Imagine for a moment what you would like your customers to be like. Think of the ideal profile, the most profitable and beneficial for your company. Without a doubt, it would be perfect to have not only an extensive portfolio, but also one that is made up of consumers who are willing to pay a high price for their products and services. And the best of all: it would be a grateful market, satisfied with your company. Wouldn’t that be great? Now, wake up, because it will never be like that. I won’t give away any secret if I say that no two customers are alike. Nor will I be offering any revelation if I add that each customer’s value is different.

However, you may be interested if I say that you shouldn’t be obsessed with finding the most profitable customers. What you should be concerned with is how to manage your portfolio and dedicate the proper resources and attention to each individual.

I like to interpret reality in two-by-two matrixes (as you will see, reality is quite simpler than it seems; that’s why it’s so difficult to decipher). If in one matrix we represent a product or service’s life-cycle, we will see that it always carves the same path, according to which we must apply different sales strategies at one time or another.

Think about the matrix I just spoke of. On the horizontal axis we find the cost of service for you, which becomes lower as it moves to the left. On the vertical axis, we can represent price, which will become higher as we move further up the matrix. Where would you like to see your customers? I don’t doubt that you would choose the upper-left quadrant: high revenue and low costs. What other situation might you want? Now, I believe I mentioned earlier that things are never so idyllic.

In the real world, customers are unequally distributed throughout the matrix. There are the more profitable ones, and there are those that generate little value. The important thing is not to stick only with the best ones, but rather learn how to manage the rest. If you look closely, the majority of your customers will be in the lower-left quadrant. That means that they know and appreciate you, but they demand a low price from you. You cannot ignore them, because in the majority of cases they represent a considerable portion of your market.

When we launch a new product or service, our level of notoriety is low, but our prices aren’t, since we need to recover the investment made on developing and commercializing our offer. If we are able to consolidate ourselves and prove that we have something unique, we enter the ideal phase, in which we dominate the market, prices remain high, but we don’t need to invest as much in introducing ourselves. Customers appreciate us, they value our service, and they are willing to pay what we establish. Money is not a problem.

But the honeymoon is over when the market reacts, competitors emerge, and the pressure to cut prices is greater. Supply increases, and “switchers” emerge; that is, customers that constantly change providers, attracted only by the cost of service. Sooner or later the product migrates upwards to the last quadrant, and that means that we have become history, and that not even a low price will guarantee us profitability. Only the customers in this position pose a problem. They are those “strategic accounts” we all know well: large companies that want a lot for nothing. Sound familiar?

You can’t avoid having customers in each of these phases, but you must try to concentrate them on a diagonal line on top of which the majority obtains what they are willing to pay, without causing you financial harm. So, analyze your company, find out what market each part of your business is geared towards, use customer