More is not better! shift your mindset away from the quantity game
Updated: May 26, 2020
Are you working your ass off, trying to keep all your customers happy? Yet your business seems to struggle, your revenue may be rising but you know deep down that your profits are dropping. Face it! It's time to let go of your blood sucking customers.
Yes, customers are important. However, not all customers not equally important. There are more valuable customers and less valuable customers. The amount of time that you have is fixed. The more time that you spend on your less valuable customers means that you have less time for your more valuable customers. It is important for you allocate your limited resources efficiently. This means that you should devote your time, attention, money, and product mainly to these valuable customers.
The more time that you spend on your less valuable customers means that you have less time for your more valuable customers
We tend to try to hold on to every customer, we believe that every customers is an opportunity. However, most often this is not case so the first step is to stop trying to be everything to everyone. What makes a customers valuable and what makes a customers less valuable or in other words a pain in the ass. There are many different definitions of a valuable customer. Your definition of valuable customer may differ from others. Below are a few questions that I ask myself when evaluating a customer for your reference.
1. Do they pay on time?
2. Is there a balance between the profit made and the resources being put in?
3. Do they refer others to you, or do they keep you all to themselves
4. Would they tell you if you made a stupid mistake to let you fix it or let it go?
5. Do they tell you what they need and want, or do they expect you to read their minds?
6. Do they respect your expertise or do they consistent undermine or question you?
7. Are they coming back for more or or they a one-hit wonders
8. Are they looking for a specific product or service that only you are able to provide, or you are the best person to provide it?
What I typically do is the following
Step 1: List my clients in descending order of revenue
Step 2: Put a delete line through the clients that makes me cringe when I hear their names
Step 3: List out a few metrics including, do they pay fast? Are they a repeat revenue? Could they generate significant amount of revenue for me in the future? Are they fun to work with? When I make a mistake are they forgiving?
Step 4: Using the above metric, grade them from perfect, good, average, poor, to complete pain.
Step 5: For the ones that you graded them as perfect or good. Go one step further into distinguishing them with metrics such as would working with them provide you opportunities to other key partners? Will they refer you to others? Do you have a work history with them that makes you feel confident you understand how they will behave in most situations.
Step 6: Place a Yes or No to the metrics from Step 5 as a tiebreaker for your perfect and good customers
Look for patterns from your top rated customers. What do they have in common?
From here, look for patterns and similarities from your top rated customers. What do they have in common? Are they from the same industry? Do they hold certain company culture that is similar to yours? Do they purchase a certain type of product from you? Do they have the same business model? Do they have common customer?
Find out what these customers are like and spend your time on these customers. To build a system that is designed to serve these customers, a system that is cater to them exclusively so you could attract more of them.
Create a system that serves your top customers so you can grow this group of people
What about the others? Well, let them go. Yes thats right, get ride of them, you can and you must. Maybe not today or tomorrow, but soon. Every time you clean your house, you make room for new and better clients. Sometimes you have to take one step back to get two steps forward. Business is not a popularity contest and certainly not a quantity game. Get your mindset away from having the most clients.
Build a business that caters to the best clients, the clients who are the best fit for you.
But you may say that by letting these less valuable clients go, they are going end up at your competitors. Yes, that's right, and thank god that they are leaving you. Let your competitors have it. Let your competitors worry about the payment issues, let them worry about the ever-demanding customers, let them take on Mr. Pain in the ass. Let these less valuable customers go so that you can deepen your relationship with your top clients, let these less valuable customers go so you can enjoy your weekend with your family and not killing yourself at the office.