Anyone who has shopped for a live Christmas tree knows the drill. They have some on display, but none look exactly like what you want. You start looking through the trees that are still bundled up. If one looks promising, you have the lot guy cut the twine and spread it out for your examination.
The bottom branches are never as nice as the top branches. They get less sunlight, and the branches closer to the trunk are brown and thin. The vendor doesn’t like to trim the bottom, since he is usually selling trees by the foot.
You have a choice. You can buy a tree of the length you need, and use extra ornaments and lights trying to make the lower branches look as nice as the upper ones. or you can spend the money for a bigger tree, and trim off the bottom to leave only the good parts. Either way, those bottom branches are going to cost you time and money.
A business owner told me a story the other day. “At the end of every year we sat down and classified our customers into A, B and C accounts. We would discuss how to better serve our A accounts, and how to find more like them.”
“One year we were doing this with a business coach assisting in our planning. She asked “What are you doing with your C accounts?” We were stumped. We didn’t do anything with our C accounts, we just knew they were C accounts.”
“She convinced us to jettison our C accounts. Numerically, they were about 40% of our client portfolio, but a far smaller portion of our revenue. We helped them find a more appropriate vendor. Since then, we are working less, serving our A and B accounts much better, and are far more profitable.”
Every business owner reading this column knows how that story is supposed to end as soon as they read “What are you doing with your C accounts?” We all talk about focusing on our best customers. We know that the Pareto Principle (20% of customers generate 80% of revenue or profit) is true. But year after year we look at our C accounts and make excuses.
“We have the time, so why not make a little extra money?” “A lot of those people have been with us for a long time.” “Some of those accounts may grow into something bigger. Remember Jones Enterprises back in 1994? They were nothing when they started with us.”
Certainly there might be a nugget in that pile of Fool’s Gold. When I go to Las Vegas I put money on the crap table. I’ve walked away with
a lot more than I came with, once or twice. That doesn’t make playing craps a good business decision.
You can identify the nuggets. In truth, someone who is sharp, knows his or her business, or is fun to work with probably isn’t in your C list to begin with.
The best place to find new business is from your best customers. They usually have better contacts, can give better quality referrals, and represent more credible testimonials. Not to mention the potential for more business from them, if you only had the time to cultivate it. That could be the time you are spending on the C accounts.
Lopping off the bottom of the customer tree will cost you a few dollars in the short run. Just like a Christmas Tree, it gives you a better base to work from, and a more satisfying end result.
