Which Are Your Most Profitable Customers?

I regularly ask my coaching clients the following three questions:

How many customers do you have?
Which customers are the most profitable for your business?
Which customers do you enjoy working with the most and why?

The last question is the easiest for my clients to answer because they can give me an emotional response rather than a fact-based response. The first two questions require analysis of their business, and most of my clients have usually not done that prior to meeting me.

I find that most businesses I work with have never actively thought about the profile of the customer they would like for their business. In pondering this issue, I devised a four quadrant approach to customer profitability and management. I call it my ‘L⁴ Customer Profitability Quadrant’.

Understanding the L⁴ Customer Profitability Quadrant’s power in relation to your business will require spending a bit of time working out the numbers. The gross margin for each customer needs to be calculated as follows:

Customer Gross Margin = Total Customer Sales – COGS for Customer/ Total Customer Sales x 100

So for instance, if Customer 24 buys $2000 of services in one year, and the cost of goods sold is $900, then the equation is:

Customer 24 Gross Margin = 2000-900/2000 x 100 = 55 percent

Using my example above, the customer gross margin calculation means that with the combination of products and services sold to Customer 24, the gross margin is 55 percent.

Another way of stating this is that for every $1000 of sales made to Customer 24, $550 contributes to the business’s gross profit.

We then rank all customers for enjoyment with 1 being low enjoyment and difficult to work with, and 10 being very enjoyable and easy to work with.

Once this information has been determined it is plotted to create the L⁴ Customer Profitability Quadrant as depicted in Table A.

Table A

Customers fall into four quadrants.

In the bottom left quadrant are the customers that are low in profitability and enjoyment, so I call this the ‘Lose Them’ quadrant.

In the top left quadrant we have highly profitable customers, but the enjoyment factor is low. I call this the ‘Look Out’ quadrant.

In the bottom right quadrant, are the customers that are really enjoyable to work with but they are not very profitable to the business. I call this the ‘Lift Up’ quadrant.

In the top right quadrant are the customers that are highly profitable and are highly enjoyable to work with. I call this the ‘Lots More’ quadrant.

‘Lose Them’ Quadrant
I wonder how many businesses have customers that are really hard going and not very profitable to the business? This type of customer sucks the life out of the business. Because this type of customer is difficult to work with, they will also often be time consuming to service. Having to work with customers that fall in this category is a waste of time and energy. That time and energy would be better spent working with enjoyable and profitable customers and finding more profitable customers for the business.

‘Look Out’ Quadrant
Customers that sit in the ‘Look Out’ quadrant are a challenge and risk to a business. They are highly profitable, but they are not enjoyable to work with. As this is a high risk quadrant, personally I don’t think any business should have too many customers sitting in it. Rather, they need to be moved to the ‘Lots More’ quadrant or out of your business.

The challenge with these customers is the profit they contribute to your business, notwithstanding the low enjoyment factor. If these customers were to leave your business, it potentially results in a major impact on profitability. Yet, because the enjoyment factor is low, there is a real chance they may not be loyal to your business, so there is a flight risk; they could find another supplier at any time and therefore impact the turnover and profitability of your business anyway.

‘Lift Up’ Quadrant
Customers in this ‘Lift Up’ quadrant pose a quandary for your business. They are good customers to deal with and service, and are probably highly loyal to your business, yet they are not very profitable. Often, because these customers are good to deal with, your staff will ‘over service’ them in order to maintain the interaction, because it is enjoyable.

This is actually an easy dilemma to resolve. These ‘Lift Up’ customers are already wedded to your business, so given the opportunity the chances are very high that they will want to buy more from you. Often customers are not aware of the full range of products offered by a business, or the business has not considered the full requirements of the customer in making offers. Depending on your business, the easiest way to address this situation is to find out more about what your customers do and what they might need from your business, and make offers.

‘Lots More’ Quadrant
These customers are your goldmines, and should be treated like kings and queens. They are highly profitable to your business, and they are enjoyable to work with.

The key here is to analyse what makes them enjoyable to work with: is it the company; the industry; the type of products and services they buy?

Once you have analysed this for your business, you can start working on targeting more of the same types of customers to your business.

Finally…
If you would like to read more about my L⁴ Customer Profitability Quadrant and how it could be applied to your business, then please go to www.adelemclay.com/free-resources and download the FREE E-book entitled: Who Are you Most Profitable Customers? This resource will help you to fully understand the nature of your customers and find ‘Lots More’ highly profitable and enjoyable customers for your business.

Could some guidance from me be helpful to you? If so, please arrange a free 30 mins Skype strategy meeting with me. Here’s my calendar to book a meeting. I’d love to support you in some way to gain ‘seductive clarity’ in any aspect of your business or life.

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Is Customer Service YOUR Key to Business Success?
Creating Superior Customer Value – do you do that in your business?
Finding Customers via LinkedIn
Using YouTube for Finding Customers
Who Wants High Customer Retention?
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?

