Remember my list of ways to make more money? The one that the most folks told me they wanted to hear more about was focusing on higher value clients (and firing your lower value clients). I can see why this idea is attractive — it’s conservative and low risk — but also has the potential for a big payoff. So let’s dig in.
Who are your high-value clients?
We need to figure this out first. To do so, follow these steps:
Step One: Pull Sales Data by Client. Go into QuickBooks (or whatever software you use) and export a report of sales by client (choose “columns by month”) for the last three years into Excel. Once you’ve got that report, create a total column that sums the sales from all three years for each client and then sort by that total column in descending value (biggest numbers on top).
Now you have a list of all your clients from the last three years sorted with the most valuable clients on the top (those who paid you the most) and your least valuable clients on the bottom (those who paid you the least).
Step Two: Step back and look at that list. What do you notice? What surprises you? Are there clients who aren’t right at the top of the list that are taking up a TON of your time? Are you surprised at how much some of the clients have paid you (both good and bad)? If you are spending the most time with your highest paying clients, you are doing things right. If not, then we need to think about adjusting the price for the more time-consuming clients!
Step Three: Look just at the top 10% of clients. The 10% of your clients represent the majority of your income (and likely profits). So if you have 50 clients on your list, look at the five that paid you the most money in the last three years.
- What do those clients have in common?
- What makes them great clients who want to pay you a lot of money?
- What problems do they have (that those on the bottom don’t have)?
Step Four: Look at the bottom 30% to 50%. These folks likely make up a small fraction of your total sales (20% or less) and an even smaller percentage of your profits.
- What do those clients have in common?
- What makes them small clients who don’t want to pay you a lot of money?
- What attracted them to your services?
(We’ll talk about how to move them off your client roster in a future email.)
Apply the Knowledge to New Prospects
Now comes the key question: how could you reposition your service offering so that it will be more attractive to those TOP customers and less attractive to the bottom customers?
Said another way, how could you change your marketing, even change the service you offer, to attract more of those high paying clients even if it makes you less attractive to the rest of your clients.
This may require a big whiteboard and a couple of hours of your team’s time to work out the details — but you can see how it can pay off! Here’s my process to do just that:
- Take that list of your top 10% of clients and start brainstorming. What makes them different from the rest? What do they have in common? Do they buy differently? Do they have different needs, desires, or outcomes? Build this out to create a clear customer profile with criteria markers. Tip: Get ultra-specific about this – the more specific, the better.
- Once you see what they have in common, how could you change your marketing messages so that it’s more attractive to those top clients? How could you tweak your service offering so that it’s more attractive to those top clients (and charge them even more)?
- Refocus your marketing and sales efforts on ONLY pursuing deals like that top 10%. How do you make sure all new prospects are like those top clients?
What if you and your team decided that you would only take new clients for the rest of the year if they were similar to those top 10% clients. They’d have to have the potential to bill more than the average of those clients. They’d have problems similar to those clients… What would that do to your business?
Sometimes it takes an outsider to help you see clearly what needs to be different. Book a consultation, and we can work together on this!