On customer relationships

It’s true in our personal relationships as it is in business: a handful of people drive the most impact. The research on inordinate customer contribution is clear, as is well-documented by Robert E. Hall on Streetcorner Strategy for Winning Local Markets:

• 50% of customers are not profitable

• 60% of cross-sell efforts (i.e. sales of related efforts to the same customers) are not profitable--in fact, they generate more cost without increasing customer revenue

• 80% of time is consumed by customers who generate 20% of the profits

• 3-5% of customers generate half of the profit

What these statistics reveal is the essence of prioritization. When in doubt, it’s always a good idea to ask, “Who gets the dollar?”