Employees

Columbus Woodruff, CEO of Hot Cards, spoke today at the West Shore Entrepreneurs Club luncheon. One of the key points he made was that employees are more important than customers and should be treated as such.

He suggested that if the richest person in town comes to your establishment to make a million dollar purchase but there are no employees in evidence, or that the employees are rude, no purchase will be made. Employees who are made to feel important, are well trained and compensated, will in turn attract customers and make them feel important. Sage advice.

Will Limkemann
www.siqualtd.com

Customer focus

Are you and your business really focused on customers? A customer-focused business:

• Always meets or exceeds customer expectations
• Is aware of current and future customer needs
• Quickly and appropriately responds to customer needs and wants
• Provides outstanding customer support
• Maintains a positive public image
• Anticipates market trends – is a market leader
• Is quick in developing sales channels
• Understands competition

Will Limkemann

www.siqualtd.com

When is it time to fire a customer or client?

An accountant told me about a seminar he attended for accounting firm owners owners. The leader suggested that firms periodically “fire” the bottom 20% of their client base. These are clients that produce little revenue, are not profitable, or are just not pleasant to deal with.

He got me to thinking that this excellent advice may well apply to almost any business. The conventional wisdom is that 80% of sales derive from 20% of a firm’s customers. Why not, then, evaluate the lowest performing customers? So often these customers are not only producing marginal sales and profit, but too often they require an inordinate amount of support and “hand holding” further eroding any profits they might produce. Should you be spending time with these customers, or fostering even better relationships with better and more profitable customers?

When you encounter an unprofitable or unpleasant customer, and you will, raise your prices so high that you will be unreasonable to work with, or simply tell the customer that it no longer fits the profile for the direction of your business.

Some business owners are afraid to let customers go for fear that sales will decrease. But, take a careful look at each poor performing customer. If customers are not profitable, “fire” them and let them be someone else’s problem.

Surprisingly, sometimes a fired customer will return begging to do business with you and will turn his/her attitude around and they will end up as good customers.

Who are your best customers?

There is a maxim that 80% of sales come from 20% of customers. Most companies go out of their way to coddle the top few customers. But do you judge your best customers by sales or profitability?

Clients I work with are often amazed at the results when I ask them to do profitability studies on their top tier customers. Often price breaks and other concessions are made to encourage more sales and to keep competitors at bay. The shock then comes when reality sets in and a client discovers that little or no profit is generated by these customers.

Keep track not only of sales by customer, but also profitability by customer. You should look at direct cost of servicing a customer as well as the indirect costs of supporting, responding to, and calling on the customers. If a customer is not profitable, re-negotiate with it, or fire it. Before taking on a new job or a new customer, do an analysis to make sure it will generate the income you need.