Do you know your clients?
Do you know your clients? Yes, but do you really know?
We often think we know our businesses, and its true most us have a handle on the numbers and the history. However, Sir Clive Woodward, at a recent conference talked about ‘The Data’, and the story behind the data is not often a true explanation of the facts.
Get the Facts. Truly, deep down can’t get any more data Facts.
You can look at your ROFE, yet behind that could be just a handful of great profitable customers that are masking the truth behind the vacuum of profit customer. Averages help get an overview but break them down and the character of the good bad and the ugly, start to show.
Ask your team, who is a pain to deal with, and why is that so. A client may serve you better by being referred to a nearby competitor. That client may have come from them in the first place.
I remember letting a client go once, and he was horrified. He got quite angry too. So, I explained to him that my average customer spent 20 hours a month of my time and gave me £300,000 turnover a year. I explained that my profit from my average customer was £100,000. On the other hand, he gave me 30 hours work a month and only contributed to £80,000 to my turnover.
Once I had explained the ‘Facts’ to him he calmed down and realised why I was making the decision and that had he known more, he would have looked at what I offered differently.
The result with this client was that I offered to charge him an hourly rate. He declined as he knew he could go and take advantage of a competitor, without paying the fees for his time. So, we agreed to no longer work together.
Unless I had got to the bottom of his way of dealing with us and backed it up with enough comparable facts, I may have continued to be bossed around by this client. It turns out the staff loved that I had ‘let him go’ because he was the proverbial heart sinker. A double win.
Working with clients you like is always a bonus. Ones that are profitable as well make a great business.
The sweet spot of what you offer is one number crunching exercise. Looking at clients who could be ten times more profitable than your average is another.
Which of your clients have the capacity to do so much more? Fewer clients to deal with could be a new option. The numbers will reveal them.
It could be that your top clients are not top clients. It could be that your low turnover/profit clients are capable of so much more, or, would refer you to others that can. Getting to know your clients in depth is important.
By getting ALL the numbers, the decisions are so much easier.
Yes, it felt good to remove Mr Pain. It was easier than I thought because I had got the facts. Numbers never lie if you dig deep enough.
So do you know your clients well enough?
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