Last night I was working with a team from an insurance company. During our discussions I asked “how many customers do you have”. They said “I think we have about 3700 policies, so that probably about 1700-1900 customers.” I asked “do you know this for sure?”, they said “no.”
Next I asked “do you know the top 20% of your customers?”, again the answer was no.
We tend to spend most of our time and money trying to find new customers. This can be an expensive and time devouring endeavour. It can take up to 12 contacts to get a prospects attention.
I suggest you take a look at the customers you already have first. They can be a great source of additional sales.
The first step is to categorize them. I suggest a simple segmentation of A/B/C.
“A” customers are your best customers. They usually account for about 20% of your customers, but they generate about 70-80% of your revenue
“B” customers represent about 60% of your customers and they account for about 15-20% of revenue.
“C” customers represent about 20% of your customers and probably less than 5% of your revenue. They are also more than likely your least profitable. They also tend to complain the most and eat up a lot of time
The next step is to ensure that everyone in the company knows who your “A” customers are. Losing one of these customers could be worth 10 of your B & C customers and could even mean layoffs.
Some of your B accounts have potential. Hidden amongst them are A’s in waiting. You need to nurture them and grow them into A’s. But be careful, because there are also some B’s that are just C’s in disguise.
“C” accounts can be troublesome. Some of them may even be costing you money. Do a careful analysis of each C account because you might have to fire a few.
I suggest you do an analysis of your accounts quarterly. Establish a criteria for what is an “A” account, what is a “B” and “C”. Ensure your people know this as well.
Finding new customers is always a big part of growing a business, but we have to remember to keep and grow the ones we’ve already worked so hard to get.
