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8 Creative Ways to Identify Your Most Profitable Customers

Entrepreneurs reveal their best kept secrets on how to identify your best and most profitable customers.

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6. Apply a Pareto analysis — the 80/20 rule.

“The best way to identify the most profitable customers is by applying a Pareto analysis, which is based on the findings of the famous Italian economist Vilfredo Pareto, it’s known in common parlance as the 80/20 rule. Each year we look back retrospectively at all the cases that we resolved and we sort them by which cases were the most profitable overall and per month. By doing that we can identify which were the most profitable cases, and then we try to identify similar profitable cases moving forward. We also identify which were the least profitable cases and we make an effort not to accept any additional clients matching those parameters. Profitability is a function of how much was expended to achieve that profit, not just the revenue itself.”

– Richard P. Console, Jr., Managing Partner of Console & Hollawell, P.C.: @ConsoleAtLaw

7. Know your customer intimately.

“As a business owner you must know your customer intimately.  You should be able describe her and her lifestyle in detail: where does she live, where does she shop, what does she look like, who are her friends, [etc.]  Give her a name and an occupation! If you cannot paint this kind of detailed picture of your key customer, then research is required to learn more.”

“It is always easier to keep a customer than to get a new one, so make sure you talk to your customer frequently.  You need to know when her life changes. This means you have to have a strategy for keeping in touch with your customer. There are many ways to do this, but social media is one of the easiest and least expensive ways to talk to your customer.”

“Make sure you have someone on your staff managing this process. College interns can help with this as well. Once you have an intimate relationship with your customer and you are communicating frequently with her, you can ask her who else might like your product or service.  When your customers are also selling your product/service, you have developed the most effective and efficient kind of customer prospecting strategy. ”

– Michael Bilello, President and CEO of Centaurion Strategies: @Centaurion360

8. Create segmented customer timesheets.

“For example, we had our employees track the amount of time they spent on various clients.  We found that our employees actually spent far less time, proportionally, on smaller clients than they did on larger clients.  While that would make sense, the proportions were so far out of whack that we realized very large clients actually make us far less profit margins. ”

– Alex Membrillo, Co-Founder and CEO of Cardinal Web Solutions: @cardinalws

 

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