Lesson 4: Kick-off
Keeping track of customers
Small businesses which are successful usually have two qualities: they are customer-focused and customer-driven. This means that the business has as its priority to know about its customers, who they are, what they need and how best to give them what they want. Some businesses are product-focused, technology-driven, revenue-focused or profit-driven but, especially for small businesses, the customer-centred model works best. Take care of your customers and growth, revenue and profit take care of themselves.
This customer-centred thing is a two-way street though. You only want customers who appreciate your work for them and your orientation putting them first. The customer-centred business honors its warranties without questions, doesn't hassle customers about payment, gives free advice whenever it's needed and quotes the best, fair price the first time every time. You don't need customers who abuse your warranties, don't pay when they should, take up lots of your time without buying anything or haggle about the price. To see which customer is which, you have to keep track of your customers.
Your system to keep track of prospects, whether MS Outlook or another program, will also keep track of customers' contact information and categories but it won't track business you receive from each customer and it won't track profit. Initially, in a small business with only a few customers, it makes sense to track these values manually but later, you'll have to put in place a system which lets you see how much each customer is contributing to the success of your business. Revenue and profit are two of the factors which go into the classification of your customers.
Basically you want to categorize your customers as desirable, acceptable and problem. You can create three categories with the A customer being the best and the C customer the least desirable. I'll tell you how it works in my business because I'm quite subjective in how I classify my customers. You can be subjective or you can classify on the basis of hard facts but your business will run better with this kind of classification.
If a customer is fun to work with, he's an A customer even if he doesn't generate much business. That may not be best for revenue and profits but there aren't very many of these and they let you enjoy your work more. If customers generate good revenue, pay on time, don't complain unnecessarily very often and pay the price you ask, they're A customers and they will let you earn a fair profit. The result of being an A customer is that they get superior service and attention. When an A customer has a problem, I jump. The A customers are called back first and are taken care of the best I can.
The bulk of customers are B customers. The A customers generate more revenue and profits but B customers are the bread and butter. New customers are B customers until they show whether they are actually A's or C's. A typical B customer generally behaves like an A customer but not reliably. He will sometimes take up a lot of your time to find out what the best deal is and then go and buy it somewhere else. He will sometimes be late in paying. He will sometimes make you jump through hoops to get an order and he'll occasionally keep bugging you with problems that aren't yours. He's OK but he's not an A. The B customer gets attention right after the A customers are taken care of, gets good service and is treated fair and equitably, just like the A customers but not as quickly.
There are usually only a few C customers but that's where the problems are. You spend time negotiating when they will pay and what part of their bill. They'll often ask for prices but seldom place an order. They want all their advice for free but call someone else when they need service. They're not reliable, don't generate a lot of revenue or profits and take up a lot of time and energy. C customers get served after everyone else. They still get the same quality products and services and the same prices and some, eventually work their way back up to B status but most find other suppliers. Typically they're the ones looking for "deals" and they find suppliers who do business that way. I don't need or want them.
You may find that a different classification suits your business better and it's quite likely that you're right. The key is not how you classify but that you keep track of your customers. You want to keep and reward the ones that are helping you reach your goals and get rid of the ones that are using up time and energy for nothing.
