From the Center for Strategic Relations, a twice-monthly supplement to Applying Strategic Relations, mailed at your request

The Wrong Customers

Thank you to those who make my Atlanta, GA (USA) visit so productive. I even wrote out this newsletter on the plane and at my hotel, I was so ahead of the game.

However, I can't find those notes, so this edition was completely rewritten. At least my trip covered training, client support, and meeting with several prospective clients.

In the last lesson, I shared with you strategies to develop buying relationships for less. Low cost prospects are critical for developing profitable buyers -- and that's exactly what your business needs to grow.

Today's lesson will address the critical question, "Are you pissing away money with the wrong customers?" It's a hard question, but 99% of business-to-business firms are so wrapped up with their product they don't stop to think who it is they are really serving.


Justin Hitt
Consultant, Author & Speaker

Ps. Do you want to meet to pick my brain?? I'll be in Kinston, NC (USA) November 24 to 26; Washington, DC (USA) December 30 to January 2; Toronto (Canada) January 3 till 6. Write to schedule an appointment.

Are You Pissing Away Money On The Wrong Customers?

By Justin Hitt, Strategic Relations Consultant,

Most sales managers tell their people, "Close every account you can, a customer is a customer." Your top line revenue grows month after month, but you're still not making any profit. Even worse, sales people are busy prospecting new accounts daily with dwindling conversion rates.

Analyze this for a moment. What does a customer cost to acquire? How much is a customer worth over time? Most companies don't know the answers to these critical questions. Do you?

You, like many business-to-business firms pay entirely too much to acquire a new buying relationship. Not because you can, but because you don't know how much a customer costs to acquire.

The wrong customers are those customers who even if you get them, cost too much to have. They are expensive to acquire, with little or no upside future potential.

What you are about to learn will make you lie awake tonight crying like a baby. Many of the customers you have today are stealing money from your business that would be better spent investing in profitable customers.

One myth says 20% of your customers create 80% of your profits. However, it's more like 20% of your customers create 120% of your profits. Are you worried yet?

For executive interested in creating and keeping profitable customers, there is something you can do. Follow these steps to waste less money on the wrong customers:

  1. Calculate customer lifetime value. What is the average customer worth over their lifetime with your company? This number is the upside potential of every new qualified lead and is a factor in calculating your investment per customer acquisition. As you increase this value, you can spend more acquiring new customers.
  2. Calculate profit per customer. How much is each customer worth after expenses, returns, and marketing costs? Once you know this number, you can spend up to this point acquiring new customers, but no more than the customer lifetime value. Knowing this, you can still be profitable spending more than your competitors.
  3. Target qualified buyers first. Who do you know is most likely to purchase your offering? Sell where customers are buying, start marketing efforts where the highest concentrations of buyer exist. Let someone else pioneer new markets.
  4. Develop a lead nurturing system. What happens to the leads that aren't ready to buy today? Knowing where buyers are, how much you can invest in them, now it's critical to track every qualified lead to close. Continue qualifying leads even after the first initial response.
  5. Focus on high value customers. Who are your most profitable customers? Not every customer is equal, by orienting your marketing and sales efforts to the highest value, you can be surer of your efforts. Use simple profiles to identify high profit, low resource customers you can serve.

You could be throwing away money right now on unprofitable customers. Why waste your hard earned resources when you can have a reliable way to attract profitable buyers. When will you stop wasting money with unprofitable customers?

© 2005 JWH Consolidated LLC dba Center for Strategic Relations, All rights reserved.
/ profitable-customers | customer-relations /

# # #
Inside Strategic Relations is for Sales and Marketing Management who want to turn business relationships into profits. Members read past issues at

Thank you for passing this newsletter to your staff and associates.

Home | Featured Articles | Glossary of Terms | Subject Index | Site Map | Editorial Calendar | About us | Contact us

Center for Strategic Relations, Dept IUN,
1123 Spruce St #3123, Martinsville, VA 24115-3123

24-Hour Phone/Fax Hotline: +1 (877) 207-3798

© 2001-2023 JWH Consolidated LLC dba Center for Strategic Relations, All rights reserved. Privacy Policy. Sitemap.