We accountants have a lot of numbers up our respective sleeves. For the sake of avoiding glazed eyes, I don’t pull them out often. But here is a stat I think you’ll be interested in – the Pareto Principal:
“80% of your sales come from 20% of your clients.”
Where you see that phrase, this one is not far behind:
“80% of your aggravation also comes from 20% of your clients”.
Keep in mind the second 20% is usually different from the first. A big problem for small businesses is finding enough good clients to be able to afford getting rid of the bad ones.
Who are those bad apples? Anyone who runs a business gets it- we’ve all come across these wormy, mushy guys. They’re the ones that don’t value what you do, who don’t pay you on time, who complain about the size of your bill no matter what services you provided and, of course, they invariably require the most attention. To make matters worse, you spend so much time and energy trying to service what are often unreasonable demands from these bottom-of-the-barrel-20-per-centers that you don’t have enough time to develop, improve and nurture relationships with your top 20%.
It’s not always easy, but a key strategy to ongoing business success is to fire clients who are drains on your company and devote more time to the relationships that can grow and add profit to your business. You can’t do that comfortably without generating enough of the shiny, crunchy, pick of the harvest clients.
So how do you find the “good” clients?
Let’s start with this concept: you don’t sell goods and services. You sell solutions to problems. You need to be absolutely clear about what problems your customers are trying to solve to ensure you deliver the most value.
Let’s look at some examples.
The brilliant Old Spice – The Man Your Man Could Smell Like ad. http://www.youtube.com/user/OldSpice#p/c/440B5AD92C9B3BD3/0/owGykVbfgUE
The makers of Old Spice are clearly not selling you a product. They’re selling you an image. If your man uses this product, he could somehow morph into this shockingly handsome Prince Charming (maybe even on a horse).
Or, this Tim Horton’s ad that often brings out a tear in even the most cynical of ad watchers:
You’re not buying a beverage. In that one minute, you are buying into hope, adventure, trust and patriotism, of course.
It can be even simpler, too. The makers of Tylenol and Advil don’t sell pills, they sell pain relief. The producers of computer backup and anti-virus systems sell piece of mind.
Now it’s your turn. What do you really sell? Is it pain relief? Piece of mind? Status? Whatever it is, it needs to solve your customers’ problems to satisfy them.
Next, you can narrow your target market to a sufficiently small area to be able to effectively reach them. Narrowing can mean a certain geographic region, a specific age group, type of consumer or a particular business in a specific industry. The point is to commit your business to serve a well defined market niche and exclude all those that don’t fit into your narrow ideal market description. This allows you to develop unique, tailored expertise and innovative products and services. The narrower your boundaries, the easier it is to find customers to fit within – and the easier it is to say goodbye to the bad apples.