Listen, there’s a correlation between effectiveness and profitability. A powerful one, at that. First, let me define some terms that frequently get mixed up. Effectiveness means doing the right things, which is different than efficiency, which means doing things right. Our discussion today is about effectiveness. Specifically, how doing the right things and profitability are correlated. We’re going to look at three tips:
1. Copy your favorite/best client.
Think for a moment of that ideal client you have. Working with that client is simply a joy. They’re always very happy with your services. They pay on time, at your full fare price. What would it be like to copy this client? As opposed to working with one such client and nine others, what would it be like if you only focused on working with ideal clients?
One thing I’ve discovered—and this isn’t always true—is that people who have money, who are a little bit wealthier, are usually better clients than people who aren’t willing to spend much. Have you ever noticed this? So focus on that ideal client who can afford your services, and then find more like him/her. That’ll increase the profitability of your business. For many companies, the top 20% of their clientele represents the vast majority of their profit. On the other hand, as much as 50% of all clients don’t make a single dime for the business. That’s kind of a scary thing to think about, right? That 50% of the people you’re working with don’t contribute to your company’s bottom line at all. So focus on your best client, and try to land more clients of the same vain.
2. Eliminate bad clients.
Think about those clients who argue, complain, and always try to fight you on price. Aren’t you tired of the mental energy you and your team have to spend just to deal with those clients? Let’s say you own a restaurant. Now imagine that customer who’s working the server to the bone. The poor server is doing everything she possibly can, but the customer keeps complaining, keeps sending food they don’t like back. That type of difficult customer usually ends up tipping the least. Not always, but a lot of the times. There’s nothing the server can do to appease this kind of person.
It’s the same thing in your business. We all have our share of bad clients, and the best thing to do, even if that bad client is bringing in a lot of revenue, is to get rid of them. This will free up the time and space for you to focus on point number one, which is marketing to or trying to land more ideal
3. Cautiously sell extra services.
One way to grow your business is to increase your service offerings, but be very cautious when doing so. Make sure that you can stay effective and profitable.
I myself am a perfect example for why you shouldn’t go and sell every extra service you possibly can. Years ago, when I was a solopreneur, only beginning to build my coaching business, some of my clients would request extra services. These were mostly jobs I could do, such as creating an operations manual or refining different processes for the company. Oftentimes I did these extra services just because I wanted to help the client out.
However, I got busier and busier working on these extra services. I soon realized that even if I was paid more, I usually ended up losing money on those deals because of all the extra time it took me to do something that wasn’t my forte. Worse yet, when a client asked me to do something that was completely out of my element, sometimes the job wasn’t done to their liking and they were disappointed. Plus, doing everything for a client can disempower them, and discourage them from finding a different solution to their problem. So in the long term, offering all those extra services wasn’t even in the clients’ best interests at times.
What I’m saying is this: Definitely look at selling extra services because that’s a good thing. That can grow your business. But make sure you’re cautious. Make sure the services are effective and profitable for your company.
Go out, take action, and have a better than great day.