Dear Videographers...Not All Customers Are Created Equal
Updated: 2 days ago
Not all customers are created equal. That might not sit well at first, but let me explain. There's a principle called the Pareto Principle which theorizes that 80% of the effects of something come from 20% of the cause. Let me give you a few examples:
1. 80% of sales come from 20% of your clients
2. 80% of sales come from 20% of your products
3. 80% of complaints come from 20% of your clients
A birds-eye view of your business is not going to allow you to see the skeletons in the closet or the customers that are sucking the life and money out of your business.
Our motto here at Financial GPS is
"If you don't know your numbers, you don't know your business."
Let's zoom in and look at your Video Marketing Company a little closer. The way to do this is to run reports based on Customers. In QuickBooks Online (QBO), you can run a Profit & Loss Statement (aka Income Statement) and filter them by Customer.
Here are 3 things you will learn by doing side-by-side comparisons of your customers:
1. 20% - Who are the 20% in your business who are making up 80% of your revenue? These are the customers that you need to pay attention to and keep! They are the first you want to target to up-sell if there is an opportunity there.
2. 80% - Once you locate the 20% customers, you are left with the 80% who may be sucking the time, energy, resources and money out of your business. You then have to decide if they are really worth keeping or if you need to charge more for your services.
3. Customer Personas - As you begin to narrow down the 20%, you begin to understand the type of customers or projects that you want to have. This information allows you to create Customer Personas which are basically like dating profiles. They allow you to be specific with the industry, age, education level, budgets, etc. of your ideal client.
The number of clients you have means nothing if they are sucking the life out of your business. I, personally, would rather have 4 solid clients who fit my Customer Persona than 10 who are sucking the life and energy out of my business, wearing out my employees and making my job harder.
So the question is, who are 20% and who are the 80%? A birds-eye view of your business isn't going to help you identify these customers. Roll up your sleeves, start digging and be realistic. Do you want to ruffle your feathers and say you signed 20 new clients, knowing they are the 80% you don't need for your business, or that you signed 3 new clients who are the 20% and who are ideal for your business?
Check out the blog on How Videographers Can Earn More Money With How They Invoice for more insight on the best ways to price your clients and make more money.
Make sure to check out our Wednesday Weekly Webinars for more training.
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