| By knowing the answer to that question, you | | | | |
| will discover how to multiply your profits. | | | | Have you noticed any interesting trends? Is |
| Let me ask you another question, if you knew | | | | the percentage of profit consistent? Are the |
| who they were would spend most time with | | | | largest customers still your most profitable |
| them? Now be honest, have you ever thought to | | | | ones? If like many businesses at this stage, |
| really look at who your most profitable | | | | you have not got any clear cut answers, you |
| customers are, what similar characteristics | | | | will need to perform this exercise for your |
| they have, what made them be your best | | | | whole base. |
| customers. | | | | |
| | | | OK, let's assume for now that you have |
| Because when you know that-it then becomes a | | | | finally identified your most profitable |
| lot easier to keep them profitable and happy | | | | customers. You will now need to look at what |
| and to ensure that you have new customers | | | | they have in common. Some suggested |
| joining this elite group all the time Do the | | | | commonalities might be as follows: |
| following and guarantee that your profits | | | | |
| will increase exponentially. | | | | They are all in the same industry |
| | | | |
| Depending on the size of your customer base, | | | | They have the same size |
| you can decide on how many you wish to | | | | |
| select. For this example, we will look at the | | | | You have a specific sales or service |
| top 5. | | | | representative looking after them |
| | | | |
| Without a proper CRM system, this is going to | | | | They are all in the same area |
| be quite difficult to calculate. If you had | | | | |
| an automated system, this would be one of the | | | | They buy a specific set of products |
| Key Performance Indicators (KPI) that you | | | | |
| would always be looking at. Let's start by | | | | Whatever the answer you come up with, you now |
| looking at your biggest spenders. | | | | will have the secret to multiplying your |
| | | | profits. Do the following and guarantee that |
| You will need to calculate exactly how much | | | | your profits will increase exponentially. |
| profit you get from each of them. You will | | | | |
| need to apply some simple accounting rules in | | | | Spend the most time with them, love them to |
| relation to fixed and variable costs. To | | | | death |
| calculate your fixed costs, look at all the | | | | |
| items that you spend money on every year. | | | | Cross sell to other customers, those products |
| Things like; rent, light, telephone, salary | | | | which your most profitable customers buy. |
| costs, etc. When you have the total, then | | | | |
| divide that by the amount of customers you | | | | Focus your lead generation efforts on |
| have, and that is the amount you will assign | | | | prospects with similar characteristics |
| as the fixed cost to each customer. | | | | |
| | | | Ask each one of them for two referrals, after |
| Now look at the variable costs. This will be | | | | all, since they are giving you so much |
| made up of cost of goods sold to each. Items | | | | profit, they must be happy! |
| such as; material costs, variable | | | | |
| manufacturing costs, sales commissions, lead | | | | There are many other things you can do to |
| generation costs, service costs, etc. Now | | | | boost your profits with this sort of |
| apply this to each of your largest customers. | | | | information, so my key tip to you, is ensure |
| | | | that you get some automated system in place |
| So how much does profit does each generate? | | | | which can answer these questions. What is |
| Do the same with your 5 smallest customers | | | | more, you will guarantee that you repeat |
| and the 5 customers in the middle of the | | | | success and avoid costly mistakes. |
| revenue ranking. | | | | |