Targeting your top 20%

Targeting your top 20%

Everyone says you need to target your market, which is all very well if your target market is obvious. The Small Business Company has loads of bank clients, so there are no prizes for deducing that one of our key targets is the small business banking sector.

But let’s say you own a local café in town, and someone asks who you target and you reply: “Hey, we target everyone. We have families come in for the lunch specials and young people come in just for the juice, and office workers after a quick caffeine fix, and, well, anyone is welcome to come in. We aren’t going to turn anyone away!”

In a quiz, you’d get the buzzer saying ‘wrong’.

You haven’t actually defined your target market; you’ve just described the last 20 minutes. Targeting isn’t about describing who you serve now, it’s about having a think about the BEST type of customer to target in the future.

So, do you want to have the families who come in and take up all your space with their screaming kids, or the young people making one juice last an hour or two because that is all the money they have? Or the office worker who only ever buys one cup of coffee and never up-sells to a muffin?

Don’t just list your current customers. Rather, identify the specific types of customers you currently have who you really like. Not ‘like’ because they are polite (though that helps), but ‘like’ because they pay full price, on time, order lots, refer customers to you, and never get lured away by the competition. That sort of ‘like’.

Your database should give you a clear picture of who your customers are. Look through the information you have on your existing customers and see if there are common elements. The easiest way to do this is to look at the top 20% of your customers who spend the most money with you.

The type of customer who consistently spends the most money with you, is usually* the best type of customer to target. (Only usually* because some large customers also demand large discounts, which erode your profit. Let’s not count those ones.)

If you look hard at your best customers – those in the top 20% – you’ll find that they share some common characteristics. They’re quite possibly from the same area, a similar type of business, or a similar type of person in similar circumstances.

What is your best type of existing customer?

If you were the café owner, you might decide:

  • Those office workers who just want a coffee but often come back later in the evening for a meal are perfect as we can up-sell to them easily.
  • We seem to be doing a lot of catering for small businesses running working lunches in their premises as they are saving time by not travelling. Why are we doing this?

If you target the top 20% who pay you the most and attract more customers like them to your business, you can focus on these customers, rather than customers who are largely wasting your time, paying you very little, or costing you money.


Glen Senior
Glen Senior

CEO Glen Senior has been helping small businesses start and grow since 1989. Along the way, he has published 6 books on small business development and business planning, created training courses, built e-learning platforms, and developed Microsoft USA’s Small Business Plus program which was delivered into 9 countries.Since 2005 Glen has focused on the banking sector and has built up an extensive knowledge of how banks can engage with the small business segment. He has presented at a number of small business banking conferences and is sought out as an opinion leader in this space.