Looking after your A class customers
You’ll no doubt have heard the saying “If you try to be all things to all people, you run the risk of being nothing to no-one.” This concept applies brilliantly in business today, and successful companies in today’s tough market are learning this truth, and reaping the benefits of applying the concept.
No company can succeed today by trying to be all things to all people. Companies today and of the future must find the unique value proposition that they, and they alone can deliver to a chosen market.
Imagine all your customers classified as A,B,C, or D, where A is one of your best customers, and D is at the opposite end of the scale. Of all your customers, your chosen market is your type A and B customers.
Another way to sharply focus your business is for you to get much more specific about your customers; the type of customer that you have right now and the type of customer you would LIKE to deal with in the future.
Why go through the process of customer or client selection? Because it is vitally important to know who your best customers are. Why? So that you can deliver exceptional service to them before someone else does.
But there is really nothing new in that idea. What may be new however, is the way that you decide who your best customers are.
You may have heard of the 80/20 principle. It simply states that in many situations 80 percent of something is caused by 20 percent of something. To give you an example, if the 80/20 rule is applied to your customers, it may mean that 80 percent of your complaints come from 20 percent of your customers. Or 80 percent of your income may come from 20 percent of your customers.
Or one more example, 80 percent of your staff problems come from 20 percent of your staff?
These may not be exactly right for your particular business, but it is surprising how often the 80/20 rule is cited when things aren’t going well. Do 80 percent of your bad debts come from 20 percent of your customers?
The relevance of the 80/20 rule comes into play if you really stop to have a look at the customers you’re currently dealing with.
If you were to categorise your customers, say by turnover, you would quickly see how your total income is spread among your customers. This would be one way to establish your A,B,C and D customers.
But before we get into that too deeply, let’s have a look at another concept – your ‘ideal’ customer. Think about this for a moment. Think about a really, really good customer that deals with your company right now. Think about what makes them a great customer.
Is it the amount of business ($ turnover) that they do with you, is it the fact that they always pay their account on time (and sometimes in advance even!), is it the fact that if they ever have a problem, you’re the first to find out so you can fix it straight away for them, is it that they share similar business ethics and values to you, is it because they’re a growing company, or is it that they are just really nice people to deal with; friendly, courteous and fun? Whatever their traits are, think about them and write them down.
Then the next question is, what would your business be like, if 50 percent of all your customers were like this? What would your average working day be like? Stressful or would it be just a little more fun? What do you think the profitability of your business would be like, your team morale and your productivity?
And just to take it one step further, think about how many of these types of customers you’d need to make the same level of income you’re currently making?
A lot less than the number of customers you’re dealing with now perhaps. This is because a typical ‘A’ customer has a much higher sales volume than say a ‘D’ customer.
Contrast this scenario with the types and numbers of customers that you’re dealing with currently… is the 80/20 principle starting to emerge?
The concept of identifying clearly what your ideal customer ‘traits’ might be is the first important step in classifying your customers. The really interesting trend you will discover is that turnover, or sales amount, is only one of the traits of being a class A customer.
It may be that turnover does have a greater weighting than the other traits, but it is only one trait.
Classifying your customers as A, B, C, and D might seem a bit harsh or clinical, but it provides clarity and focus for delivering exceptional service to those customers that you have decided are really worth it – your A and B customers.
So in your business now, how do you currently determine who receives the A plus service when priorities need to be juggled and made? Are you trying to be all things to all people in your business?
Once you have determined the traits of your A, B, C and D customers, you then need to look at doing something with this information.
De-selecting your D customers can make good business sense. However, choosing not to deal with your D customers can be a very difficult decision to make. Why? Because many business people believe they can’t be choosy. Many business people believe that times are so tough that they must take ‘everything that walks through the door’.
You do have a choice. You don’t have to deal with the Ds. And do you know what the benefits to you will be? You’ll have less hassles, more fun and more profit. You’ll have more time to provide quality service and to offer additional products and services to your A and B clients. And remember, those are the nicest customers to deal with.
Your customers will win as they get superior service and you will win by enjoying your business more and being more profitable.
By Dee Schick; originally published in Her Business magazine.
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