Improve Your Margins Without Complex Maths
If you’re not a numbers person the thought of calculating margins can seem like a daunting task, here’s where we can simplify the process and look at it from a practical perspective by simply analysing your customer database.
When we look at any business’s customer database we know that it pretty much ends up looking a little bit like a bell curve.
It has a base, and we have the majority of the customers sitting in the middle (we’ve labelled them C and B clients) and then we’ve got some of our database that sits on either side – our D and A customers.
Our A customers are our best customers.
And at the other end of the spectrum we have our D customers. These are the guys that we really don’t enjoy dealing with. These are the customers that take up a lot of our time, effort and resources and don’t often pay enough for the privilege.
And then we have our C and B class clients in the middle. What we need to do is have a proper look at that database to decide who the C customers are and who the B customers are so we can start to get as many people moving towards and becoming more A customers and at the same time reducing the amount of D customers.
A great strategy is to think that your breakeven point is probably somewhere between your C and D customers and the average amount of money that we make from clients is right bang smack in the middle, obviously.
But the sweet spot is really between the B’s and the A’s here at the cupcake.
To improve margins, a simple to understand strategy is to get the C’s to become B’s and the B’s to become A’s…to attract more A’s and to get rid of the D’s or at least move them into becoming a C.
Now if we can do that successfully, essentially what we’re doing is moving everything in terms of our average to the right of the curve and what we have found with working with our clients, is that this approach, on average will add 10% to your bottom line.
I’m sure that’s something any business owner would be happy to achieve.
Of course, get in touch with us for a 15 minute chat on how we can help you make more money in your business for less effort
Natalie and Amanda (the slicers and dicers)