It’s the question, we all think we can pinpoint in a second, my best customer is?
Every business has customers, and while all customers are important, most entrepreneurs will agree that some customers are more important than others. This could be based on a host of factors, but ultimately it will be determined by revenue and profitability generated from the client. When you are in business for yourself, profitable customers allow you to pay yourself PROFIT from the business.
This may be due to the amount of revenue the customer brings in, their ability to refer new clients to you, the interesting challenges of the customer, or another factor. It makes sense to identify these clients so you can spend more time with them or at least acknowledge them in some way.
How do you find out what customers have generated the most revenue for you? The two accounting systems common to most small business owners are QuickBooks and Xerox. As long as you have entered data regularly into your system, it’s easy to get data on your best customers.
In QuickBooks, the report is called the Income by Customer Summary Report. In Xero, it’s called Income by Contact
The reports look like this: each row holds the customer name and the Income column holds total revenue by the customer. If your system allows you to sort the revenue field, do this in descending order. If not, you can export the data to Excel and sort it in Excel.
When we meet with our entrepreneur customers, I always ask two questions to see if they know exactly their best clients immediately. Ask yourself these questions quickly and within 5 seconds you should have an exact answer or you need to spend some time evaluating client sales and profitability:
- Who are your best customers?
- Why are they your best customers?
Your top customers based on revenue will show you the actual best customers based on sales. These are the customers you may want to consider spending more time with. Schedule periodic breakfasts with them, give them a call on a regular basis, and send them a gift or thank you note once in a while. The report helps you organize your connection points with your top customers so you don’t miss an opportunity or forget to reach out.
Run these reports on a regular basis so that you’re focused on nurturing the most important relationships in your business. You can also look at the changes to see if you are gaining or losing clients year by year
Use the numbers from the report to trigger reaching out to clients that are spending less with you to try to save the relationship before it’s too late. .
Make this report a regular activity in your business to stay close to what your customers are doing with you.
Need a different approach of looking at your P&L statement and focused on Profit First, feel free to drop me a note and I will share 3 ideas with results that you can consider for your business, email@example.com