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How Do You Know If You’re Over-Servicing Or Under-Servicing Your Customers?

How Do You Know If You’re Over-Servicing Or Under-Servicing Your Customers?

Let’s wrap up our month on Bottom Line Growth with one more area where I see lots of overlooked opportunity – fine-tuning the sales-service mix so that you’re not wasting money in one area or another. Let’s dig a bit deeper.

Often high-volume customers are already buying as much as they can, and yet we keep pumping sales efforts into them. The best investment to make to keep these highly valued customers even more engaged and loyal are often improvements in the level of service offered to them.

Other clients may be underserved with regards to sales. They may be small-volume customers who could be using more products and services as they grown, however they’re below the radar. Many of these are highly profitable because they buy at full margin. The best investment to make to keep these high-margin customers is often to provide consultative sales support to help them buy more.

Likewise, large and blue-chip customers may often be over-serviced at the expense of profitability. Bending over backwards may seem like a good strategy, but may not be sustainable, so it is absolutely critical to factor in profitability, not just size of revenue.

And, small customers with potential may be under-serviced, with only minimal efforts provided to retain and grow them. Once again, factoring in profitability is critical in determining future strategies that provide the right level of sales and service, with a supportable, sustainable cost structure that makes sense.

The simplest way to implement this concept is to group your customers according to Large, Medium, or Small revenues first, and then within each category assign each customer a High, Mid, or Low level of profitability. You can find a very quick, easy and surprisingly accurate non-accounting approach for establishing profitability in my new book, Profit in Plain Sight. Once you have your customer categorized, then your strategies become stunningly clear.

Your goal is to establish which customers should have sales/service strategies that will “maintain” the relationship more effectively at lower cost, which should have sales/service strategies to move them up, and which should have sales/service strategies that reduce expenses to help improve the profitability of customers in the category. Although this is a longer term strategy, it complements the “Find 1% Everywhere” approach that was highlighted in a previous blog post by increasing revenues, and decreasing costs.

It’s all a part of selling more products and services, at higher prices, and lower costs, with pull vs push.

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