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Why the top 20% of customers yield 16X more profit to the bottom line and therefore worth your time to keep
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“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
READY?
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
PREMISE:A business cannot
afford to lose customers from it’s
top 20%
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
PREMISE:Pursuing new
customer acquisition is
1,000% more costly that keeping
existing customers
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
PREMISE:It takes 16 new
customers in the bottom 80% to
replace 1 customer in the top 20%
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
How much do you REALLY want (need?) to know?
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
Opinion without facts is opinion
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
What do you KNOW about your business?? Where is the business coming from?? How much does it cost to get?? How much did it cost to acquire a (the) customer (CCA)?? How much is a (that) customer worth to us (LTCV)?? What is the value of our salespeople?? What is the value of our customer service people?? Are we paying sales OR customer service too much OR too little?? How reliable are our sales forecasts?? How can we make them more accurate?? How dependent are we on which customers?? How much are orders costing us? By type? By customer?? What opportunities are we not pursuing? Why? Why not?? What DON’T you know? (too busy?)What DON’T you know? (too busy?)
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
The 7th C of Credit
• Character• Capacity• Capital• Collateral• Conditions• Cash Flow• Customers (stickiness, profitability, ABC)
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
The Pareto Constant Isn’t…but it IS average
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
Focus….but how?
Concentrate on leveraging ALL your resources….people, time and money
Where is the leverage point?
THAT’s the first decision…..
What 20% of your (or your firms’) actions create 80% of the results?
20%80%
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
Lonely at the top…
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
Is SALES EVERYone’s job? Form DOH! To DUH! and in between…
Sales Marketing Product Development Manufacturing Management Shipping Quality Assurance Tech Support Reception Purchasing Human Resources Finance Customer Service
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
SO....1.Get the facts2.Priortize3.Plan4.Act5.Measure6.Repeat
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
“Seek the advice of a good consultant”
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
Quality Customer Development
Relationship Quality Assessment
Customer Development
Sales Process Analysis
Customer Recovery
80/20 Analysis
If 20% If 80%
If Sales Process or Relationship Issue Helping you develop your business by
working with your customers.1st
Independent validation of relationship2nd
Repair or expand relationship3rd
Colloborate with customer for product/service development
4th
Recover a lost customerGrow bottom 80% customers into top 20%
5th
Assess and recommend Sales Process Improvement to avoid future problems.
Customer
Product Development
“If I could change one thing, I would take the negative implications out of telling management the truth.” Jack Welch
OR....Do it yourself...
What’s the cost of NOT doing it?