A couple of clients spring to mind immediately – one in telecoms, the other in architecture – which I can use to illustrate my practical three step approach to this challenge.
First of all, get a list of all your customers with their annual contribution to your sales – or better still – profits. Arrange it in order of contribution and then print it out as a chart. You’ll invariably find a Pareto-type effect with the top 15-20% of customers being by far the most valuable, followed by a tail of minnows.
When I did this with the telecoms client, it suddenly hit the MD that they needed to have a minimum profit target per client. They then reviewed pricing levels for these smaller customers and actively looked at what other services they could offer that would increase the level of business. In some cases they were prepared to lose the customers because they knew that it just didn’t make economic sense to service them.
Looking at the top customers, the next question was what was the profile? For instance, what sector, how many users, what situation were they in that led to the original deal? It turned out there were clusters in financial services and the medical sector. The MD had been aware of this, but it wasn’t until it was jumping out of the paper at him that he realised just how significant it was.
Similarly with the architecture practice – they’d got a long tail of small residential clients, but developers were the key. In this case, recognising the challenging market, we looked at how to handle the smaller clients more cost effectively, as there was significant uncertainty with the bigger deals.
Having established the profile of the ideal customers, the next step was to look at what was already working – how had they won these customers in the first place?
For the telecoms company, there were half a dozen lead source providers – almost all in the IT sector. Again the MD was aware, but had not clocked that two companies in particular were most significant. It led to the question – how could he strengthen these relationships to do even more business?
For the architecture practice, a similar exercise showed up estate agents and planners as key sources of referrals. In their case, actions focused on maintaining relationships with proven referrers and expanding the network of contacts through drop in visits to neighbouring towns.
Having identified two or three key areas of activity in each case, the final step was to set targets for the number of visits and meetings per week to provide a framework to make it happen.
The outcomes; the telecoms company has grown the target segment of business by over 50% in the last two years. The architecture practice has been nearer the survival point during this time, however, it is now restructuring to reduce costs and grow profits, as they recognise that just surviving definitely isn’t enough.
In short, accelerating the growth of your business boils down to focus:
- Know what you want – and don’t want
- Look at what’s working – and what not
- Build on what’s working to get more of what you want
It’s not rocket science, but in my experience it’s surprisingly rare that people actually set things like this out on paper. Investing the small amount of time it takes to do this now will reap big rewards, as you’ll use your resources far more effectively in the next quarter.