How to Identify the Best Customers for Your Business

Many companies pursue growth opportunities without adequately defining who their ideal customers are. That lack of clarity can hamper profitable growth.

BY FRANK V. CESPEDES, JAMES P. DOUGHERTY AND BEN S. SKINNER III

IT’S DIFFICULT TO start a venture that gains traction with paying customers. In the first decade of the 21st century, fewer than half of all U.S. startups were able to survive beyond three years.¹ But it’s even harder to grow a company beyond certain levels of sales. Of the nearly 44,000 companies founded in 2000 and listed in the Capital IQ database — which includes public and privately held companies — fewer than 6% achieved more than $10 million in revenues by 2010, and fewer ...