Being intentionally choiceful about which customers you serve is not a new idea. Yet too many leaders avoid it, hanging on to wrong customers who cost more in time, energy, and reputation than they’re worth. Choosing customers wisely, and letting go of those who don’t fit, is one of the most important strategic decisions any business can make. Convey those choices with your positioning, vetting, aligning expectations, choosing not to renew, or walking away as a last resort.
The First Strategic Choice: Where to Play
Before figuring out how to win, organizations must choose where to play. That starts with the customers you choose to serve. The right customers fit with your purpose, enhance your reputation, and can be served profitably.
Wise businesses choose not to serve everyone. One shopping cart manufacturer had hundreds of customers and 2,500 different models of cars. Their profit margins were low, and they had a crippling amount of work in progress and inventory. After narrowing their product line to five carts and focusing on their top 50 customers, they reduced their inventory and working capital needs while growing revenue and profits dramatically. Less really was more.
Where and When to Apply Customer Choice
There are five points at which businesses can and should apply this discipline:
- Clarify your positioning. When you declare your ideal customers and value proposition including pricing, the right people will be drawn to you as employees, partners, and customers, and the wrong ones will self-select out.
- Vet potential customers before engaging. It’s better to discourage a mismatch than to fix one later. Smart firms qualify prospects as carefully as potential customers qualify them. Some do this subtly, referring misaligned prospects to competitors better suited for their needs—strengthening both their reputation and their network.
- Align expectations upfront. Use your contract, scope of work, and/or pre-start meetings to define not only what you’ll do, but also what your customers will do. Clear mutual commitments prevent hard feelings later.
- Choose not to renew. Quietly not extending an engagement or not rebidding a customer’s work is often the cleanest way to end things.
- Walk away as a last resort. This is the least desirable way to end a relationship, but sometimes necessary. When values are misaligned or trust erodes, staying may cost all more than leaving.
Two Ways to End Things
Not all “firings” sound the same. Some businesses make it about themselves, saying “You’re not good enough for us.” Others make it about the customer, saying “We’re not the best choice for you.”
Both approaches can be correct, but the latter can leave relationships intact and reputations unharmed. You don’t need to hurt others to help your people, brand, and business. And people you make feel bad about themselves generally don’t feel good about you.
Nightclub bouncers aren’t just enforcing dress codes; they’re curating their clubs’ experience by whom they choose to let in and not. But people turned away don’t feel good about themselves. (Negative)
Luxury brands like Hermès or Ferrari do the same by limiting production, controlling distribution, and keeping prices relatively high. Their customer choices reinforce the brands’ meaning and prestige without hurting non-customers in any way. (Neutral)
Progressive Insurance sets its pricing for different potential customers based on those customers risk profiles and then shows them competitors’ pricing. That encourages prospects whom Progressive cannot serve best to find options elsewhere, making those prospects feel good about their choice. (Positive)
The Power of Customer Curation
Choosing customers intentionally creates alignment, loyalty, and profitability. It protects your people from serving causes they don’t believe in, and shields your brand from relationships that dilute it. It also signals to the market who you are and what you stand for.
Leaders who understand this don’t “fire” customers out of frustration. They approach this choice intentionally and deliberately. They know that saying no to the wrong customers makes room to say yes to the right ones and serve them better.
In the end, choosing your customers isn’t about exclusion. It’s about focus. The right customers make you better. The wrong ones make you worse. The best organizations have the courage to tell the difference and act on it in ways that make everyone feel better.
