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Whitepaper on Customer Messaging Must have Adobe Reader 8.0
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Getting lean in tough times “Lean” is a sound business philosophy in good times. It’s a great prescription for tough times. The value-added philosophy has always been about “lean”: add value, not cost; sell value, not price. A tough-times lean philosophy applies to customers as well. You have three types of customers: High-value Targets (HVT’s), equity, and profit piranhas. HVT’s contribute most of your profit. They represent your top 20% most profitable customers. Equity customers are breakeven customers. They give as good as they get, and they get as good as they give. This accounts for more than half of your customers. Profit piranhas are your 20% least profitable accounts. They account for most of your losses. They chew away at your profit. They demand a disproportionate amount of time, energy and resources. They complain more. They return goods more often. They pay late. They shop your prices. You give better than you get and you resent them. You get the picture. Profit piranhas prove that all business is NOT good business. There is some business you want the competition to have. In tough times, you cannot afford profit piranhas. You may be able to turn a profit with them by changing their ordering habits, enforcing terms, or explaining your dilemma to them and ask for positive suggestions. If they fail to cooperate, purge your account base of these and redirect your resources to those accounts whose business supports your business. Why throw good money after bad money? |
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