You’ve heard of the 80/20 Rule….80% of your business comes from 20% of your clients. Why is it that average businesses are able to only get 20% of their total revenue from their best customers? How can you change your sales model in order to turn this around?

First off, identify your types of clients. There are three “buckets” you can put your clients into:

  1. Core Clients – These are your top 20% clients. They value your product or service and enjoy working with you. They are loyal and see you as an industry leader and an authority in what you do. You and these clients both benefit financially from your relationship.
  2. Opportunistic Clients – Here is your other 80% of clients. They are looking for the cheapest, quickest “solution” for the current moment. They are not long-term clients and certainly not loyal. They do not care about your expertise and will either drop you like a bad habit when something cheaper comes along (regardless of your value), or will try to squeeze you for the lowest price…even if that means you cut into your profits. They don’t care about a relationship with you and you make very little profit, or may lose by having them as a client.
  3. Must-Have Clients – These are clients you’d like to have . However, they are currently doing business with your competitor(s). Obtaining this group as a client would put them into the Core Client category.

Now that you understand the types of clients  it’s time to focus on each group.

Core Clients are more profitable, and are generally very pleased with your relationship. This group is also a pleasure for your employees to work with, which makes all parties involved more invested and engaged. Win/Win.

How do you keep your focus/engagement on the Core Clients (and convert Must-Have Clients into Core Clients)? You have to dump the Opportunistic Clients. Yes, you can fire a client.

If a client is not serving your business positively, they should go. There will be plenty of your competitors happy to scoop them up from you – only to find out what a loss they’ve acquired down the road.

Opportunistic Clients suck your team’s energy, time, resources and negatively affect your bottom line. So why on Earth do you want to keep them around? This group can be like a bad relationship, toxic to your bottom line and significantly takes away from your efforts to keep your Core Clients happy and your time to gain those Must-Have Clients. This bucket has major holes in it and your profits are leaking away.

Firing a client is not easy or fun process but it’s a must if you want to grow your business. Once you have “trimmed the fat,” you can focus on your current money-making clients, as well as earning the business of the Must-Have Clients. And at this point, start seeing that 80/20 rule become closer to 100.  

Need help determining who your best customers are and attracting more Must-Have-Customers? Schedule a chat with one of our CMOs to discuss how we help our clients determine their 20% and Must-Have clients.

About the Author:

Jay is co-founder of yorCMO.

Jay also founded Webtivity Group to help companies break through the confusion of how to effectively use their website and digital marketing efforts to meet their business objectives.

Jay is a successful digital marketing and ecommerce professional that helps companies across multiple industries grow revenue using a broad range of strategies. He has a deep understanding of the challenges companies face when trying to balance the diverse components of growing revenue across all marketing channels. He has been called “Tactegic” for his ability to blend strategic thinking and tactical execution to achieve measurable results.

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