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Member You - How to Squeeze More Profit Out of Your Customers!
Accounts receivable funding, also known as factoring, continued an upward trend in 2005 with volume exceeding $112 billion. This represented a 9.3% increase over the prior year, which is the strongest year to year growth rate since 2000. In fact, only 2001 was the only year in the past 20 that factoring volume did not rise. A/R funding continues to be an accepted part of financing, but according to the Commercial Finance Association’s Annual Asset Based Lending and Factoring 2005 Survey, two thirds of the volume came from the northeast and southeast parts of the country. The northeast is the major region for factoring volume with 42% of the total.The survey indicated that only 5% of factoring volume came from the Midwest, which includes some highly populated states with a plethora of companies that typi
Without people you are never going to run a large business and without the right people you are never going to own a successful one. Employing people is not like buying a piece of machinery; as they do not come with money back guarantee or an instruction manual. You can’t just switch them on when you need to, or run them continuously for 24 hrs a day and then trade them in for a newer model at will. However employing the right people for your business can truly take you forward ahead of your competition. But before you decide whom, you need to decide should I?Take Billy he is a self employed electrician and a very good one. He has spent 20 years working for large companies and had previously decided to set up on his own. He wanted a better quality of life, see the kids more and be in control of his destiny.
The biggest mistake businesses make is to focus all their marketing effort and budget on getting new customers. Research has shown that it costs up to 6 times more to get a new customer than to retain or sell to an existing one. And this is the key. Concentrate on selling more to your existing clients. Simple! Squeezing more profit out of your customer base is a cost-effective way of increasing your bottom line.
So, let’s look at the steps you can take to tease more profit from your client base.
Pareto’s Law
No doubt you have heard of Pareto’s Law? You may know it better as the 80/20 rule. In a sales context if you examine your sales pattern, you may find that 80% of your profit comes from only 20% of your customers. While the percentages may vary slightly, as a principle it generally holds true. Yes, it may come as a bit of shock to find out that most of your profit comes from a handful of customers, but armed with this information you can now create a plan to earn more profit!
So, the first step to squeezing out more profit is to identify your top 20% profitable customers. Obviously, to do this you have to have a database, which keeps track of who orders what and how much. What? You don’t? Keeping track of your customer’s dealings with you is essential. Get a database up and running … today! The effort in setting this up and keeping it up to date will be quickly pa
You are probably familiar with the traditional fruit baskets and flower settings used as business gifts in today’s modern corporate world. But a new trend is developing in corporate gift giving that adds a whole new dimension to business relationships – the business wine gift.As it is customary for business associates to exchange gifts on occasion, an alcoholic gift has been frowned upon in the American business scene. But as business relationships become closer and on a more personal level, a wine gift is becoming much more acceptable.Is a Corporate Wine Gift Appropriate?Because of business teachings in America, the mixing of work and alcohol has never really been accepted as an appropriate practice. Of course, the endorsement of intoxicated employees at any corporate level is never
The biggest mistake businesses make is to focus all their marketing effort and budget on getting new customers. Research has shown that it costs up to 6 times more to get a new customer than to retain or sell to an existing one. And this is the key. Concentrate on selling more to your existing clients. Simple! Squeezing more profit out of your customer base is a cost-effective way of increasing your bottom line.
So, let’s look at the steps you can take to tease more profit from your client base.
Pareto’s Law
No doubt you have heard of Pareto’s Law? You may know it better as the 80/20 rule. In a sales context if you examine your sales pattern, you may find that 80% of your profit comes from only 20% of your customers. While the percentages may vary slightly, as a principle it generally holds true. Yes, it may come as a bit of shock to find out that most of your profit comes from a handful of customers, but armed with this information you can now create a plan to earn more profit!
