Successful companies choose the customers that they want to work with, others supply anyone who will let them – they are busy, but not always busy making money.
Too many sales people find it impossible to say ‘no’, and end up taking on work that is non-profitable, proves difficult or impossible to deliver, is time consuming, and causes hassle to everyone in the business, as well as the customer. Add to this, the fact due to limited resources, this non-profitable stuff actually stops them looking for and working on the profitable work, it’s easy to see how many business managers find they are being ‘busy fools’.
So, what can be done?
Step One : Identify Your ‘Best’ Customers
First of all consider your existing customer base and identify who your ‘best customers’ are. This might not be the biggest, or the ones you’ve been serving the longest. Think about order size and profitability, levels of profitable repeat business, ease of dealing with, how price sensitive they are, whether they pay you on time, whether they pay you at all! You need to agree your own criteria that suit your business. One design business I know only works with clients they like (this actually makes commercial sense as they have to spend considerable amounts of time working with clients, and find themselves being more creative on jobs they enjoy than those they don’t).
Step Two: Establish Why They Buy From You
Secondly, identify why these customers buy from you, what’s important to them, what attracted them to you in the first place, how you could improve, what would they like to see you do better, and importantly, how could you do more business? Carry out a Customer Attitude Survey, and get a real picture of your strengths and weaknesses.
Step Three: ‘Profile’ Your Customer Base
Use the information gained in your sales and marketing activity. For example, ‘profile’ the sort of customers that you want to work with – their buying characteristics, their industry sector, size, and their needs (hint: match the profile as close to your ‘best’ customers identified earlier).
Step Four: Maximise Resources
Target these customers, make sure that your ‘selling time’, and that of your team, is spent in front of these customers – this might mean turning some potential ‘customers’ down. You might consider ‘incentivising’ these customers to do business with you (not necessarily by discounting!), or even ‘disincentivising’ those who you don’t really want to work with!
Step Five: ‘Dump’ Your Worst Customers
As for your ‘worst’ customers, consider reducing your reliance on them, and then eventually eliminating them from your portfolio. I’m not advocating ringing them up tomorrow and telling them to get lost, but look at how you can turn them into profitable customers – that sometimes means saying ‘no’. Your time and that of your business might be far more effective working with customers who appreciate you, and let you appreciate profits at the same time.
As the MD of an engineering business once told me six months after consciously cultivating his customer base, ‘Having dumped my non-profitable customers, I’ve got more time to devote to my best customers, less hassle, increased profits and the satisfaction of knowing my competitors have picked up all the problems that go with my old bad customers!’
Try it, it could work for you.