Do you assess the value of your clients?
I just learned that a huge American bank was turning away clients. Are they insane? No, they are actually very sensible. Some clients are just so difficult, that they are not worth keeping. Some argue, complain, and ramble so much that they burn out your hard working support staff to the point where a single client could be doing $500 of damage per year when they only pay you $400 of which only $20 of that is profit. Hmmm. That equation doesn’t yield good results in real life. So, the bank gives away many customers all the time.
Critical mass
I am looking at my database of people on my various directories. I often ask myself what the value of a non-paying client is. In the directory business you need critical mass. You can not have a nationwide directory and have only 10 subscribers. It would look unprofessional and be unhelpful. You should have a few thousand listings on a directory, and hopefully thorough listings with good service providers as well if you hope to become popular. So, we call all agree, that I need quantity in my business. But, when and where do I draw the line?
Wanting to slow down
After dealing with years of customer service issues, and endless work, I want to slow down, so I can invest more in my health, recreation, and branch out into other industries. How valuable are some of the dormant listings on my site? And how much work are they to keep on board?
Removing poor quality listings
I decided that there is no point in removing a listing that doesn’t require work. Wait until it requires some type of work, and THEN get rid of it if it is not worth it. Or, think ahead, and get rid of the listings that underperform to such a degree that they just don’t belong. But, over the years I overlooked many anaylitics. The information I paid attention to was NOT the information that was valuable. I learned that by assessing the SKILL of the people on the listings rather than just the thoroughness of their listing or click popularity — I was able to learn that many of the unpaid (and paid) listings that I had invested so much of my time into for years — lacked any type of skill in the industry that they claimed to serve. There was no knowledge of terminology or practices, not to mention social skills.
If you are not valuable in quality or money…
After talking to hundreds of people and seeing that they were not only ignorant, but dangerous to hire, I decided that I need to downsize the directory. I need to list only those who have some idea of what they are doing. But, what about the free listings. If they are not willing to learn or pay, then what good are they? I’ll keep them around for a while and hope that a few of them will take a course in terminology and procedures and get to the point where I can keep them in the long run.
7000 listings: 2000 good listings
Out of 7000 listings, only 2000 have the quality level worth keeping in an urban area. There are a few thousand others in remote areas who I will keep because there is nobody else there. The others will eventually get cut. I will have a much smaller directory. From now on I will focus on quality, not quantity — but, still try to have a high quantity of quality listings.
What about your clients?
Can you segment them into groups after reading about my unusual personal story?
Which ones are purely profitable?
Which ones are just a pain?
Which ones are new, but could be molded into good clients?
Which ones are nothing special, but worth keeping?
What they pay you doesn’t matter
My new point of view is that what a client pays you should be a smaller analytic than you think –for now. If a client starts out being knowledgeable and has all of the same characteristics of your best clients, then they have a sort of an un-monetized value. They have potential. This is what I look for. After they get to know you, and get rolling a bit with your company, if you do a good job, you might be able to talk them into a more comprehensive service plan involving a lot more money. In short, the quality of the client is more important than what they are paying you NOW. After all, the small new client could turn into a huge client later. A huge client could downsize or go out of business. The size of the client can change fast. But, their intrinsic quality in terms of their business skill, knowledge, personality, and other “soft” factors like that are less likely to change much over time.
On a brighter note
I will say that I have high paying clients that have no clue what they are doing, and a few non-paying clients who are experts at what they are doing in their business. So, if you nurture poor-quality clients to a higher level of interaction with your company, they might become larger clients who SHOULDN’T be your clients. For me — now — it is not about me getting money now. For me — now, it is about quality. Being the best quality version of me that I can be, and finding the best clients regardless of how much they pay me. I am not even thinking much about the money any more. That is secondary.