So, the first step to squeezing out more profit is to identify your top 20% profitable customers. Obviously, to do this you have to have a database, which keeps track of who orders what and how much. What? You don’t? Keeping track of your customer’s dealings with you is essential. Get a database up and running … today! The effort in setting this up and keeping it up to date will be quickly p
Companies seeking capital often ask how long the Executive Summary of their business plan should be. The answer depends upon the use of the summary, mainly determining if 1) it precedes the full business plan, or 2) it will be used as a stand-alone document.When the Executive Summary precedes the business plan, its length should be short, typically only one to two pages and certainly no longer than three pages. This is because the Executive Summary is not meant to tell the whole story of the business opportunity. Rather, the summary must simply stimulate and motivate the investor to learn more about the company in the body of the plan.The second type of Executive Summary is a stand-alone document. That is, it is given, by itself, to investors for their initial review. If interested, the investor will
So, let’s look at the steps you can take to tease more profit from your client base.
Pareto’s Law
No doubt you have heard of Pareto’s Law? You may know it better as the 80/20 rule. In a sales context if you examine your sales pattern, you may find that 80% of your profit comes from only 20% of your customers. While the percentages may vary slightly, as a principle it generally holds true. Yes, it may come as a bit of shock to find out that most of your profit comes from a handful of customers, but armed with this information you can now create a plan to earn more profit!
So, the first step to squeezing out more profit is to identify your top 20% profitable customers. Obviously, to do this you have to have a database, which keeps track of who orders what and how much. What? You don’t? Keeping track of your customer’s dealings with you is essential. Get a database up and running … today! The effort in setting this up and keeping it up to date will be quickly p
Much of the literature and advice on implementing business change focuses on knowing where you are going and making sure that you understand and communicate a consistent vision of the future. Indeed, I have looked at the importance of this in an earlier article in this series. This month’s article, however, looks at the past and its often under-estimated importance in implementing change.Clean sheets and blue skiesBusiness change projects tend to begin with a “visioning exercise”, to determine where the organisation is going and what its objectives are. The output of this exercise is used as a guide to determine the changes that need to be made. Much is made of “starting with a clean sheet” or the clich?d “blue-sky thinking”.This approach has the benefit of allowing more radical changes
So, the first step to squeezing out more profit is to identify your top 20% profitable customers. Obviously, to do this you have to have a database, which keeps track of who orders what and how much. What? You don’t? Keeping track of your customer’s dealings with you is essential. Get a database up and running … today! The effort in setting this up and keeping it up to date will be quickly p
It’s strictly a matter of semantics. Notice the difference between “a” and “your.” It makes all the difference in the world. Let me explain. But first a word about my background.I was a Yellow Page consultant for almost 25 years. During my tenure, I advised various businesses on planning their programs. It involved recommending headings, sizes, directories, layouts, headlines, and other elements that could ultimately spell success or failure. These people relied on my judgment because I was the expert, They were busy running a business and delegated their insurance, accounting, legal issues, and advertising to the professionals in the appropriate fields. And why not? How could any one owner wear that many hats and do them all well? So we offered our expertise for the betterment
Get them buying more often
Having identified your top earners, the next step is to focus on how you can get them to buy more frequently. Increasing their ordering frequency may sound a bit simplistic but that’s the beauty of it … it is! The trick works especially well if you are in the retail or supply business. The idea is to catch the customer in advance of them needing your product or service and offer it either before they know they require it, or before they go to a competitor.
So how does this work? Let’s take your customer Bodgit Ltd. You go through their purchasing history (from the database you have now set up!) and you see that every 6 weeks or so, they re-order. But some months there are gaps, suggesting that they may go to competitors on some occasions. Make a note in your diary for one week before you would expect them to order again. When the time comes, pick up the phone and say, “Mr Smith, I imagine you must be getting low on widgets? Would you like me to send your usual amount or do you need more?”
“Wow” thinks Mr Smith, “This company is sharp!” Result? One happy customer; an order that may have gone to your competitor comes to you; one extra cheque to bank! Have a think about how you can apply this technique to your business. Try it out.
Increase the average order value
As well as getting your customer to buy more often, why not get them to spend more? They may be buying one product from y
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