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