About 10 years ago I was invited to be a mystery shopper for a five-star hotel spa in Hong Kong. I booked a massage and when asked if the room settings were ok, I asked if it was possible to make the room darker. The room was bright enough to comfortably read a book which I feel is too light to enjoy a massage, I prefer the room to be darker. The therapist responded that they could not make the room darker, this was the darkest it could go.
After my treatment I met with the spa director who had invited me to mystery shop and gave him my feedback. When I mentioned the room brightness he said “we cater to a younger trendy crowd, you’re probably not our target market!”
How brutal. I was used to being the target demographic for any medium to high end brand and this response put me firmly in my place! I never forgot it (or the spa director!) however, I also learnt two invaluable and interconnected lessons from it; (i) know your target clients, and (ii) don’t try and be everything to everyone.
Whether you work for a global corporation or are a small business owner, your time and resource is limited. Even the largest corporations must decide how to allocate limited resources to maximise profitability. For example, few corporations have larger reach and resource than HSBC. In its home market of Hong Kong, HSBC has over a million consumer and corporate clients however, in the UAE it focuses on only a few thousand corporate clients. In the UAE, HSBC defines SME’s as companies with a minimum annual turnover of AED 200m thus ruling out the vast majority of actual SME’s. This is not a criticism, far from it. It’s recognition that HSBC has identified its target client base for the UAE market and is not trying to be everything to everyone as it is in Hong Kong.
Many of the sales team I train are yet to make such a strategic transition. They are too busy casting a wide net and trying to service whatever business comes their way. While this may be necessary in the early stages of a business, we all must pay the bills after all, it’s not a good long-term strategy. There is a high risk that poor quality leads and clients, who will not generate long term value, absorb a disproportionate amount of your limited time.
Having a clear client strategy is an integral part of your company’s brand. It is likely that your own personal brand will also be linked to the clients you service – the more relevant your client base, the more relevant you are seen as being. It directly impacts your reputation. The wrong clients can become a distraction and while they may bring in revenue, the time spent servicing them could actually be costing you more lucrative relationships within your core sector of expertise.
So, if you are client facing and haven’t done an audit of your client base recently, it’s probably time to do one. One approach is to estimate the percentage of your time you are spending servicing each client, what percentage of your revenues they are responsible for now and what you think they can grow to. Calculate the ratio of time required to current and future revenues, and for the lowest 20% consider whether you should be spending time continuing to cover them. This may sound mercenary, but it’s no different to how a restaurant culls the poor selling menu items. All businesses irrespective of size have to optimise resource utilisation.
If you’re not yet convinced, compare the revenues generated by your top 20% of clients compared to the bottom 20%, and then the respective time spent on each. You’ll find it a sobering exercise. The appeal of redistributing your time towards clients that can become as productive as the top 20% should be attractive enough to justify the strategy.
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