Finding the Right Customers
By: Hubert Crowell
Those who analyze the reasons for their success know the 80/20 rule applies. Eighty percent of
their growth, profitability and satisfaction come from 20 percent of the clients.
Three golden rules
1. Marketing, and the whole firm, should focus on providing a stunning product and service in 20
percent of the existing product line. That 20 percent being the small part that is generating 80
percent of the profits.
2. Marketing, and the whole firm, should devote extraordinary endeavor toward delighting,
keeping forever, and expanding the sales to the 20 percent of customers who provide 80 percent
of the firm's sales and profits.
3. The product you are marketing must be different and either unobtainable elsewhere or
provided by you in a product/service/price package that is much better value than is obtainable
elsewhere. These conditions are unlikely to apply in more than 20 percent of your current
product line, and you are likely to obtain more than 80 percent of your true profits from this 20
percent. And if these conditions apply in almost none of your product lines, your only hope is to
innovate. At this stage, the creative marketeer must become product led. All innovation is
necessarily product led. You cannot innovate without a new product or service.
Be customer centered for the few right customers
Important as focus on the few best products is, it is much less important than focusing on the few
best customers.
Direct your attention where the real threats of competition exist. Know who the top revenue-producing customers are and make sure you meet their needs.
Keep in closest contact with the 20 percent of your clients who give you 80 percent of you
business. Each week, go through contract management files and jot a note, send a card, or make
a call to anyone you haven't had contact with of too long.
Lock in your core customers
1. Know your core customers and the profile of the heavy and frequent consumer.
2. Provide exceptional or even outrageous service to them. Anticipate their needs when you can
and rush in like a SWAT team when they ask you for anything else. This may have short-term
cost but will have a long-term reward.
3. Target new products and services at the core 20 percent of customers, developing them solely
for and with this group. Develop improvements to existing products, or develop totally new
products, that are wanted by, and if possible, developed in liaison with, your core customers.
4. Aim to keep your core customers forever. Your core customers are money in the bank. The
real measure of a healthy business lies in the strength, depth, and length of its relationship with
its core customers.
Attention to the core 20 percent of customers must be a company-wide obsession
Your organization cannot be centered on 100 percent of its customers: it can be centered on 20
percent. Your core customers will see and judge you by the efforts of everyone in the firm, seen
and unseen. This makes marketing the job of everyone in any organization.
Salesperson Performance
1. One often neglected important item is to hang onto the high performers.
2. Hire more of the same type of salesperson. Maybe not with the same qualifications.
Personality and attitude can be much more important. Ask your sales superstars to help you hire
more people like them.
3. Try to identify when the top salespeople sell the most and what they did differently then. The
80/20 Principle applies to time as well as to people. 80 percent of sales by each of your
salespeople were probably generated in 20 percent of their work time.
4. Get everyone to adopt the methods that have the highest ratio of output to input. Do more of
what makes the best use of time and money. You could analyze this, but it may e quicker and
cheaper simply to observe how the top salespeople spend their time.
5. Switch a successful team from one area with an unsuccessful team from another area. You
will soon find out whether the good team can beat the structural difficulties or vice versa. Or you
may want to split the teams so that some are left in each area.
6. Only train those who you are reasonably sure plan to stick around with you for several years.
Get those who are the best salespeople to train them, rewarding the sales superstars according to
the subsequent performance of their trainees. Invest the most training in those who perform best
after the first series of training. Take the best 20 percent and invest 80 percent of the training
effort in them. Stop training the bottom 50 percent, unless it is clear that you are obtaining good
payback on this effort.
The Vital Few Customers
Some customers are vital. Most are not. Some sales efforts are wonderfully productive. Most are inefficient. Some will lose you money.
Channel marketing and sales effort where you can offer a minority of potential customers
something that is unique, better, or much better value than they can obtain elsewhere, provided
that you can make higher profits in the process. Any successful enterprise draws its success from
this simple principle.
Assignment: Read Chapter 6 of The 80/20 Principle, by Richard Koch, ISBN 0-385-49174-3
Save this URL for future reference in your favorites folder.
Your comment will be graded and returned with a link to the next topic, if you have a good grasp
of the 80/20 Principle, then you will move on quickly. A lesser understanding will result in a
slower pace covering more material.
Exam: Explain where you should place your sales effort and why.
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