a broad range of clients. But if you're a smaller firm or solo practitioner, you need to think through your screening criteria pretty carefully. Otherwise you'll end up like my bank client, a hoarder of relationships.

The deeper your knowledge of a particular industry, market, process, or type of company, the more differentiated your expertise will be and the stronger your ability to compete. As an example, I have spent decades deepening my knowledge of an important process-how to develop and grow client relationships-and so I screen for clients who are trying to build trusted, consultative relationships with senior executives. Someone else's focus would likely be completely different and, I hope, uniquely matched to their particular strategy.

What types of clients represent the best strategic fit with you and your firm, given the type of value you add and the solutions you provide?

Screen for relational fit

Because I believe strongly in the importance of relationships-in business and in life-I want to know whether I can have a positive, trusted relationship with a prospective client. I also want assurance that the client's reputation will enhance-or at least not diminish-my own! Here are some questions you should ask to test for relational fit:

• Does the client have a history of building productive, long-term relationships with external providers? Wouldn't you prefer a client who has a healthy relationship orientation, versus one who treats everyone like an arms-length, disposable vendor?
• Does this organization have a good reputation? Your own image is strongly affected by your clients' standing in the marketplace. If you find a client taking ethical or legal shortcuts, head for the door.
• Are the leadership and the company culture aligned with or at least not in conflict with your core values? Every three or four years I encounter a client whose values and general outlook are so at odds with my own that I have to diplomatically wind things down or let the engagement peter out.
• Do you sense, from the very first meeting, that you will be treated with courtesy and respect? Some clients are tough during the sales process, but then love you to death once they accept your proposal. But usually, what you experience on Day 1 is what you will probably get six months later.

Screen for your ability to have an impact

If a client fits both your strategic and relational selection criteria, you then have to ask, "Will I be able to have an impact?" Sometimes, the circumstances are such that can't really add value, and you end up banging your head against a wall.

When...