Profitable Selling: Choose your Customers.

Profitable Customer GroupsNot all business is good business

Treat your customers all the same, and you’ll be squandering your time, effort, profits, and missing out on your biggest opportunities for future growth.

Instead, split your customers into groups. That way you’ll see where best to invest your time and money and where you should toughen up, strip down your service, or even walk away. There are just three things to consider, and it might sound strange, but size isn’t one of them.

Strategic Fit: Some customers see you as one of many alternatives and just want to get the lowest cost. Others care that you’re different and will pay more for the extra value you can provide – the more they value your difference, the better their “strategic fit” with your business.

Profitability: When you strip out the discounts and the “cost-to-serve”, some customers are much more profitable to trade with than others. Do the math; it’s critical you know who these are.

Opportunity: Put each of your customers into one of the four boxes, you’ll need to prioritise which As to invest in, which Cs to develop etc. Don’t prioritise on size of business - fewer, bigger customers is rarely a good thing; prioritise on the growth you think they can bring you.

Now build your action plan: Spend time with your group A customers, find new ways to add value for them, and proactively go after more customers like them. Find ways to strip out costs for the Bs - they don’t value the extras anyway. If Cs really value what you do, they’ll pay for it; you aren’t a charity, so toughen up. And as for Ds, the quicker you replace them the better. Imagine what you’d do if you lost them, now go ahead and start doing just that.

BOTTOM LINE: Some customers are far better for your business than others. How much effort have you spent in the last month trying to hold on to bad business? And how much did you prioritise and invest in those customers that hold the keys to dramatic, profitable growth?