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Cut Selling Overhead in Two Easy Steps

My mentor was right when he said I was "all over the place, losing opportunities for business growth" because I was always looking the other way. A critical mistake pointed out was my overhead dealing with unqualified prospects ...

In 1996, I was spending more than half my profit on unqualified prospects. Like many sales people, I thought I needed to meet with everyone. Throw in general overhead, marketing, and taxes ... I was hardly making a dollar on a new customer.

It's that what business is about, earning more than you spend on every new customer. Basic math tells you if you spend $2.00 to get a customer who only pays you $1.00 that you aren't going to survive.

To solve this problem my mentor suggested the following:

• Know your numbers. For every customer, product line, and marketing effort you must clearly know the cost and income generated. While these numbers will overlap across these classifications, together they tell you where to focus your efforts.
• Measure for profits. While income and expenses have their value, it's profits that pay the bills in business. Focus on selling profitable products to profitable customers.
• Add more hoops. I wasn't qualifying prospects nearly enough before talking with them about their specific situation. Because of this I left money on the table and didn't provide the value I could to each client.
• Fire the unprofitable. Some clients weren't worth having even after they signed the contract. Even some clients, who paid their bills on time, cost me more than they were generating.

You can be smarter than me, just follow the two steps provided here to orient your efforts towards profitable customers. I was able to significantly cut my selling overhead because I was now only meeting with individuals ready to buy.

I wasn't out of the woods yet, the next mistakes I'll cover was getting the money for the work I had already done. Stay tuned for that message soon, meanwhile, what are you spending and making from each client? The numbers may surprise you.

Justin Hitt turns average business relationships into profitable customers and you can too. Training materials available at https://www.jwhco.com/shop/

By Justin Hitt at February 1, 2007 12:52 PM  Subscribe in a reader