If I told you that I would give you $50.00 to walk into businesses with red doors and only $5.00 to walk into businesses with blue doors what would you do? Silly question isn’t it? I am sure you would run from red door to red door as fast as you could.
So now I want you to think about your customers. How many of your customers give you more than $50.00 when you walk in and how many only give you $5.00? Now here is another question, why do you walk into the $5.00 customers?
Take a long hard look at your customers. Get the sales figures for each if you don’t already have them, and see who your red doors are and who your blue doors are.
There is nothing about this exercise that can be considered fun. YET! The next step after identifying your blue doors is to list them all out in order of revenue from most to least. Next make another list in order of profits from most to least. If a customer is in the bottom 50% of both lists you need to fire them! These customers are stealing from you every time you walk through their blue doors.
The time you spend with these blue door customers is the same time you could be spending with red door customers or prospecting for more red door customers. It makes no sense to keep wasting your value on these customers.
OH wait, I forgot one very important piece of this action. When you fire a customer you need to replace the revenue and profits either from increasing sales to an existing customer or opening a new account with the time you saved. Firing a customer without the commitment to use the added time to build your business someplace else is CRAZY! You are just shrinking your business. The plan is to help you succeed which means grow your business.
So let’s look at where we are now. We have identified the blue door customers by revenue and profits. We have made a list of any customers that fall into the bottom 50% of both lists and we are going to fire them. With the time we gained by not calling on these customers we are going to either open new accounts or penetrate existing accounts to replace the revenue and profits.
Sounds like a great plan, for now! You need to do this same exercise once a quarter. Every 90 days get your customer information, rank your customers to identify the blue doors, make the 2 lists one by revenue and one by profits and fire any customer below the 50% mark of both lists. DON’T compare the list you made 90 days ago with the new list. If you do what you should see is that the blue doors are now a little bigger account then they were. This is because as we keep dropping the bottom blue door customers the average revenue and profits of the remaining customers goes up. OK, remember I said there was nothing fun YET? Well this is the fun part. You are growing your business and adding more red doors along the way. Added to that is the fact that the red doors you are adding along with the red doors you are selling more to is making you more successful.
Now let’s talk about reality. The economy is slow right now and no one is going to walk away from business no matter how small it is. I have to admit, I understand that. (I have been known to pinch a penny so hard that Lincoln yells uncle) So what do we do with the darn blue doors now? Easy, don’t go there, just call them on the phone. Use your time behind the wheel of your car to make sales calls on these customers. This will add another level of revenue to your business and now you are making GREAT business decisions.
Think of it, you are showing up only at better accounts (some are blue doors but they weren’t in the bottom 50% of both lists so they made the cut) you are selling more to the customers you do call on, and the time that was wasted driving from place to place is now generating revenue.
YOU ARE NOW A MONEY MAKING MACHINE!
But it all starts with firing your customers. Can you do it? Do you have the self discipline to say you are not going back to those customers and stick to it? It sounds hard doesn’t it? Well the truth is it is even harder to do. However if you stick to this plan for one year and really do the assessments 4 times, you will see exponential growth in your business.
Lorin
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