Persuading customers you can’t afford to lose - part 1
Who are the customers you can’t afford to lose? Often they are those customers who produce most of your sales or most of your profit. I start with sales because this is the easiest place to look. Simply run a report of your sales for the last 3 years by customer. Ideally, sort the customers from biggest to smallest. In the 1980’s people talked about the 80/20 rule, 80% of your business came from 20% of your customers. Today we often see the 95/5 rule, for many companies 95% of their business comes from just 5% of their customers.
When we had the 80/20 rule it was important to manage the 20% of customers well. With the advent of the 95/5 rule, it is not important to manage the 5% of customers well, it is now critical. To solve the problem of being so dependent on 5% of your customer, your first step is to know who the 5% are. Surprisingly, in our consulting we find many senior managers do not know. Yet senior managers are expected to manage business risks for the organization. How many organizations could survive if 95% of their sales disappeared?
So, the first step to persuading the customers you can’t afford to lose is to know who they are. Not just to react to the noisiest customer who demands your attention. So, who are your customers you can’t afford to lose?