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Is it time you graded your customers?

2 months ago

When we talk with professional business owners about building their business, we often get an interesting response … “No more! Please! I couldn’t handle any more work; I’m flat out as it is.” This seems strange, because in many cases, their business is far from what would be considered massively profitable, and by their own admission is often not a fun place to work.

The problem lies in a common mis-perception that ‘building business’ means just getting more leads. The reality is that business building is more about ‘quality’ than quantity.

If you’re familiar with Pareto’s Principle, or the 80/20 rule, you’ll know that this means that in any situation, 20 percent of the inputs or activities are responsible for 80 percent of the outcomes or results. In business terms this could mean:

  • 80% of your revenues/profits are generated by 20% of your customers.
  • 80% of your complaints come from 20% of your customers.

The goal is to streamline your business to focus on the top 20% of your customers that are creating 80% of your revenues/profits and to part ways or retrain the 20% that are causing 80% of your complaints.

Any questions?
Call us on 02380 560833

You can achieve a better quality of client, focus on profit and free up your time in four steps:

Step One: Categorise Your Clients

We all have clients that drive us mad. They might always pay late or complain and haggle over invoices or prices, wait until the last minute to lodge important paperwork, put unnecessary demands on you, have questionable hygiene habits… the list goes on. The first step is to categorise your clients into 4 classes A,B,C & D class clients. The definition is up to you. You might also find an ‘A’ class client might be one that always pays a month late but never questions the price.

Step Two: Tell them where they rate

Send all your ‘A’ and ‘B’ clients a letter telling them that you appreciate their effort in the relationship, that you enjoy working with them and will always strive to do the best for them. Then send your ‘C’ and ‘D’ class clients a letter suggesting that it might be time for a ‘new approach’. State your commitment to service and explain how important their participation is in the relationship. If there is no change after a couple more contacts, you might refer them to your competition. It costs you to work for these clients. You make a living working with numbers … if you make £100 profit on doing a job for a client who haggles, complains and wastes another few hours of your time and then starts on your staff members, you’d be better off without them. At the least, they vastly increase the chance of a heart attack or other stress related disease (like divorce).

Step Three: Fill the void

The time you gain when your ‘C’ and ‘D’ grade clients take their business to your competitors (and drive them mad), can now be used more productively, for instance marketing; attracting clients that want to work with you, and that you want to work with. Alternatively you could work on systemising to increase productivity in your workplace. You could even go home early and spend some extra time with your family or on that neglected hobby or passion.

Any questions?
Call us on 02380 560833

Step Four: Maintain the system

It’s important to inoculate yourself against more ‘C’ & ‘D’ Clients – the goal is to deal with only ‘A’ & ‘B’s … so make sure that your new clients are educated on the fact that the unique and outstanding level of service that you provide for them is possible because your clients commit to participating in the relationship, and define what you expect of them. This is an important strategy to get YOU more in control your business, improve your profitability and most importantly, reduce the stress levels of you and your team.

Good Luck!

If you’d like to learn more about this and other Sales tools you can use to make your business more profitable, then we offer regular Sales Mastery Master classes to help business owners like YOU. Find out more here

Originally posted on ActionCOACH.com. Updated 15.06.17

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