Did you know that you can increase your profit without injecting additional funds into your business? Also, are you aware that some of your existing customers are like an untapped goldmine of opportunities? A quick and effective way to increase your revenue stream and maintain a nice profit margin is to identify your top clients who often fly under the radar. Do you know why? Because they are the ones who quietly make a huge purchase, and you won’t hear them making unreasonable demands or complaints.
By contrast, high-maintenance clients hurt your business, with some surveys suggesting that, on average, they eat up 10-20% of your profits. Unfortunately, small companies, especially during tough economic times, feel they need to chase any and every client, a mistake that can take a toll on your resources, including your most valuable ones–your employees.
Ways to identify your best and most profitable customers
At Sum of All Numbers, our vibrant team of business consultants and bookkeeping experts know several “hacks” to improve a company’s bottom line even without new funds or drastic restructuring. That’s why we analyze our clients’ records and help them identify the loopholes like products with poor ROI and high-maintenance customers who are causing money to go down the drain.
One way to identify your best and most profitable clients is to look at your customer profile and list down those who pay full price for your high-quality products and services. Also, they won’t haggle the price down and make unreasonable complaints about the cost with the intent to get a significant discount from you.
By contrast, high-maintenance customers usually need more cajoling and incentives (like discounts, freebies and promos) to encourage them to buy or continue their business with you.
Your best customers are also your most loyal assets. And because they feel that there is an ongoing positive relationship, they are likely to recommend you to their friends and family and continue buying your products or services years down the road.
Note that if you diligently update your customer profile, it’s easier for you to identify your best-performing clients.
Aside from looking at your customer profile and analyzing your relationship with them, you can also identify the best clients (low-maintenance but with high-profit margin or ROI) by looking at these factors:
- Cost of goods or services (focus on the actual cost of the good and leave out fixed expenses like rent, overhead, utilities, etc.)
- Total spending per period (weekly, monthly or yearly figures)
- Cost of “extra” services (Do they often return products? Do they frequently call your staff to make a complaint or demand? Are they too demanding when it comes to administrative/sales support?)
Final wordS ON IDENTIFYING TOp Clients
At Sum of All Numbers, our team of bookkeepers and business consultants are helping companies across different industries improve their bottom line using the Profit First principles that flip the traditional view of accounting and cash flow.
One of the core principles of the Profit First book is that as a business owner, you have to take a percentage from each sale as profit; this allows you to harness your natural tendency to improve your profit margin and motivate you more as you see your cold hard cash continue piling up in your bank account. If you want to learn more about improving your bottom line and identifying your most profitable customers, leave a message here or call us at +(888) 564-5777. We’re excited to hear from you.