Using Staff to Strengthen Bonds

Dan Kahl is an American sales trainer, and he recently suggested that we: Broaden the relationship with good customers by proactively introducing them to other employees in your business.

The best salespeople understand that the more comfortable your customer is with your company, the less risk they see in dealing with you, and the more likely they will be to prefer your company as a supplier.

That means that they should be comfortable with more people in your organization than just you (or your sales rep). By proactively introducing your good customers to others in your organization, you broaden the relationship between the two, and tie your customer to you via those additional relationships.

Make sure that your boss or personal assistant or partner has been introduced to your customers. Bring a customer service person or two to visit your good customers. Invite them into your facility to meet the people who make things happen inside your business.

Each relationship makes your customer more comfortable in dealing with your organization, and increases the likelihood that you will be their preferred supplier.

Self-Assessment Exercise

1. List all of the key people in your “A” accounts in the first column of a spreadsheet.

2. Across the tops of the columns, list each of the key people in your organization.

3. Next place an “X” in the cell where the two people have connected. For example, if customer John Smith knows your customer service person “Jenny,” then put an “X” in that cell.

4. When you have completed that, use the empty cells as a guide, and plan to remedy the situation.

5. Over the next few months, proactively introduce those customers with the key internal people until all the cells are “X’d.”

“A”Accounts – The 80/20 Rule

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. Over time, his – and many other researchers’ – observations of the wider occurrence of this phenomenon have become known as “The 80/20 Rule” (or Pareto’s Principle).

Applied to your business, the 80/20 Rule means that 80% of your Gross Profits are probably generated from 20% or less of your client base. If that holds true for you, what implications does it have for your marketing and client relationship management activities?

Simple! You have limited resources, so it makes sense to concentrate the majority of them (say 80%) on the top yielding clients (the top 20%). If you did this, and your efforts increased your dealing with these clients by just 10%, that will yield an extra 8% (10% x 80%) of profits!

That’s the equivalent of a 13th month’s profits for the year!

So, how do you work out who your 20% of top customers are? You spreadsheet them!

The 80/20 Spreadsheet

Prepare of list of all clients who have purchased from you in the past 1, 2 or 3 years, along with their total purchase (or, even better, if can calculate it, their Gross Profit) value to you.

Open a spreadsheet and import the list into the first two columns, in descending order of value. Total Column 2 to ensure that it equals your total sales (or GP) value for the period. Name the total field “Sales_total”.

Start a 3rd column and enter the following formula into it: Have the first cell in Column 3 = the corresponding cell in Column 2 (e.g., C1=B1). Have the second cell in Column 3 equal the sum of the cell above it plus the cell to its left (C2=(C1 + B2). This will give you the cumulative value of your top two clients. Repeat (drag) the formula down Column 3 until you reach the bottom cell. The last figure in this column (the cumulative total of all customers) should equal the total of Column 2.

Now work out where in the list of your customers, you reach 80% of your sales or GP value by creating Column 4 and formatting it to display as a percentage. In Column 4 enter the formula C4=(C3/Sales_total), then drag that formula down the entire length of the column.

You will be able to instantly identify the point at which Column 4 displays 80% and you will then know that everyone above that point in the table constitute you “Top 20%”.

Will these be exactly 20% of your clients? No, probably not, but they will certainly be a small proportion of your entire client base, and they will be the ones who, if you devote the time and energy to developing your relationship with them, will yield the highest returns for your efforts.

Free Spreadsheet

If you would like to run the 80/20 Analysis on your clients, but want to take the easy way out on the spreadsheet, email me for a free “ProfiTune 80/20 Analysis Spreadsheet”.

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