Monday, February 25, 2013

Your Must-Read of the Day: It's Time to Fire Your Underperforming Customers

Anthony Tjan:

If you look hard at who is buying your wares, you can quickly get a sense of where the money is coming from and where your money is being spent. Some businesses exhibit the classic 80/20 rule, with their top 20% of customers making up 80% of the revenue. We have also seen a good number of firms with even more skewed revenue distributions that are closer to 90/10. Yet organizational efforts and resources are often poorly mapped to, or unaligned with, that revenue distribution pattern. In fact, it is often the opposite. That is, the bottom customer quartiles take disproportionately from a company's sales, marketing, and customer service resources. Some of the most challenging customers are those who in the "low-middle" bucket, buying relatively little, but needing very high touch and maintenance.