operational
your customers are they profitable?
It is normally seeing their email address appear that brings the feeling of dread as I open Outlook. One of those customers that many of us have to endure, remain professional with, keep on side and bend to. The customer that never seems to be really happy, never seems to be on the same page and never sees the value that you provide for them. Why do we bother?
headaches! Now of course this is a rough approximation but the observation is the same, which customers are causing stress and which are making you profit. When you first start out, you and your team will put up with almost anything in order to get sales, get money into the bank account and get the business moving, this can be exhilarating, exciting and stressful. As your business matures and you have a customer base you can start to see, feel and observe who the awkward customers are, but let’s try and quantify this a bit more.
YOU CAN’T MANAGE WHAT YOU DON’T MEASURE. - Peter drucker
The Pareto Principle states that 80% of consequences come from 20% of the causes, so in business you often find that 80% of your profit comes from 20% of your customers or 80% of your time is often spent dealing with 20% of your customers. If you extract this further it is quite often 20% of your customers who cause 80% of the
This age-old adage that if you don’t measure certain variables you cannot reliably work out where the profit is, is really important. In our company we measure how much time each member of the team spends on each customer and what they are doing for them. We also apportion how much each customer uses the systems, resources and goods we pay for and then we work out the profitability of that customer.
