The Business Success Newsletter / Strategic Relations Journal (Bridge Issue)

A resource of the Center for Strategic Relations.

Issue #37 -- June 14, 2002

Published each Friday and distributed to business owners and professionals like you, who want to learn more about improving your business profits and overall success. Subscription information is available at the end of this newsletter. Thank you for reading.

Dear Entrepreneur:

Did anyone notice that I skipped last week's newsletter? The Business Success Newsletter has two types of readers, business owners of companies with fewer than 10 full time employees, and those with companies of more than 10 employees. If you have not noticed, many of the topics I write about require your organization to have some resources to implement -- business owners with fewer than 10 full time employees just aren't going to benefit as much with this strategic relations information.

What am I getting at? I'm splitting the newsletter into the Business Success Newsletter and the Strategic Relations Journal. The newsletter you are reading right now will become the Strategic Relations Journal, which I will primarily talk about helping business owners to build stronger relationships. The new Business Success Newsletter will contain information more useful to someone with fewer than 10 employees -- still very valuable information, but in addition to some of the articles I provide, it will feature authors from

If you have any questions about this refinement of service (you'll learn what I mean in this issue) please email me at You will not be automatically subscribed to anything -- if you are getting positive results from the information I'm providing here, you don't have to do anything. Look for a special notice about the newsletter enhancements next week.

Now, on with the show...

This week we are going to talk about focusing on those customers with proven value to your organization, your ?Top Ten Percent? most profitable customers. In order to deserve doing business with more people like that, you will need to build the relationship necessary and this article will give you some ideas to do just that. Next week I?ll share with you no-cost customer relations win-fall that can increase loyalty to your product or service from your existing customer base. You won't want to miss it.


Justin Hitt
Managing Editor

How to Increase Your Profits by Cultivating Your ?Top Ten Percent?

Not all customers have equal value to your organization; in fact, some customers are more profitable than others are. These profits come from the cost of service and total purchasing volume, not just individual product profitability. To cultivate these profitable customers, you first must identify them in your customer portfolio.

Your ?Top Ten Percent? customers are at the top of your ranking for volume, frequency, and profits per dollar invested. Group your customers by profits generated for your company, organizing them by ?Top Ten Percent?, those ?Above Average?, and customers with ?Below Average? profit earnings. Utilize statistical information and remember customers purchase multiple products, so don't use products as the only measure of profitability.  Try to develop a full picture of each customer?s contribution and expense to your organization, consider overhead costs as well as other expenses on a per customer basis. It is important to align your profitability measures with your corporate goals and always use measurable information -- don't just guess!

Once you have arranged your customers by their profitability to your organization and have grouped them in the three groups mentioned above -- you'll get the most out of this strategy by determine the specific demographic differences between categories. Each customer tier will have specific demographic, preferences, and product expectations unique to that group. This analysis helps you better understand the differences between your customers, which enables you to serve their needs. It may be necessary to append your historical sales information with customer demographics from third party data in order to get a clearer picture of who your customers are in each category. If the differences are not apparent, then revisit this segmentation process and refine your profit measures.

Armed with a clear understanding of what makes your best customers most profitable and differentiates them from your least profitable customers; it's time to put this information to work. For every ?Top Ten Percent? customers, if you could get another customer just like them, wouldn't you be rewarded with greater profits? In most cases, targeting your most profitable customers points your organization in a direction for gaining customers that will earn the company the most income for dollar invested. Distribute this newly gained customer profile to each of your sales and marketing people -- this is your new target customer.

As your company changes it's focus, to those most profitable customers, it should consider giving away it's least profitable customers -- if a customer isn't profitable, stop serving them. Don't upset them, just orient your new services around the needs of those customers who are already profitable to your organization. Even consider charging unprofitable customers more so you can break even on serving them. It may take a few cycles but eventually you can grow your ?Above Average? customers to be more profitable while reducing the number of customer you are serving at a loss. Over time, your efforts will be rewarded with an overall improved quality of customers.

Once you have obtained the larger picture of who your most profitable customers are and start addressing their needs specifically, your whole business strategy becomes more focused on the type of individual who already demonstrates the most real income to your business. This isn't an easy strategy, but with the right measurable information and solid demographics you are on your way to greater profits in your business.

Justin Hitt, Strategic Relations Consultant and author of 101 Strategies for more Profitable Customers. For more information on cultivating your top ten percent send an email to cultivate-toptenat for a report ?Discovering your ?Top Ten Percent? Customers and Cultivating them for Greater Profits? by return mail (a $27.97 value!).

© 2002 JWH Consolidated LLC dba Center for Strategic Relations, All rights reserved.

Questions & Answers

In focusing on what my customers want, the Strategic Relations Journal will continue to answer readers questions about business development, relationship management, and management strategies that increase profits through improve relationships with the ?8 Relationship Realms? which you will learn about in future issues. Send your questions to -- it's the only consulting I do. Isn't it worth your time to try it?


If you are interested in consulting, I provide onsite and over the phone consultations in the area of strategic relations. I only work with business owners who have multiple company interests employing 10 to 150 fulltime professional staff who through a high utilization of technology provide a specific product or service in a repeatable manner.

I?ll help you build stronger relationships which will bring you more income, reduce your costs, and provide real profits for your business. An eight-hour minimum is required paid in advance; however, your first hour is free which we will spend defining the problem. Projects last from 1-day to 3-weeks depending on your specific needs.

For more information on rates and availability, write consulting-ratesat

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