Saying “no.”
It’s a simple word… but can be incredibly powerful for entrepreneurs.
As an entrepreneur, it’s natural to want to make as much money as possible. The mistake comes with the belief that you have to serve every customer in order to do so…
But saying “no” to customers that you struggle to provide value for is actually a strategy for growth!
Yes, you heard me right…
Here are 3 reasons why:
Reason #1 – Removing “Time Vampires” From Your Business
The Pareto principle, better known as the “80/20 Rule,” says that 80% of your results will come from 20% of your efforts.
Applied to business, this means that 20% of your customers will usually comprise around 80% of your profits…
On the flip side of the coin, it also means that 80% of your problems will typically come from about 20% of your customers…
And with a little research, chances are you’ll find that it’s your most price-sensitive customers that create the most headaches 🙁
After all, if the price is the most important buying decision to them… they’re not valuing (or seeing) all the other advantages of working with you.
Identifying and removing these “time vampires” can make a huge difference in how much you enjoy running your business and will drastically increase the amount of energy and time you can devote to your most valuable clients…
Saying “no” to these kinds of customers could be the smartest decision.
Check out this related article on the 80/20 principle, also known as the Pareto principle, which states that roughly 80% of effects come from 20% of causes. You can apply the 80/20 rule in your business to highlight the importance of focusing on the most impactful and valuable activities to maximize efficiency and success.
Reason #2 – The Impact Of The Internet And Social Media
Choosing to serve only customers for whom you can provide the most value can have a dramatic impact on your business…
The internet (and social media in particular) has given individual consumers a level of influence they’ve never had before – not only is it easier for customers to share their opinion (good or bad) of a business, they can also reach a much, much wider audience than pure word of mouth could ever provide.
According to the American Express 2012 Global Customer Service Barometer report (which included 1000 interviews), participants told an average of 24 people about their bad customer service experiences – up from 16 people in 2011.
If they enjoyed a good customer experience, then they only told an average of 15 people – up from 9 people in 2011.
These numbers show two things:
- People are telling more and more people about their customer experiences
- Bad experiences are mentioned a LOT more
If you are creating a great experience for your best customers, it can have a massive impact in positive “word of mouth” style advertising, but remember: when you take on customers that you struggle to serve, their negative experiences travel even further…
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Systems, including those you create for digital marketing, create consistent, predictable results. They also allow for scalability. Read more about growing your business in this handy guide we put together for you.
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Reason #3: How To Decide Which Customers To Serve
To find that “best” 20% of your customers, look for those who are:
- The most satisfying to deal with
- Generating the most referrals for your business
- Repeat purchasers
Ask yourself: of your existing customers, who would you replicate if you could?
Once you have a list of great customers, identify specific traits that make them enjoyable and profitable to work with…
Then design a strategy to find more customers that share those great qualities.
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Check out this related piece, “How to Value a Business: A Guide for Small Business Owners.”
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The thought of “firing” a customer can be a daunting for most growth hungry entrepreneurs, but it’s only by eliminating customers who provide little profit – but a use up a LOT of energy – that you will be able to optimize your business to its full potential…
Saying “no” a little more often is a recipe for not just a more profitable business, but a more satisfying one to operate too!
In your corner,
Charlie
