80/20 Your Customers: Learning to Focus on the Right Clients

80-20Conventional wisdom says that for businesses to be successful, they need to concentrate on pleasing 100 percent of their customers, 100 percent of the time. But should they really?

Basic business theory stresses the need for a business to put every effort possible into making every customer happy, and to make every transaction centered around the need to make every customer feel like they are your only customer. It is a concept engraved in stone in many businesses, both large and small, but is at its heart based on a false premise.

Theory is one thing, but reality is often far different. In the real world, business is ruled by the ‘80/20 rule’. This rule states that for any business, 80 percent of their income is generated by 20 percent of their customers.

Businesses often ignore this at their own peril. Their natural instinct tells them that every customer is equal, and every customer deserves the same degree of focus and an equal share of business assets directed at them.

Your big customers are your lifeline, and should be treated as such. Every effort should be made to make that 20 percent of your customer base completely engaged and completely satisfied with every transaction with your business.

This can be an extreme cultural shift for a business, especially one which is centered on sales or whose main income stream is sales-related, whether direct-to-customer or business-to-business.

A close look at your customer base should give you the guidance you need to decide which of your customers are that magical 20 percent. Often these will be ‘silent customers’, or customers who do business with you infrequently but have a high dollar value to your business.

Zeroing in on these customers and building a good business-to-client relationship with them can pay off in big ways with increased sales, more frequent orders and a healthier bottom line. Customers who feel valued and who are given preferential treatment are customers who will feel encouraged to do business with you whenever possible – even if that means passing over other vendors to do business with you.

Another key to keeping these customers happy is zeroing in on exactly what they need. If adding a new product or changing an existing product would make a major customer happy and translate into more income from that customer, do it.

Finally – and here’s something else that is totally counter to business instinct – don’t be afraid to fire troublesome or low-performing customer. What this means is that if you have a hard-to-please customer who generates more problems than dollars, feel free to end your relationship with them. This is particularly important if concentrating on those customers is taking up time or resources that could be better invested in making your high-value customers.


Categories: Strategy