One way to determine if you are focusing on profitable customers is to use a simple matrix where by you categorise each of your customers based on value and effort.  I have attempted to demonstrate how this might look for a business but it can be adapted to suit your own particular business.

In the following chart we have two axis.  The vertical axis showing the amount of EFFORT from low to high.  The horizontal axis showing VALUE low to high.  By plotting your customers in one of the resulting quadrants you can determine which customers are the right kind of target for your business.

In the above example you would want to focus on the bottom right quadrant and seek to attract the type of client that sits here.

You can take this a step further by working out where the customers have orginated from and thereby establish where to focus your marketing effort.  In the following example we can see that 70% of the low value high effort sales (the worst!) came from networking and email marketing whereas only 15% of the high value low effort sales (the best!) were through these routes.  We could conclude that our time and effort is better spent advertising (45% of high value low effort business) and not waste time networking and email marketing (or at least consider the quality and approach of these activities).

You can use this system for many aspects of business including by products and services you sell.  The final chart is by product widget where, in this example, Widget A only accounts for 3% of high value sales and Widget C is a low effort sale.

Finally, if you cannot easily produce the kind of information shown here then maybe you need to review your CRM systems and processes and contact us to help you attract and acquire the right kind of customers!

Go on... I Dare you... Click on the Contact Us button at the top of this page :)