You have probably heard that it’s important to identify your “ideal customer”, but have you ever considered exactly what that means?

Your ideal customer is the customer that provides you with the highest return on your time and resources. When making this determination, you must consider both the resources you spend attracting these customers as well as the cost of servicing them. If a customer is so expensive to reach that it takes months or years of service to realize a profit, they’re the wrong target. Conversely, some customers are relatively cheap to attract, but provide such a low profit margin that they are barely worth your time.

This doesn’t mean that your ideal customer can’t be expensive to reach—as long as he or she provides a profit margin which makes the effort worth it. But it also doesn’t mean that your ideal customer has to be a big spender, Wal-Mart has made a fortune by primarily targeting low and mid-income consumers.

So who is your ideal customer?

High income earners? Low income earners? Young adults? Senior citizens? College Educated? Health-conscious? Couch potatoes?

What are some of the most important distinguishing characteristics of your ideal customer? Don’t just consider how much revenue each customer generates, think about how much time and effort you spend on each customer. Think about how much it costs to attract them.

Now, take a moment to consider your current customer base. How many of them match your description and qualify as ideal customers? (For many small businesses, the answer is “not many”, so don’t get discouraged.) Hopefully you can identify at least a small handful of customers or clients that are “ideal” and use them as your model moving forwards.

Even though many of your current customers aren’t “ideal”, it is important that you market to the customers that you want, not the customers that you currently have.

Identify the distinguishing characteristics of your ideal customers, and create a plan to reach them. This might be direct mail, it might be putting on a “training seminar”, it might be a strategic partnership. The appropriate channel depends completely on the customer profile you are pursuing. I’d be glad to help you plan this out!

Most likely, the majority of your current customers are not ideal. This means that you aren’t as profitable as you could be. You’re working harder than you should be for them, and not making as much as you should.

So take the time to identify the characteristics of your ideal customers, and craft a strategy to reach them. Over time, the percentage of your customers that qualify as ideal will rise – and with it, your profitability.