Conventional wisdom has firmly established the notion that the customer is always right. That may be true, but dealers who want to make the most of their resources—and ensure a customer base that will build a strong business—may end up facing a different question: Is the customer right for you?

In an ideal world, dealers would have customers who all pay on time, require a minimum of unnecessary guidance and are loyal advocates for the company's products and services, since word-of-mouth is one of the most powerful advertising tools available. Ideally, these "dream customers" are willing to listen to ideas about ways to improve their existing service and new offerings that are constantly being made available by emerging technology. They may not buy right away, but they're always receptive to the possibilities.

In an ideal world, dealers would have customers who all pay on time, require a minimum of unnecessary guidance and are loyal advocates for the company's products and services, since word-of-mouth is one of the most powerful advertising tools available. Ideally, these "dream customers" are willing to listen to ideas about ways to improve their existing service and new offerings that are constantly being made available by emerging technology. They may not buy right away, but they're always receptive to the possibilities.

Some dealers have learned the hard way—through years of trial and error— how to spot trouble and nip it in the bud early, or avoid difficult customers altogether. So, how do you build a strong portfolio of customer accounts that will make your business profitable in the long-term?

Identifying the Ideal Customer

Sometimes, filtering out potential problem customers can be as easy as taking a close look at credit history. While it's not always a foolproof method of determining someone's willingness or ability to pay, it's a strong indicator. As a general rule, the better the rating, the better the customer.

Chris Soda, manager of dealer development for Monitronics International, encourages dealers to do a credit check at the onset of the initial contact.

"From our standpoint, we've shown lower credit scores to have a much higher rate of attrition," Soda said. "We typically advise against taking those customers unless there's enough of an upfront payment from the customer to cover the cost and lower the risk. Dealers can leverage quality assurance survey calls as a positive for both them and the customer," he said. "The conversation can be tailored around relationship-building and gratitude for their business along with a few QA questions. This is reassuring to customers and builds value while also validating the long-term quality of the account for the dealer."

Another valuable place to start is by understanding the market demographic and figuring out the best potential customers to acquire. Simple market research can provide insight into areas with top wage earners with good credit ratings.

The key takeaway? Find out who would benefit most from your products and services, and go after them.

Cultivating the Relationship

Once you have acquired a new customer, the job is far from over. Learn as much as you can in the first few weeks to identify their long-term value. Consider using sales data to separate the top prospects from the rest of the herd, and concentrate your ongoing communications and marketing efforts on that group.

For example, customers who approach you for products or services—rather than being solicited—might be more receptive later to offerings that they might not yet know about. Also, customers who make a living in technology related industries or who use your products or services consistently may be attractive long-term targets, since they recognize the value of your offerings and your company.

Let customers learn more about you. Keep the lines of communication open and cultivate the relationship. Then, spend a good chunk of time and resources on the group with growth potential. If this group becomes "second time" purchasers of new products or services, they may be more likely to be loyal and dependable customers. They will be treasured assets in your portfolio of customers and may continue to respond in the future.

Weeding Your Customer Base

Developing a strong customer base goes beyond identifying potential sales. Take a good look at your existing accounts with the following questions in mind:

• Which customers are taking the most of your time and resources?
• Are those customers really worth the effort it takes to keep them?
• Would your efforts be better spent on finding new customers with more potential for future sales and RMR?

Using methods similar to those for new customers, identify and cultivate existing accounts that show the highest potential in terms of repeat purchases and larger average transactions. Long-term revenue recurrence beyond RMR is nirvana for any dealer.

Likewise, look closely at the other end of the customer spectrum. While it's tempting to treat each customer equally, it's easy to fall into the trap of spreading efforts evenly across the customer base, or even concentrating on less-responsive customers in hopes of building their interest. Typically, it's much more difficult to change firmly-entrenched, customer behavior than to concentrate on nurturing quality accounts.

Doing the Most with Limited Resources

Of course, this doesn't mean you have to "fire" a customer. But, it's important to deploy resources where they will have the greatest impact.

Your best customers are your biggest fans, and they vote with their wallets. Develop new ways to reach out to them, whether it's through loyalty programs, special incentives on equipment upgrades or information about the latest technology.

It may seem counterintuitive to refocus attention from one block of customers to another, but it often makes sense. In a business climate in which every effort has to be made to use resources thoughtfully and effectively, it might be worth more time finding and nurturing the flowers instead of tending the weeds.