All your customers are super important. After all, they are the ones that enables your company to go around. Still, there’s always some customer relationships that are a little more important than others. Do you know who your most important customer relationships are?

According to Philip Kotler ”a profitable customer is a person, household or a company that overtime, yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling and servicing the customer.” In order to identify your most profitable customers, you must examine what creates growth and development, and thus are most critical to lose. But, how do you do that?

How do I keep track of whether my customers are profitable or not?

Most people use their CRM system to measure the activities they do in relation to a client, and yet keeps one track on how much they buy each year. In this way, it is easy to figure out which customers are cash cows and which ones are a waste of energy. If you do not have a CRM system, you hopefully have an awesome Excel file with your activities, and a financial system where you can see all sales – then use that!

The customer portfolio – what does it look like?

Segmenting (divide) your customers using the steps below:

  1. Distribution – What is the distribution between large and small customers? Maybe you ave you A-and B-classification on the customer?
  2. Turnover – What percentage of your revenue is from small customers as a group, compared to the large ones? This figure can often be surprising.
  3. Time and resources – how much time is spent on maintaining customer relationships? How many calls, mailings and customer meetings do we do with the customer every year?
  4. Other factors that are challenging to measure in concrete results and time. Here you might have to trust your gut instinct.

With this data collected, you should easily be able to figure out which of your customers are most profitable.

Who is your ”cash cow”?

By figuring out how much your customer is worth, and divide them by the Boston matrix, you can quickly see which customer relationships that are more profitable and better than others. You will also gain insight of the relationships that can be profitable and might therefore require a little extra love.

I have done a review of my customers and have both learned which ones I should put the most time to nurture, but also which segments and industries I should go for when looking for new customers. Do it yourself! It will ease your everyday life.

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