Small Business Cash Flow – The Ultimate Guide

Small Business Cash Flow – what is it?

Cash flow is the sum of all the cash received into your business, less all the cash payments being made from your business. Positive cash flow is when there is more cash coming into the business than is being paid out of it. Negative cash flow is when there is more cash being paid out of the business than is being received by the business.

Small Business Cash flow issues arise in a small business for two major reasons:

The small business doesn’t have enough revenue (gross income) coming into the business compared to its expenses, and/or
The small business doesn’t have good internal financial management and administration procedures in place to support the business. This could mean the business has difficulty collecting its accounts receivables; it has too much cash tied up in stock; and/or it is spending too much money on business overheads/expenses/assets.

Many small businesses mostly focus on gross income and profit – before or after tax. While both are important in business, cash flow is the life blood of all businesses, and without it they eventually die.

Yet, very few small business entrepreneurs spend much time thinking about cash flow or understand how critical a business driver it is. The key transactions in business that affect cash flow are:

Sales (cash and credit).
Purchases (inventory and business expenses).
Business loans (new and repayments).
Business assets (buying and selling them).
Investments

The key principles of good cash flow management are simple. Firstly, the small business needs to ensure it has more income coming into the business than expenses; and the business needs to have its accounts receivable paid on time so it can pay its own creditors.

I have developed the SPEARHead System™ – 50 Strategies for Supercharged Small Business Cash Flow to support entrepreneurs to manage their cash flow. For the FREE E-book, please click here www.adelemclay.com/free-resources

What does SPEARHead System™ mean?

The SPEARHead System™ covers all aspects of small business cash flow as follows:

S – Sales Receivables
P – Payables and Purchases
E – Expense Management
A – Asset Acquisition
R – Residual Cash

Head – how do you ‘Head off’ or ‘SPEARHead’ your competitors to ensure your business never loses a customer and attracts all the customers to it that you are seeking?

For my FREE E-book entitled: SPEARHead System™ – 50 Strategies for Supercharged Small Business Cash Flow please click here http://www.adelemclay.com/free-resources/#spearheadsystem

Let small business cash flow issues be a thing of the past for you and your business.

Other articles on Small Business Cash Flow :

Cash Flow Problems in YOUR Small Business
Small Business Problems – Why are YOU in Business
Small Business Cash Flow Problems
Cash Flow in Business
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant in Business?
How to Solve Cash Flow Problems: Inventory Turn

Entrepreneurship versus The Meaning of Life

What Is the Meaning of Life?

That is certainly a question I have asked myself from time to time, and as a result have spent a lot of time reading on the topic. It has been many a dinner party debate – existential analysis. There are no right or wrong answers; it is about individual perspective.

I have now got to the point where personally, I think the question is not, “What is the meaning of life?”, but rather, “How does one live a purposeful or meaningful life?” Certainly that is a question or conversation that sits more comfortably with me.

I have been influenced in my thinking by many books, and one in particular has resonated: Dr Vicktor E. Frankl’s “Man’s Search For Meaning”. Dr Frankl was an Austrian Jewish Doctor of Neurology and Psychiatry. In 1942, along with his compatriots, parents, wife and brother, Dr Frankl was arrested and taken to a concentration camp in Bohemia. He remained incarcerated until the end of WWII, during which time all of his loved ones perished.

Notwithstanding his personal tragedies, Dr Frankl continued to seek answers to fundamental existential questions. After WWII he returned to his work and developed Logotherapy (Logos in Greek denotes ‘meaning’). According to Logotherapy, man could experience meaning in three ways:

The Meaning of Life – having clear roles, goals and ambitions.
The Meaning of Love – having loving and healthy relationships.
The Meaning of Suffering – having a redemptive understanding towards life’s challenges and suffering.

So, what does all this mean in the context of small business or entrepreneurial success?

For me the key is PASSION! To live with meaning and purpose, we have to live passionately.

If we are not passionate about the work we do, finding meaning in it, then we will never achieve the level of success we are seeking in our work.

As entrepreneurs, like it or not, we are leaders. If we are not clear on our purpose in life or the meaningfulness of our own lives beyond our businesses, and the congruence with that life purpose in our businesses, then in my opinion and experience our teams, customers and other stakeholders in our businesses will not ‘buy into’ or connect with us; they will sense the mis-alignment, and our businesses will struggle.

You see, people, whether they be staff, customers or suppliers, want to build authentic and trusting relationships with others. I know that the word authentic is an overused word at present, but it means ‘real and genuine’. We want authenticity in our lives and the people we interact with socially and in business are a part of that authenticity. Do you feel authentic in your relationships? Are you living with purpose and passion?

Have you created a plan for your life? Ironically, many of us would not start a business without a business plan, but most of us do not have life plans; a map and set of goals that we aspire to and are working towards achieving. Many people wander through life and business, and feel unfilled. Do you want to feel that way?

