Wednesday, April 4, 2012 at 10:32AM In Part 2 we recommended you should ask one simple question: What business results can we help them achieve? The next challenge for you is to understand who in your customer’s organisation you need to influence.
By Gary Peacock
Monday, March 26, 2012 at 8:46AM By Gary Peacock
In part 1, we suggested identifying your customers you can’t afford to lose by looking at those with the largest sales. Once you have the list of sales by customers, just ensure these really are the customers you can’t afford to lose.
Specifically, check that big sales = big profits, watch out for number of transactions. Sometimes we have large sales but to generate these sales we have to process many purchase orders or many dispatch notes or many invoices. So, if we have two customers that generate $10 million where one customer needs 10 purchase orders and 10 invoices and the other needs 1 million purchase orders and 1 million invoices, these two accounts generate very different profits.
Without getting too complex, generally the customer with the most transactions will be the less profitable. The main point here is to check that big sales = big profits in your organization. This is very important to check, especially if your organization is growing fast. As sales grow, the complexity from large numbers of transactions can kill your profits from your customers.
Once you know who these critical customers are then ask one simple question. What business results can we help them achieve? This is the only thing that matters. Despite the protests of many in your organization it’s not about products and services. If you want to persuade the customers you can’t afford to lose, then you must help them deliver better business results.
Thursday, March 8, 2012 at 12:00PM By Gary Peacock
Who are the customers you can’t afford to lose? Often they are those customers who produce most of your sales or most of your profit. I start with sales because this is the easiest place to look. Simply run a report of your sales for the last 3 years by customer. Ideally, sort the customers from biggest to smallest. In the 1980’s people talked about the 80/20 rule, 80% of your business came from 20% of your customers. Today we often see the 95/5 rule, for many companies 95% of their business comes from just 5% of their customers.
When we had the 80/20 rule it was important to manage the 20% of customers well. With the advent of the 95/5 rule, it is not important to manage the 5% of customers well, it is now critical. To solve the problem of being so dependent on 5% of your customer, your first step is to know who the 5% are. Surprisingly, in our consulting we find many senior managers do not know. Yet senior managers are expected to manage business risks for the organization. How many organizations could survive if 95% of their sales disappeared?
So, the first step to persuading the customers you can’t afford to lose is to know who they are. Not just to react to the noisiest customer who demands your attention. So, who are your customers you can’t afford to lose?
Tuesday, February 21, 2012 at 3:46PM One of the purposes of the Gordian Blog is to help busy managers in fast-growing or mature organizations solve business problems faster. Over the coming months, the blog will look at tools and insights to get better business results faster.
By Gary Peacock
