Knowing Who To Get Rid Of

By: Dan Kennedy on: December 7th, 2010 4 Comments

Yesterday, Bill Glazer discussed the idea of Less Is More… So let’s continue with that concept. But first let me ask you this important question.

Do you know what a customer is worth to your business?

During a session with some of my top clients we had one of the participants, an astute businesswoman, discussing one of three businesses she owned, the only one not making money, made the statement that each account was worth an average of $18,000.00 a year.

I said each account was worth nothing.

Donald Trump tells the story, during his ‘crash’, of walking down a Manhattan street with Marla next to him, spotting a homeless person sitting by a doorway selling pencils, pointing him out to Marla and saying “That guy’s worth $70 million more than me.” In true financial terms, Trump was right. Of course, not in terms of skills, knowledge, ambition, resiliency or potential. But at that moment.

I am right about her accounts. If the business has no net profit, then the accounts have zero value. To that business. But I once had a company in that same situation, and I sold its accounts to a competitor for a big hunk of cash; while they were worthless to me they had value to the competitor. There was also value in making a competitor go away. But let’s keep this business. If we do, we have to dig in and do a lot of investigation and analysis.

Odds are, some accounts are quite profitable but others are big losers, sucking up inordinate amounts of time and material, providing the thinnest of margins. Odds are, some services are very profitable, others losers. Odds are, you can get to net profit by firing some clients, raising prices on some services even if it drives away some business. Odds are, you can get to net profit by cutting gross – not by growing it.

Most entrepreneurs are always thinking about “more.” But we must be sure whatever “more” we add or do equates to “more NET.”

I’m all for selling. I love selling. But I figured out very, very early that some sales are better than others and some sales aren’t worth making at all. In my first job, I quickly realized that the easiest types of businesses to place a book rack in were the worst accounts in terms of inventory turn and reorders, so I abandoned the path of least resistance altogether and worked harder at finding ways to sell to the best accounts.

In my speaking business, by the second year, I was turning down paid engagements that would place me in front of audiences ill-suited for my backend business.

In our seminar business that was aimed at doctors, I quickly identified that we could sell to virtually every female veterinarian who attended, but nearly all turned into refunds.

Why sell to them at all? I’m all for selling, but never for indiscriminate selling.

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    ABOUT THE AUTHOR:

    Dan Kennedy is internationally recognized as the 'Millionaire Maker,' helping people in just about every category of business turn their ideas into fortunes. Dan's "No B.S." approach is refreshing amidst a world of small business marketing hype and enriches those who act on his advice. For more money-making marketing tips, tactics and strategies, go to www.GKIC.com

    4 Responses

    1. Scott says:

      that’s deep. Very good, very complex and way beyond most of our competitors. Thanks Dan!

    2. Ray Higdon says:

      That is solid stuff. Avoid the path of least resistance if it is not worth it, very cool

    3. Hey Dan

      So true. Whats the point of having accounts that bring in money, but have an inbalance with cost, money, time, stress or otherwise.

      Same goes for selling, So what if yo can sell anything to anybody. What matters, in the long run, is selling the right things to the right people.

      bLAZE yOUR tRAIL

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