Category Archives: Entrepreneurial Misc

Know that 20% like you know your own dog. Pareto’s 80/20 Rule. by Mark Bove’

Pareto’s Law – The Definitive Guide to Bigger, Easier Profits After you’ve heard the adage “work smarter, not harder” for the gazillionth time, you probably want to gag. Reading Timothy Ferriss’ The 4-Hour Workweek, you’ll find it again; this time, swallow the gag reflex and pay attention.

It comes in the form of Pareto’s Law, the 80/20 principle (another teaching point that’s been around the block more times than a new driver in a Mini Cooper). Never mind. You really do need to learn this principle – and put it to use – if you want to boost the bottom line and still have time for a life.

Even just the title of Ferriss’ book should be enough to nudge your imagination. What would you do with a workweek that only lasted four hours or less? If it’s really a possibility – and it is – it’s worth taking another look at something that actually works, and not just looking, but putting it to use.

Here’s how it works: Pareto says you get 80% of your results (good or bad) from 20% of your input (what you do). In business, it can look like this: 80% of your sales come from 20% of your customers. That means that you’ve got a dead weight factor of 80% among your client base. They’re requiring an inordinate amount of work, and are only producing a small portion of your revenue. Translation: not good.

How do you put this principle to use to boost your profits?

1. Track everything.
First, you’ve got to be able to know which clients are the most profitable. If you’re not keeping track of this info, start. If you’re in an MLM selling health and beauty products, you need to know which clients buy the whole anti-aging line – on the autoship plan, and which buy the occasional mascara, if you call them… after seven attempts to reach them. It works the same way for every business – product- or service-driven, from haircuts to custom-built private jets. That same 20% of your customers are easy. They know what they want. They buy it from you. They’re happy. You’d better know exactly who they are.

2. Know that 20% like you know your own dog.
You want to be able to pick these customers out of a lineup because you know them so well. What makes them such great customers? What trends do you see? How do they like to be contacted? What are you providing that compels them come back for more? How did you find them? Where can you go looking to find more just like them? By taking the time to get to know them, you can learn a lot – it’s time well spent. Essentially, by learning all about these customers, you form a blueprint for your ideal customer. With this blueprint in hand, you take the first step in designing your customer base.

3. Be picky.
When you’re new in business, you’re so grateful to have anyone come through the door that you’ll put up with a lot just in hopes of making a sale. It’s not a good precedent to set for your business, but it happens. The trick is moving away from that as quickly as possible. Given the choice, why would you gather unpleasant, high-maintenance, penny-pinching customers who tax even your best customer service person’s patience? Instead, you could assemble a group of loyal, quality-driven, appreciative clients who value what you provide and make doing business a pleasure. It’s a matter of choosing quality over quantity, at first.

4. Get into cloning.
Well, not really. But you do want to redirect your efforts from how you used to do marketing and sales – anyone with a pulse – to attracting more who fit the blueprint of your ideal customers, and by spending more time and energy on the customers you’ve got who are already ideal. You can find more of these precious gems by asking for referrals, by going where they go and doing what they do, and by doing everything you can to provide exquisite service to them.

5. Systematize it.
You’re probably not in the position to just go willy-nilly firing clients who don’t meet your dream come true blueprint. But you can definitely make sure that your new clients are the ones you choose. Set up a ranking system so you’re able to keep track of your clients and their profiles. Customize your service so you spend the bulk of your resources on the most productive clients – while still providing excellence to your B-list clients.

It’s always possible that today’s 80%-er may become tomorrow’s best client – or they may introduce you to that dream client. Regardless, your goal is to provide excellence to all clients, while actively pursuing the ones that’ll make your life easy and your business boom.

An internet business isn’t something you want to jump into without any training – but with a bare minimum of tech skills, anyone with a computer, internet access, and a hobby or interest can build a business.

Additional Resources on this topic:

http://en.wikipedia.org/wiki/Pareto_principle


Know Thy Customers

Customers buy products for three main reasons: status, price and function. To sell tothem, determine which of these is motivating them. For example, drivers buy Michelintires for a variety of reasons: They are safety-conscious; they like the brand; they are impressed by the tires’ long life; the tires fit their self-image. Don’t assume you already know why customers buy your product.Ask them such questions as:• How do you make purchasing decisions?

• Are your decisions impulsive or deliberate?

• Do you shop around?

• Do you buy direct or from catalogues?

