Looking back on my time running my own companies there were three things that I thought about a lot. Each element was important and critical to my success. They are Customers, More Customers and Profit.
So what exactly do I mean when I talk about Customers, More customers and Profit?
- Customers. There are two approaches to a potential customer. Make a “one-off” sale or make a number of sales over a long period of time. I heard this distinction as “Wolf or Shepard”. The wolf goes all out to make a sale, no matter what the cost. While the Shepard carefully engages with the customer ensuring that no-one loses face both before and after the deal. While the Shepard may not get the biggest deals initially, they end up with deals that seed additional deals and other revenue options. For example, we sold our customers a Messaging Server and then annually a support contract or upgrade to the latest version of software. The target was to retain as many customers as possible.
- More Customers. It’s great getting income from your current customers but what about having some more? We kept the pipeline of new customers filled to ensure that the increase is greater than those leaving. For example, new customers purchased our Messaging Server due to reviews in magazines, customer referrals, etc. and some we lost because their companies went under, were bought, etc.
- Profit. Every sale must make a profit to keep the company going. Making a profit means knowing the cost of supply of the product or service. For example, we sold Support contracts that would pay for approximately an hour of engineer’s time. On average each support incident would cost us 2.8 hours to resolve. On the face of it we made a loss (and the customer got excellent value for money). But we knew that only 1 in 8 contracts would result in a support incident. (If only we knew which one of eight not to sell!)
Once your company is generating profit then you have dramatically increased your freedom to operate. You can elect to take the profit as dividends; bonuses; more staff; continue innovation in product and/or process; new products; invest in new, external opportunities; etc. The choice is yours.
If you’d like to examine your success at gaining customers, keeping customers and making profit, please email me or give me a call.