Who Is Your Customer?

IN THE CHAOTIC WORLD of small business — particularly those in the screen-printing and promotional product market business — a critical question often goes unanswered: Do you really know who your customer is? More importantly, do you even care?

For businesses with revenues below $3 million, this question isn’t just academic — it’s the difference between thriving and merely surviving. Yet, 90% of these businesses grow primarily through word-of-mouth, reputation, and referrals. This is great when the business is small and the owner is doing most, if not all, of the key functions.

The owner typically will be the direct point of contact with the customer. As such, he has direct responsibility and accountability with the customer. If all goes right, or wrong, he is the one face-to-face with the customer. Either way, that experience is what gets communicated from the customer to others who are looking for your services. This is leaving your success to the whims of seasonal and economic cycles as well as the reputational: Know, Like, and Trust elements you hope to build your business with.

As the business grows, the owner has less and less contact with the customer and the relationships become more distant, except for the highest value customers. This leads to the need to understand how customers buy, independent of the owner. In other words, if someone walks in cold, how will he decide to work with you?

The Customer Hierarchy: A New Perspective

Think of your customer base as a pyramid, similar to Maslow’s Hierarchy of Needs. At the bottom, we have the survival level:

• Level 1: Survival
  These are the customers you take on simply to keep busy. They’re often one-time buyers, price-sensitive, and quick to jump ship at the slightest opportunity. Sound familiar? They often are completely ignorant of the design and print process, providing horrible art copied at 72 dpi from the web. In the old days, it was “Can you use my business card for art?”
• Level 2: Safety
  A step up, but not by much. These customers pay the bills and might even come back, but they’re still primarily concerned with price. They’re the ones who’ll leave you for “a guy who does this cheaper.” Or they run out of product and someone in their organization “knows a guy who can do that cheap,” or “My cousin just started a DTF business and can do it for us.” It’s a case of not being in the right place at the right time. We call this requirement Top of Mind. The business hasn’t established enough presence to reach this.
  If most of your customers fall into these two categories, you’re not alone, you’re with the 90% of the market that does. But you’re also not where you want to be.
• Level 3: Belonging
  This is where the magic begins to happen. This is the first of the next four higher levels of buyer. These customers buy primarily on emotion not price. They’re connected to their brand and loyal to your service. Remember that $75 T-shirt you bought at a rock concert? That’s the power of emotional brand connection purchasing.

The Hard Truth

Most businesses don’t have a firm grasp on their financials. They react to profit and loss statements after the fact. The financial impact of past decisions are reflected as profit or loss. If it’s a profit business — it’s considered and they move on. If it’s a loss, there’s hand wringing and anxiety along with, “We have to do something about this.” The alternative is proactively managing the customer base. In today’s digital economy, this reactive approach is a recipe for stagnation, or a slow, agonizing descent into insolvency.

A Cautionary Tale

Let me share a story from my 50 years in this business. Early on we had a big music client who grew to nearly $500,000 in annual sales with us. One day, the executives walked in and said, “It’s been great, but we found someone just like you who can do the work for thousands less.”

We knew it was a terrible decision, but they were certain. Of course, it didn’t work out. The lesson? The cheapest option rarely is the best, especially when it comes to your most valuable customers. I was so focused on delivering a great print and great service, that I completely missed what needed to happen for a loyal relationship I could count on.

The Hidden Goldmine in Your Customer Data

Here’s a shocking revelation: In our recent study of years of customer data, (thousands of customers with purchase history of up to 10 years) we typically found that the top 25% of customers account for 89-93% of total revenue. Even more startling, the bottom 50% often contribute only 1-4% of revenue.

Let that sink in. Half of your customers might be sucking the life out of your business by occupying your time without contributing significantly to your bottom line. Not only that, one of my clients recognized this and raised his prices significantly and two things happened.

As expected, the company’s most price-sensitive clients fled. There were a few (less than 10%) that stayed, at least temporarily. So ultimately, the shop lost 40% of the total customers. That would be shockin base, except for the fact their Net Operating Profit increased by $57,000 for the year working with 40% fewer customers. And they got back all the time associated with those small jobs!

Taking Action: Knowing Your Customer

How do you start identifying your ideal customers? Here’s a simple yet powerful exercise:

1. Export your customer data into an Excel spreadsheet, sorted by revenue, highest to lowest.
2. Divide your customer list into four equal groups. These are called quartiles because they represent 25% levels.
3. Add up the revenue for each group.
4. Prepare to be shocked by the disparity.

This exercise is just the beginning. It’s a wake-up call, a first step toward truly understanding who your ideal customers are and why they matter.

The Path Forward

Moving beyond survival and safety-level customers isn’t just about making more money. It’s about creating brand connections, fostering loyalty, and building relationships that transcend mere transactions.

Consider the emotional power of a local high school winning a state championship. The demand for commemorative merchandise skyrockets, not because it’s cheap, but because it means something. That’s the power of emotional purchasing, and it’s where you want your business to be.

The Benefits of Focusing on Ideal Customers

When you focus on attracting and retaining ideal customers:

1. Your marketing becomes more targeted and effective.
2. Your customer acquisition costs decrease.
3. Word-of-mouth referrals become more predictable and frequent.
4. Your business becomes more resilient to economic fluctuations.

Conclusion

Understanding your customer base isn’t just good business — it’s essential for growth and sustainability in today’s market. It’s time to move beyond the survival mentality and start building a business that attracts and retains ideal customers.

This article is just the beginning. In future installments, I’ll explore the economics of customer profitability, strategies for attracting ideal customers, and discuss how to navigate the challenges of shifting your customer focus.

For now, start with the Excel exercise. Take a hard look at your customer data. You might be surprised by what you find — and excited by the possibilities it reveals.

Remember, in the world of screen printing and promotional products, success isn’t just about the quality of your prints. It’s about the quality of your customer relationships. It’s time to start building the right ones.

Want to learn more? Email me for a detailed worksheet and checklist on how to conduct an in-depth investigation of your existing customer history. Your journey to a more profitable, sustainable business starts now.