Archive for March, 2014

Not All Customers Are Created Equal

Ever thought of classifying customers according to their value to your business? If you are like most business owners the answer to this question is “No”.

Yesterday I co-facilitated our all-day planning workshop for business owners. The purpose of this workshop is to help owners plan what they want to accomplish during the second quarter of 2014. We had a lively discussion around this concept of tiering customers by their value to your business. The Pareto Principle applies to most businesses, meaning 20% of customers provide 80% of profits. Think of “A” customers as being Awesome; “B” as Basic, “C’” as those you Can do with or without, and “D” customers are those that Drag down your profits. Take the time to tier your customers…you will be surprised at what you find.

I highly recommend that you establish criteria and evaluate your customers against that criteria. Possible evaluate criteria include:

  •          Size of profit from that customer
  •          Referrals received from customer
  •          Timeliness of their work
  •          Behavior when dealing with your team

Think of your “D” customers as those who demand lots of your time, nick and dime you over price, and are difficult to satisfy. These customers are costing you more than they are providing so either fire them or significantly raise the fees they pay you. The lure of their revenue usually keeps owners from firing these customers until the owner is reminded that D customers:

  •          Consume their time…time that could be used soliciting more “A” and “B” customers
  •          Wear-down their team adversely impacting team morale
  •          Typically pay them a lower hourly rate than their best customers

Your team is your most important asset, and you must do everything you can to protect them. If it means firing a customer, two or more, then it’s worth it for the well-being of your team.

Should all “difficult” customers be fired or asked to leave?

There is a distinction between a challenging (demands much) customer and those who suck your time and energy and argue over price and pay late. Though challenging, the former types of customers can actually help the business grow by pushing comfort zones and expanding product offering. Think twice before firing these challenging customers, but don’t hesitate to fire your “D” customers.

So how do you fire your “D” customers?

In all instances and as difficult as it may be, you need to be professional, calm, and emotionless. The conversation will most like be difficult as customers in these situations often get defensive and make accusations. You must remain firm and calm. You need to be tactfully firm and avoid doing anything that will cause your customer to tell others, some of whom could be current or potential customers.

If you want to discuss your “D” customers and how to either fire them, suggest they move to a competitor or raise your fee to them, I’ll be happy to speak with you.

Jeff Lovejoy


March 27, 2014 at 10:06 am Leave a comment

Dare To Surprise

In May of 1863 a nimble, creative, risk-taker with his back to the wall defied all logic by soundly beating a much larger and better supplied competitor. The setting was Chancellorsville, Virginia where the Union Army with 133,000 men under the leadership of Joseph Hooker faced the much smaller Confederate Army of 61,000 men, under the leadership of Robert E. Lee. Despite facing overwhelming odds and against all military rules of engagement Robert E. Lee sent Stonewall Jackson with 50,000 men around to the right flank of the Union Army. Hidden from view, the Union Army learned of this risky move as Jackson’s force attacked and completely annihilated the right half of the Union Army.

So, why is this important to business owners and leaders?  Well, the lessons learned from this dramatic moment in history are several fold:

  • Smaller forces are able to beat much larger competitors if they understand the weaknesses of those competitors.
  • Business owners must be willing to take risks when the opportunity to significantly out-perform competitors presents itself.
  • Owners of larger businesses must be continually watchful for new strategies and markets by their smaller competitors.

Understand the weakness of your competitors:  Business owners are typically found working IN their business instead of ON it. This more tactical focus results in their losing sight of their competitor’s weaknesses. If Robert E. Lee had focused his attention on tactical matters, such as the number of shoes his army needed, or the condition of their tents, he never would have recognized the strategic opportunity in front of him. The result would have been a victory by the overwhelmingly larger competitor. Spend time focused on your competitors, find their weaknesses, and exploit those weaknesses.

Leaders must be willing to take risks:  Easily said, but harder to successfully execute. People often don’t make decisions that involve risk for at least two reasons; 1) risk means reaching outside their comfort zone and that’s not something most people like to do , and 2) in the absence of metrics, their decisions are made on subjective feelings. To grow your business you must continually make decisions that stretch your comfort zone (get a coach to help stretch your comfort zone). Secondly, begin tracking key metrics. Numbers simplify decision making.

Owners of larger companies must be forever vigilant: The success a larger company has enjoyed can be reversed by competitors who recognize opportunities to take market share. As businesses become successful and achieve significant growth they often lose sight of their customers’ experience with the company. As the leader of a rapidly growing and/or large company never lose sight of your customers’ experience with your business.

As the owner of a smaller business, don’t limit your growth by thinking of your business as a powerless underdog. You have tremendous power to impact markets and to take market share, but your focus must be ON the business. You cannot afford to be doing the work of the business.

Jeff Lovejoy


March 13, 2014 at 5:27 pm Leave a comment

Empower Someone to Become a Hero…Ask for a Referral

In today’s wired, interconnected world where communicating with friends is just a matter of keystrokes, it’s easy to see why having an effective referral program is key to growing your business. People are sharing ideas and experiences more frequently and to far wider audiences than ever before. Prospective customers not only hear about your business by searching online, but also from comments shared by people they trust.

Leads that arise from referrals are six times less expensive to acquire, are more likely to buy from you, and typically are less sensitive to price. These characteristics exist, because trust in you and your service/product is passed to the prospective customer when their acquaintance recommends your services.

For these reasons you would think that most business owners have developed clearly articulated policies to generate referrals. Logical yes, but accurately no. Most business owners I meet recognize the value of referrals, but haven’t formalized their referral program…apparently preferring instead to leave this important lead generation source up to chance.

In his book, “Get More Referrals Now”, Bill Cates identifies four primary reasons owners and their sales teams aren’t more active in soliciting referrals. Beneath each reason I list a couple strategies from Bill’s book and my experience to overcome the obstacle.

  •  Reason #1: The owner and members of his sales team forget to ask. Has this happened to you?

Solutions:  1) formalize your referral program – write it down and communicate the details of the program to your team

  2) build soliciting referrals into your formal sales process

  •  Reason #2: The owner and members of his sales team lack the confidence to ask

Solutions:  1) provide exceptional service that creates Raving Fans and solicit feedback from customers on their experience

  •  Reason #3: The owner and members of his sales team think asking for referrals is pushy

Solutions:  1) recognize that people make referrals to feel good by helping their friends

  2) from the beginning of the sales process foreshadow that you will be asking for referrals

  3) target markets where your ideal clients are found

  • Reason #4: The owner and members of his sales team don’t know how to ask

Solutions:  1) use scripts and practice, practice, and practice again asking for referrals

 If you and your team are not receiving enough referrals take the time to investigate the reasons. Your time will be well spent if it results in opening the referral faucet.

Reach out to me if you would like additional information on strategies to gain referrals.

Jeff Lovejoy


March 4, 2014 at 7:57 pm 2 comments