Tuesday, January 25, 2011

80/20 Client Service: The Secret to More Profits and Fewer Headaches

There's a limited number of hours in every day -- 24, to be exact.

That means there isn't time to do everything. There are some things you can't do ... and shouldn't do.

Especially when it comes to the people your business serves -- your clients.

The less time you waste serving the wrong clients -- people who complain about price, are slow to pay, don't appreciate what you do, etc. -- the more time you can invest serving the right clients -- those people who cheerfully pay your fees, appreciate what you do, and refer others like them.

So, stop talking to the wrong clients and start talking to more right clients.

Now. How can you tell who is who? By doing "80/20 Thinking."

As described in the life-changing book by Richard Koch, The 80/20 Principle: The Secret to Achieving More with Less:
To engage in 80/20 Thinking, we must constantly ask ourselves: what is the 20 percent that is leading to 80 percent? What are the vital few inputs or causes, as opposed to the trivial many? Where is the haunting melody being drowned out by the background noise?
Here's what happens when you engage in 80/20 Thinking: You find that a large percentage of your revenue comes from a small percentage of your clients. Implication? These are the right people to be spending more time with!

  • 85% of your revenue comes from clients within 20 miles of your business.
  • 62% of your revenue comes from 3 client segments: appliance repair shops, bookkeepers, and professional speakers.
  • 78% of your revenue comes from clients who belong to the Chamber of Commerce.

Important: The actual amount will almost never be exactly 80%, but it will be disproportinately large. Look for any big output coming from a small input.

When I applied 80/20 Thinking to my resume writing service back in 1999, I found that about 70% of revenue came from four kinds of clients: sales, marketing, IT, and management professionals.

And I liked doing business with these clients -- they were smart, didn't complain about price, and they got good results from my service, which led them to refer others.

So guess what? I added a tagline to my business to attract more clients like them. It read as follows: "Specializing in resumes for sales, marketing, IT, and management professionals."

A little thing, right? But it had a big impact. I started getting calls from more of my idea clients -- sales, marketing, IT, and management professionals.

You can, too. But not until you first identify which clients you want to spend more time with.

Now, don't forget -- there's a flip side to clients you love. This would be clients you ... don't love.

Example: If you find 72% of your revenue comes from orthodontists and bookkeepers, but you HATE working with orthodontists and bookkeepers, then STOP working with them and START looking for clients elsewhere.

When I identified the 20% of clients who gave me 80% of my problems, I created an “undesirable” status in my Goldmine database for these unpleasant clients and prospects who were unpleasant to deal with. Those people (from certain industries that shall remain nameless) never heard from me again.

Does this sound cold? Consider: No matter how well you serve clients, about 1-5% will never be happy, no matter what you do.

Then consider: Time isn’t money. Time is everything. Time is all we have each day. So don’t waste yours on people you don't enjoy serving.

80/20 Thinking helped eliminate nearly all my client service headaches in a few weeks, while attracting more ideal clients. My business grew and I had more fun.

80/20 Thinking can work wonders for your client service and your business, too.

(More ideas like these in the Free Report, Guaranteed Marketing for Service Business Owners.)

No comments:

Post a Comment