Who are your profitable customers?
You can likely think of your “dream customer”. He or she always raves about your products and services, passes on referrals and introductions to other prospects, makes helpful suggestions for new product enhancements, and even asserts that you should raise your prices!
On the flip side you can just as quickly visualize your “deadbeat customer”. This client is never satisfied, costs you time, money and psychic energy – and then refuses to pay you! These customers actually cost you money.
The key to a successful business is attracting look-alikes of your dream customers while jettisoning the deadbeats. Your accounting data can help you track the numbers so you can make your client mix decision based on facts rather than reaction.
Within your accounting system, start tracking data that will help you measure and develop profitable customers. For each customer include additional characteristics (apart from sales and expenses) that identify how you attained this client and how much this client “promotes” your business:
- Source: What marketing program or referral source led this client to you
- Referrals given: How many clients has this client referred to your business
- Customer Satisfaction rating: if applicable
- Participation in customer forums
- Leadership roles in the industry
- Your rating from 5 (dream) to 1 (deadbeat)
And don’t forget to log and report all that time handling complaints (and upset employees) for each customer. You will quickly get at the real costs, and profits, for each client relationship.
Who is your dream client? Your deadbeat client? How did you indentify and act on that insight?