success - Turbo Coach, achieve breakthroughs - Brian Tracy
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190<br />
<strong>Turbo</strong><strong>Coach</strong><br />
There are several questions you should ask as you examine<br />
your customer profitability:<br />
How often does each customer purchase from you?<br />
What is the average size of each purchase?<br />
What is the profit margin of the product(s) purchased?<br />
How much time is spent in providing customer service<br />
after the sale?<br />
What is the ‘‘product returns’’ record of each customer?<br />
As in so many other areas, you might find that Pareto’s<br />
Law applies: Twenty percent of your customers may account<br />
for 80 percent of your profits. The question becomes, what<br />
do you do with your least profitable customers?<br />
Many companies regularly ‘‘fire’’ the bottom 10 percent<br />
of their customers. They stop doing business with those who<br />
generate the least revenues or yield the lowest return on their<br />
purchases, choosing to concentrate on their more profitable<br />
customers and attracting more like them. At the very least,<br />
be diligent in rooting out those customers who actually cost<br />
you money—regardless of the revenues they generate. You<br />
cannot afford to carry this unprofitable load.<br />
Sales and Marketing Profitability<br />
Do you know the return on your sales and marketing expenditures?<br />
It is not unusual for companies to spend 25 percent<br />
to 35 percent of their revenues on sales and marketing, yet<br />
often they do not know the actual return on these initiatives.<br />
One of our clients, the owner of a small print shop, was<br />
determined to increase his revenue base by 50 percent within
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