<p><strong>Scenario: </strong><em>"Dude, we have to cater to all of our customers. Let's send them all super-personal birthday cards on their birthdays. And, super-duper-personal Thanksgiving cards. Billions! Yay! Yay!"</em> Conventional wisdom says: <em>"Treat everybody that comes through your door equally well!"</em> We say: Blah! Why?</p> <ul> <li><span class="highlight">20% of your customers make up the bulk of your profits (~80%).</span></li> <li>80% of your customers make up a lousy percentage of your profits (~20%).</li> </ul> <p>Yes, your other 80% is important -- and you hafta treat them well; but if you're doing it at the expense of your top customers, take caution: <span class="highlight"><strong>When you focus equally on both camps, you get mutha $@!%&amp;# problems by leaving mutha $@!%&amp;# profits on the table.</strong></span> Profits from your top 20%, that is.</p> <h2>Why Catering to Everybody Sucks</h2> <p>What is your booty essentially doing when you're catering to everybody? <span class="highlight">You're working ridiculously harder to generate a much smaller pot of Benjamins.</span> That is, you're expending more time, resources, headaches to serve a group of customers that give you minimal results -- relative to your super-extraordinary customers.</p> <h3>Consider Cheap-Ass Chappy.</h3> <ol> <li> You're providing marketing services to his "super-awesome" business.</li> <li> Chappy needs five of your company's top "personal" marketing consultants because he thinks his business is "The Bomb!"</li> <li> <span class="highlight">Really, Chappy's business is a pathetic piece of scam trash that barely generates any profit to feed his self-absorbed narcissistic personality. So, he rarely pays on time -- if ever.</span></li> <li> He needs you to hand-hold him all-day, everyday -- wasting your (1) resources, and (2) precious time.</li> <li> He needs you to explain things to him five times because he "forgot."</li> <li> He tries to squeeze out every frickin' penny from you -- so that takes him even longer to pay you.</li> <li> Profits you generate: <strong>$2,000</strong></li> </ol> <h3>Now, Consider Kick-Ass Client Tomas.</h3> <ol> <li>You're providing marketing services to Tomas's company.</li> <li> Tomas runs a $10 million financial service company filled with super-happy clients. They love his service.</li> <li> <span class="highlight">Tomas doesn't micro-manage you. He lets you do what you do best, and gives awesome input.</span></li> <li> <span class="highlight">He pays you on time, orders more services from you, provides you with fresh leads, and even gives you financial advice.</span></li> <li> Profits you generate: <strong>$8,000</strong></li> </ol> <p><span class="highlight">Relative to Cheap-Ass Chappy, Tomas took less of your time, caused you less headaches, kept your morale super-upbeat, conserved your people resources, and drove you to kick major booty everyday.</span> <span class="highlight"><strong>Most importantly, Tomas gave you a much bigger bang for your resources.</strong></span> What's the key for your badass, then? (1) Drive away customers like Chappy (more on this later), and (2) start finding more customers like Tomas.</p> <h2>Why Catering to a Certain Few Rocks</h2> <p>When you focus on the few that create the bulk of your bottom line, two things happen:</p> <h3>1. You sustain your morale to kick-booty everyday.</h3> <p>Ever worked with a viciously-demanding customer that pays you pennies? Not too fun. Of course, part of your brain thinks: <em>"If I can just solve Chappy's problems, I'll be okay!"</em> On the surface, it sounds like that. But, dealing with bad customers cuts much deeper. <span class="highlight">Bad customers gradually shrivel away 'kicking-ass-mentality' level by pounding your morale each-and-every-time they demand something from you.</span></p> <h3>2. You start fattening your profits to grow your business.</h3> <p>Think of it this way: <em>Every single one of your customers has an ROI tag attached.</em> <span class="highlight">The more you invest in finding and keeping your top clients, the more money you generate.</span> <span class="highlight">If you attracted more Tomases -- and reduced your Chappys, you'll soon discover how just how profitably sexy your business will be.</span></p> <h2>"So, how do I know who are my top 20%?"</h2> <p>Ask your badass two questions:</p> <h3>1. "Who are my most profitable clients according to my financial sheets?"</h3> <p>Measure each customer's ROI by the profits they've generated for you this week/month/quarter/lifetime.</p> <h3>2. "Who are my profitably-hidden clients?"</h3> <p>Don't confine yourself strictly to financial docs. <span class="highlight">Several members of your actual top 20% won't be so profitable on your financial docs; however, they bring with them lucrative associations that make you more profitable.</span> For instance, those associations can include key people connections, a juicy source of referrals, priceless feedback/tips/advice on your business, industry expertise, etc.</p> <h2>"So, how do I serve my best clients?"</h2> <p>Think of it this way: if you only had that top 20%, how would you run your business?</p> <ol> <li> <span class="highlight">You'd refine your offerings to suit that sexy 20%.</span></li> <li> You'd innovate like crazy to their needs.</li> <li> <span class="highlight">You'd start helping them reach their mutha $@!$%! goals.</span></li> <li> You'd go the extra 8519417402174 miles for them.</li> </ol> <p>As for the rest of the 80%? <span class="highlight"><strong>Treat them super-good too, but remember: your priority is with the top 20%.</strong></span> You serve them.</p> <h2>The Secret Sauce to It All</h2> <p>Now, you could stick with your current 20/80% customers; but if you really want to kick ass, we'd go further. Ask you super-crazy-badass these two ridiculously awesome questions:</p> <ul> <li><span class="highlight">"How can I attract more customers similar to my top 20%?"</span></li> <li><span class="highlight">Or better yet: "How can I reduce more customers like my bottom 80%?"</span></li> </ul> <p>For instance, consider Chappy in the example above. <span class="highlight">You want to eliminate customer behaviors like Chappy's.</span> So what do you do? You start:</p> <ol> <li>hiking up those fees for "personal" marketing consultants (or removing them completely)</li> <li> write training manuals so you don't have to repeat yourself a million times</li> <li> charge for technical/marketing support so customers like Chappy don't abuse your company's resources</li> </ol> <p><span class="highlight">Will Chappy viciously drain your resources in the future? Not likely if you have the right policies in place.</span> That lets your badass focus on your company's juicy top 20%, and equally important: attract more customers like them. The template to get you started:</p> <h2>Top 20% = Juicy good.</h2> <p>&nbsp;</p> 2007-01-07T22:30:42-08:00 true 443 why-most-of-your-customers-suck 0 2009-11-06T21:45:44-08:00