New Year's Resolution: Pick the Right Customers

With the New Year and a renewed economy come fresh opportunities and a perfect time for some reflection. Typically, we spend so much time measuring how well we’re serving customers that we can sometimes forget to measure how well our customers are serving us. This is a critical part of ongoing success, especially now as our climb out of the recession accelerates. Where you spend resources is particularly important as you now may have less competitors and more opportunity to chase. Picking the right places to focus makes a big difference.

Quick Customer Litmus Test

Some customers might seem like they’re worth a Herculean effort, and they might be, but it’s hard to quantify this until you take a hard look at all of your customers and prospective customers. Here’s a simplistic to start the process of building a customer strategy for spending more or less resources on certain

1) List your customers and new prospects; include how long you’ve been serving existing customers, the revenue earned and a summary of costs for each. Keep it simple, since this is meant to be a quick exercise, not a deep dive.

2) Next, list what your customers’ collectively expect from your company and what role you play in meeting their business goals. Objectively rate how well you serve these needs and assign an overall score for each customer.

3) Now, list expectations that you have from customers. Identify what you need from them in order to meet your business goals. Include intangibles such as ‘good chemistry’ and ‘aggravation factors’. Now, rate how well each of your customers delivers on meeting your needs and assign an overall score for each.

4) Review the initial results to see how compatible you are with each customer and what the total ‘cost’ is of doing business with them. Now, identify which customers are good, moderate or poor matches with you.

5) Identify and list the short and long term opportunities that exist with each customer and decide where you feel they fall into one of the following lifecycle categories: a growth potential for your future; in maintenance mode to keep revenue flowing; or ripe for being replaced.

6) Lastly, for each lifecycle category, order customers from top/down and pick the top 5 to 10, then determine if they’re moving from their current position to another, (ie. from growth to maintenance). You’re now at a point to be able to dig deeper into financials and supporting data as you generate strategies and assign support resources to nurture those customers and prospects representing growth opportunities. Move towards replacing nonperformers, while ensuring that you protect and maintain those in the middle. Having a strategy in mind for each customer lets you better assign resources to ensure that you’re optimizing the effort of each individual in your employment. Keep in mind that,in many cases, eliminating customers can take time and should be approached without burning bridges. However, sometimes, as in the sidebar example, moving a quickly is appropriate.

We all are in business to meet a set of goals intended to have beneficial outcomes that we feel are worth spending our days, careers and life’s work pursuing. Let’s refine this effort and simply refer to it as our dream. Customer relationships are costly to foster, expensive to maintain and draw resources from every part of our business and lives, but these same relationships fuel our dreams. Any time we waste focusing on bad customer matches is time a from opportunities and customers who may offer greater potential reward. Without regularly checking how our customers are serving us, we can get caught up pursuing the dreams of some less deserving customers and lose focus of what best contributes to our success. So in 2011, whose dream are you working on?

See sidebar example. MF

Technologies: Management

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