Segment your customers to gain a clear marketing focus. For example, categorize your buyers according to how they use your product. Boat owners, for example, may use their boats to fish, cruise, entertain or spend time with their families. Each function requires a different message and strategy. Self-image is so important to most people that it can dictate what they buy. Teenagers who buy clothing, for example, may identify themselves as either preppy or punk. The two groups have different musical tastes, subscribe to different magazines and respond to different messages. People from every background, lifestyle and age group do the same reinforcing your identity by choosing certain products is not just a teenage tendency.

The creators of the The Blair Witch Project, an independent film shot on a low budget,knew that their horror-movie customers enjoyed being scared – so they focused on function. When the film debuted at a festival, promoters plastered “missing persons” signs around town to generate curiosity about what happened to the protagonists. They opened the film in small theaters, where it quickly sold out, and they spread rumors that it was too scary for normal theatrical distribution. This created more buzz. Theaters reported earning as much as $56,000 per screen, compared to the $10,000 to $12,000 per screen they earned on mainstream blockbusters. Because its creators understood its customers so well, The Blair Witch Project became one of the most profitable moviesever made. Customers fall into these four types:1. Those who buy the best products they can afford.

2. Those who compare product features and the price.

3. Those who focus on price alone.

4. Those who hang onto everything and buy as few new items as possible.

Recomended reading – for more information on this subject:

(book) Streetwise Marketing Plan

by Don Debelak

Please don’t waste my time…dealing with Time Wasters, by Mark Bove’

 

Note: this recording was originally posted in April 2008…but I just had to bring it back due to the high demand…It’s one of my wittiest posts to date!

my custom "Time Wasters" stamp

Todays marketing minute will focus on getting rid of those dreaded TIME WASTERS, those customers that drain your energy while making you little or no profit. The ones that you keep hoping will one day give you that big job or tell all their friends to come buy your product or service. Is it crazy to think that you can PICK the customers with whom you do you best work with and leave the rest behind? The answer is a resounding No

Mb

Choosing Your Customers Brings Success and Stress-Free Days

Choosing your customers sounds like a dream come true. In some perfect world, we could hand-select our customers and they would behave exactly as we want them to. They would provide us with all the work we want and would be a joy to work with.

Well, that perfect world is here. The secret to having a roster of choice customers is to do something that is pretty unorthodox; something that will have you shaking in fear; something that will take you totally out of your comfort zone. The secret to having your dream customers is, to dump the ones that are not ideal for you.

Yes, I know that we go into business to get as many customers as possible and to be as successful as we can. So the whole idea of canning our customers is totally foreign. It goes against everything that we as business people believe. However, by taking this step, we will make our business interactions much less stressful, produce better work and be on the path to attracting more ideal clients.

So how do you go about this process? You can’t just pick up the phone and say “I’ve decided to dump you as a client” to any client who upsets you on any given day. You need to put these steps into action.

Thoroughly analyze your list of clients. Put them into three categories: the ones you totally enjoy working with and work best for and with; the ones you dread working with and therefore give less of yourself to; and those who fall into neither category.

Then, do some deeper analysis of the list of ideal clients and ask yourself what it is exactly about them that makes you enjoy working with them. When you have compiled that list of reasons, you now have the criteria of what makes an ideal client for you.

Those who are in the list of those you dread working with are there because interactions with them tend to be difficult, they rob you of your energy and your productive time and therefore your work for them is less than stellar. By getting rid of these clients, you will enjoy your workday more and work at your peak potential more often. This will result in better output from you and even happier clients.

When you have made the decisions of which clients you will no longer serve, the way to trim them from your client database is by referring them to other people who may be more capable of serving them well. Essentially having a good fit with your clients is important to doing a good job, if you are not a good fit, you are doing them a service by referring them to someone else who may be.

When you have successfully eliminated the stressful, demanding, counter-productive factors, a.k.a. clients, in your business, you will see that you have created a much better work environment for yourself. Just imagine how pleasant and enjoyable it could be to work with only your ideal clients. It will refresh your spirit and creativity and you will be a much more positive, confident and successful individual.

By doing so, you will find yourself much more productive and producing better results for your remaining clients. This good work will, in turn, reward itself, by earning you more referrals to other ideal clients. Your happy clients who you enjoy working with will be thrilled to recommend you because they are so pleased with your work. Your client base will fill back up, replacing the less-than-perfect clients you got rid of and more.

Remember those clients who were somewhere in the middle, neither a joy to work with nor a torture? Your increased productivity and better work will often reflect positively on these clients and they will become more like your ideal clients. If they do not, and they fall into that category of those you dread dealing with, it is your signal that it is time to do a little more cutting into your client database.

The scary step of choosing the customers you want to work with and getting rid of the ones you don’t want to can make a huge impact for the better on your business and your life. Once you embrace the step that needs to be taken, you will be rewarded with the results you seek in your business.