As a small business owner, you’re always looking for ways to improve efficiency and customer satisfaction. One effective strategy is the 80/20 rule, also known as the Pareto Principle. This rule suggests that 80% of your consequences come from 20% of your causes. Adding a slight spin on this we can comfortably state that 80% of your headaches come from 20% of your customers.
Why Focusing on the Top 80% Matters
You’ve probably noticed that some customers are just easier to work with. They appreciate the quality of your products and services and are a pleasure to serve. These customers are likely part of your 80%. They’re the ones who not only bring in steady business but are also likely to become evangelists for your brand, spreading the word to others and bringing in new business.
On the flip side, there’s the other 20%. These might be the clients or customers who take up a disproportionate amount of your time and resources but contribute less to your bottom line. They might be more demanding, less satisfied, and harder to please. This 20% can drain your energy and distract you from focusing on the customers who really matter.
Actively Managing Your Customer Base
It’s a tough decision, but sometimes, the best move for your business is to let go of that troublesome 20%. This doesn’t mean you should abruptly cut ties; rather, it means making strategic decisions about where to focus your efforts.
Here’s how you can do it:
- Identify the 20%: Look at your customer base and identify those who are less profitable and more difficult to serve. These might be the ones who complain more often, pay late, or are just generally hard to satisfy.
- Redirect Your Efforts: Gradually shift your focus and resources away from this 20%. This could mean not pursuing their business as aggressively or gently turning down projects that aren’t profitable or enjoyable.
- Enhance Service for the 80%: Redirect the energy you save into serving your top 80%. This means going the extra mile for them, offering better service, and making them feel valued.
The Benefits of Focusing on the 80%
By focusing on the 80% of your customers who truly value your business, you’re not just making your day-to-day work more enjoyable, you’re also setting the stage for long-term growth. Satisfied customers are more likely to recommend your business to others, creating a cycle of positive feedback and new customer acquisition.
An Ongoing Process
Remember, managing your customer base is an ongoing process. Continuously evaluate which customers bring the most value and which ones might be holding you back. It’s not always easy to make these decisions, but in the long run, focusing on your best customers is key to sustainable business growth.
Sometimes, Less Can Be More
For small business owners, applying the 80/20 rule can be a game-changer. It’s about recognizing that not all customers are equal and that sometimes, less can be more. By focusing on the customers who truly appreciate your work, you can build a stronger, more profitable business and a base of loyal supporters who will help your business thrive for years to come.
1sixty8 media is a full service digital marketing and business services agency specializing in the mobile enhancement industry. We invite you to contact us today to learn about any of our products or services.
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