Michael Newman’s latest ‘e-Wealth Daily’ article is titled “Recognize the Source of Your Wealth”. [‘e-Wealth Daily’ Article]


Michael Newman’s latest ‘e-Wealth Daily’ article:

Recognize the Source of Your Wealth

It sounds simple, but one of the most important parts of running a successful business is noticing where most of your profits are coming from. Think about it; you probably have some customers who spend more than others, while costing you less.

Therefore, at some point, you have to figure out who you want to focus on and who you want to get rid of as customers. The obvious question is, “Why the heck would I want to get rid of some customers? A dollar earned is a dollar earned!” That’s true. A dollar in the cash register is a dollar in the cash register, there’s no denying it.

However, some customers cost more to market to, spend less on your services and might, quite frankly, be a pain in your neck. Let’s say 20%-30% of your customer base is where you make the majority of your money. They spend big, don’t cost a lot to market to and mainly purchase the products and services that earn you the most profits. It’s quite possible, in this case, that this 20%-30% is responsible for 80% of your company’s profits.

Now, let me ask you what makes more sense — spending more to keep your less profitable customers around or slightly ramping up your efforts to the profitable bunch?

Just think, for what would likely be a fraction of the cost to upgrade sales efforts to your profitable customers (heck, maybe even raise prices a touch to make up the difference), you could earn more and have less to worry about!

Of course, if you plan on focusing more heavily on a smaller number of customers, you’ll want to strengthen the relationship through interaction and benefits. This way, they’ll feel appreciated and more likely to spend. On the other hand, you’ll have to inform your least profitable customers that you’re taking your business in a new direction. Something you’ll want to do gracefully. After all, you don’t want to burn any bridges. Who knows what the future will hold!

One of the things you can do is to tell them that you’re overhauling your prices and services. After hearing this, they may decide for themselves that the relationship should come to a close. In order to make it easier on them, however, refer them to other companies that can get them the services they need. Follow up later on to make sure things worked out. By keeping the lines of communication open, there is the potential to take advantage of future situations where they could, once again, become a customer.

e-Wealth Daily

About e-Wealth Daily

The e-Wealth Daily Bulletin brings you daily tips, advice and breaking news related to home businesses, small businesses and internet marketing. Our team of experts gives you the information you need to take your business pursuits to the most profitable level. Founded by Adrian Newman in 2003, the e-Wealth Daily Bulletin and www.ewealthdaily.com are a division of Lombardi Publishing with online newsletters reaching over 100,000 subscribers each month.

* IMNewsWatch would like to thank e-Wealth Daily for granting permission to reprint this article.

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