“Oh you couldn’t do that!”
Most of our client activities over the past 6 months have been focused on bringing back margin and profitability into the business. We get the same kind of initial responses from our Clients that they are very busy, increase in orders and not enough people to do everything. Above all that, there is still no cash, profit or money in the business.
One quick way to bring back profitability into your business is to go through your active and inactive customers and rank them on the following system:
- A – highly profitable, high potential for new sales
- B – profitable and potential for growth
- C – some profit but potential for growth
- D – low profit, heartache, a nightmare for your employees to deal with
The hard facts are that A’s & B’s are where your high profit accounts are. Our data suggests 70% of your GP lies with these customers. D’s are where the wasted productivity of your workforce goes, almost all of these will be loss making accounts. We’ve heard all the excuses as to why you still do business with them – “they’ve been with us years”, “they are friends”, “they’ve been with us through thick and thin”…….on and on….
Here is the truth of “D accounts”
– They are bad payers – you end up being their overdraft (’cause their bank won’t fund them)
– They bust your sales reps around to get the lowest margin
– Your customer service people are fed up dealing with complaints from them
– Your service is never good enough, there is always something wrong with them
FIRE THEM!!! It’s one of the most pleasing of things to do. The positives are almost endless.
– Your debtors reduce
– Your margins increase (and after all business is all about margin)
– Your level of complaints reduces
– Your staff moral improves
– You will be seen as decisive and taking action by your workforce
So go ahead and surprise yourself!