Customers Your Company Doesn’t Want

Do a quick exercise: Take a minute and jot down three types of customers your company doesn’t want. Oh, and this is important: You can’t choose people like shoplifters or “sale-hoppers”—the kind of customers that no business wants.

If you’re like most business leaders, identifying customers you don’t want isn’t easy, especially in times like these. But it can be helpful to consider which of your customers are least important, if for no other reason than to help you focus on the most important ones.

We’re all familiar with the old saying, “you can’t be all things to all people.” Yet in business, too often that’s what we end up trying to be. General Motors is a prime example (and look where it got them). There was a time when each GM nameplate was narrowly targeted toward a certain demographic, leaving other company brands to serve their own slice of customers. But over the past several decades, as each GM brand expanded its lineup to serve as many different customers as possible—sports cars for the sporty, minivans for young families, trucks for working people—they ended up stepping on each other’s toes. (See this interactive timeline tracking GM’s last 30 years.)

Consider one of those famous brands now slated for the scrap heap: Pontiac. Back in the ’60s and ’70s, Pontiac was defined by drool-inducing muscle cars such as the GTO, Firebird, and TransAm. The Pontiac brand meant power, styling and cool. Its appeal wasn’t for everyone, but it was powerful for some. Since that time, however, Pontiac has introduced a host of new models like the Trans Sport (a minivan), Sunfire (a compact car), Aztek (an SUV crossover), and Vibe (a hatchback). It’s unclear who, exactly, Pontiac has not been trying to serve, which is another way of saying it’s been aiming to please too many masters. And soon Pontiac will be gone, as will several other once-proud brands in the GM stable.

Don’t Forget the Target

It could be that Wal-Mart (WMT) will learn from the GM example. The company has been attracting a lot more upscale customers of late, for obvious reasons. In the first quarter of 2009, 17% of Wal-Mart’s retail visits were from new customers, and they spent 40% more in the store than the average shopper. Will the company accept their business? You bet—branding is about whose business you’ll seek, not whose you’ll take. But if Wal-Mart begins catering more to those customers’ needs at the expense of its core target of “people who live paycheck to paycheck,” it will be making a mistake.

Years ago one of the home pregnancy test brands created an award-winning advertising campaign that was particularly successful at reaching its childbearing-age female prospects. Due to the nature of the ads, the company received a handful of complaints from older women who thought they were in bad taste. Its response? Press on. It wasn’t that the company didn’t care about the complaints; it simply recognized that older women were not the target audience for a pregnancy test, and it should therefore not be overly concerned about what they thought about the ads.

That underscores an important principle: The further removed your brand is from your core target, the less relevant you should expect it to be—and to some people, perceptions about your brand may even tip into the negative column. Burger King (BKC) and Bud Light are much less concerned about how women feel about their brands than what their core male target thinks, and the worst thing that could happen to many youth-oriented brands would be for parents to perceive them as cool. (I’ll be curious to see what happens to the teenage tattoo trend once the current crop of young people grow up and have kids of their own. When mom sports a flashy tattoo, junior might look for a different kind of self-expression.)

Who Are Your Best Customers?

You still may find it difficult to think in terms of customers you don’t want. But here’s a suggestion for how to get there: Start by describing your best customers in terms of a handful of key demographic or attitudinal dimensions. Perhaps you do best among teenagers who live in latch-key households, have their own discretionary income, are media savvy, and are searching for an identity. Or perhaps your best customers are retirees who are living on a fixed income, have lots of time on their hands, like to linger, and endlessly compare notes with one another about the products and services they buy. There are many ways to describe people based on demographics—purchase behavior, lifestyle, attitudes, perceptions, key desires, etc.—and if you reflect on who your best customers are, you can probably create a fairly robust profile.

Next, take that profile and turn it inside out, revealing a customer type with the exact opposite characteristics. Chances are they’re not the kind of customer you want to pursue. Oh, sure, you’ll take their money if they offer it, but you shouldn’t spend valuable resources pursuing them—not when there’s a much more fruitful universe of prospects available to you. You might even use this line of thinking to create a continuum of customer types which you can then rank from “most wanted” to “least wanted,” enabling you to orient your operations and marketing toward pleasing those in the most wanted column.

A while back I spotted a Harley-Davidson (HOG) t-shirt that read, “If I have to explain, you wouldn’t understand.” While I’m not the Harley type, as a marketer I respect what the company is trying to do. Harley-Davidson focuses relentlessly on the customers and prospects it does want, and is O.K. with the rest of us figuring out our own forms of transportation, recreation, personal identity, or whatever it is that makes Harley fans so loyal. See? I guess I don’t understand.