Trim and Score Your Customer List

I heard a great quote recently; “If a salesperson is calling on more than 50 prospects and customers, that salesperson has a hunting license instead of an account list.”

It is unrealistic to think you can manage more than 50 accounts. The only exception to this rule is if you are selling high end capital equipment that is purchased once every 20 to 30 years. But, if you are making repetitive sales to the same customers over and over, you are kidding yourself to think you can manage more than 40 to 50 accounts.

After you slim down your customer list do some analysis and I’d wager that somewhere around 80 percent of your revenue comes from the top 20 percent of your account list. Furthermore, those last few accounts that make up your top 20 percent of the revenue are substantially smaller than those at the top of your list. Do some account review and balance your accounts with some new larger accounts.

Next, implement an RPM Customer Scorecard. Yes, just like purchasing does with your suppliers, but they call it a Vendor Scorecard. An RPM Customer Scorecard measures three critical components of a customer:

  1. Revenue. What is the gross sales volume of each customer? Those accounts at the top receive a value of 10 and those at the bottom get a score of 1.
  2. Profit. This is a measurement of the percentage of revenue that goes to the bottom line. The highest get a 10 and lowest get a 1. Here’s a chance to work with your controller! Controllers are pleasantly surprised when salespeople ask this question.
  3. Maintenance. Here’s the fun measurement, sometimes called the nuisance factor. Those dream customers that you enjoy working with, although demanding, are fair and when they need a favor you go out of your way to help them. On the other end is the person’s name that makes you flinch every time you see it in your inbox. They ask for discounts, shorter lead times and never say thank you. You can guess who gets the 10 and who gets the 1.

Total up the scores. A score of 25-30 represents a customer you want to make sure you have a plan to keep them as a customer. A score of under 10 is a customer you should refer to a competitor. With this scorecard in hand think about the creative conversations you can have with your customers, particularly at the time of a price increase. With those customers scoring between 10 and 25 you can have great conversation reviewing the scorecard.

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