Man over computer

Continuing on with the dismantling of the 80/20 rule for sales, we now look at the clients.  Another widely accepted aspect of the rule is that in B2B sales, 80% of your customer support resources, time, and attention get sucked up and consumed by those customers that generate only 20% of your revenue.
 
On the upside, the small group of customers who do generate 80% of your revenue are generally so much less dependent and demanding that one can usually still service them and satisfy their minimal requirements when we should be doing so much more.
 
Many of the “demanding 80″ are the clients you knew would be a problem even before you closed them, in fact you know you shouldn’t have even closed them, but you did and now you find that you are spending disproportionate time, energy, and emotion on them.  All that bandwidth would be better spent growing the 20% who generate 80% of your revenue, and finding others like them.
 
So how do you move to the 70/30 space?
 
Well this time of year is a great time to review, measure and fire those clients that don’t stack up.  What’s the worst that can happen; they go to your competitor and waste their time, resources and opportunities.  With your new found bandwidth you can concentrate on replacing the deadwood with fresh clients that look and act like the 20% you love.
 
With the many outputs available in today’s CRM’s, it is a simple process to create straight forward and meaningful benchmarks.  Margins are good, cost of sale, payback period, and ongoing profitability.  You can also include factors such as support and payment records, and more.  Once you decide on which metrics make sense for you and your company, the rest is easy.  Fire the bottom 10%, bottom 20%, or if you are feeling queasy, start with 5% now, and do another round in June, just start.

You should also review and take a good look at the 20% that are your bedrock.  Study them, know them so you can take your new found bandwidth and reinvest it into finding more like them.  Find out what they like about you, your company, and why they selected you in the first place.  Then you can develop an action plan to find more companies like them, willing to pay, even a premium, for those same attributes, and have fun doing it.

Once you grow these accounts to be 30% of your account base, the exponential growth in revenue will more than make up the revenue you fire.  The opportunity for solid referrals and other dividends are just a bonus. 

It is easy to be busy putting out fires dealing with the 80% of customers that hold you back, but once you fire that bottom bunch,  you can get busy having fun filling, executing and monetizing your pipeline.

What’s in Your Pipeline?
Tibor Shanto