I invite you to take a step back and think about the meaningfulness and purpose of your life and what drives you at a personal level. Perhaps you might like to consider the following questions:

Who are you?
What matters to you in your life?
What are your personal values?
What do you want to do?
What do you want to share with the world?
Why do you want to share it with the world?

It is time to DREAM…. are you thinking “oh not that ‘airy fairy’ stuff?” It isn’t at all! For me DREAM means: Destiny Represented Evocatively, Actively and Magnetically. If there were no barriers to what you could achieve in your life, both personally and professionally, what would you want to do and achieve?

Find your passion in life; identify the things that will make your life feel meaningful. Once this has been done, create a life plan with goals (and perhaps a vision board), and start mapping out your pathway towards achieving that life plan. Set weekly, monthly and yearly goals, and review them periodically. It is affirming when another milestone in life is ticked off.

Then think about how your life plan merges with your business plan. Are they congruent? Are your goals and values in life congruent with what is occurring within your business and the way in which you manage your business and interact with all your stakeholders?

Are you running your business in a way that supports you to achieve your life goals? For instance, if one of your life goals is to have a one month overseas holiday with your family each year, can your business sustain that? Who will manage your business in your absence? Is your business viable without you working in it, or are you the ‘key person’ and if you are gone for one month, nothing will happen, no work will get done?

If your business framework is not allowing you to achieve what is important to you in life, then you will feel frustrated and that will be felt by all.

What needs to change in your business for you to achieve your personal life plan?

I truly believe that when there is congruence between our life plan and business plan, we are happier entrepreneurs and that happiness and purposefulness will be felt in all our relationships – personal and professional. Plus, we achieve more – again both in life and in business.

I call it VIVA Leadership™ – Vision Internalised is Vision Actualised™: internal clarity and ownership of our personal vision, and congruence with our business world creates purpose, momentum and achievement…. with lots of happiness and contentment along the way…. as well as the usual challenges of running and growing a business. But hey, at least when the tougher times in life and business occur we know we can even find meaning in those times too. We just need to push through, and the achievement of our life’s purpose will be a step or two nearer. Personally, I like the thought of that.

Other articles on What Makes Successful Entrepreneurs:

What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
NZ Entrepreneurship Success
Leadership Qualities
Supercharge Your Profitable Business!
Mega Entrepreneur Defined!
Seven Secrets of Super Successful Entrepreneurs
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

Seven Secrets of Super Successful Entrepreneurs

Do we all need to be like Steve Jobs or Bill Gates to be successful entrepreneurs? They were recognised as being ‘forces of nature’; icons of modern day entrepreneurship. Steve Jobs was known as a creative genius whereas Bill Gates is said to have an iron will. Are those the key traits that entrepreneurs need to success in business?

I have reviewed many international studies on what traits make an entrepreneur successful, and have summarised everything I learned into the Seven Secrets of Super Successful Entrepreneurs.

You might be saying, “Well Bill and Steve did not run small businesses! I don’t need those traits!” I disagree. They started with very small enterprises, working out of their respective garages or bedrooms with their business partners. At one time, they were fledgling businesses but they had a strong vision of what they could achieve… and they went for it. Similarly, all other entrepreneurs could do the same.

Bill Gates believes there are three keys to success in any new venture: Timing, Vision, Action! Steve Jobs believed that passion was key. Anything could be achieved with total belief and passion.

What is your driving force towards being a successful entrepreneur? If you are not sure, perhaps the Seven Secrets of Super Successful Entrepreneurs will assist you.

Secret 1: Self Belief

Successful entrepreneurs always believe in themselves, and they think BIG! They have great vision. They have passion. Successful entrepreneurs have an unrelenting belief that they will achieve everything they set out to do! They have a single-minded commitment to their dream and vision, and an unshakeable passion for what they are doing.

Successful entrepreneurs take massive action. They are not afraid of failure. They can tolerate ambiguity and risk. You see, for every mistake they make, they learn the lessons and move on. Many entrepreneurs have been successful, lost it all, and then built up their wealth again in another business. Successful entrepreneurs are hard wired that way.

As marketing guru Seth Godin says: “The only people who excel are those who have decided to do so”.

Secret 2: Set a Goal and GO!

Successful entrepreneurs set a goal; they make a decision. Then they act on it. They go for it! As well, they will quickly evaluate the outcomes. If the goal and action were wrong, they alter the course of action, and move on. Movement and momentum are keys to success as an entrepreneur.

Successful entrepreneurs are in a hurry. They have a ‘go-for-it’ or ‘get-out-of-it’ attitude!

Successful entrepreneurs will always be accountable, which means they are always responsible for everything that happens in their business.

Secret 3: Stand Out

Successful entrepreneurs don’t look at what others are doing and copy them. Instead they step outside of the box, and head the other way. They break the rules! They forge new and exciting frontiers, or they find new and interesting ways of doing things.

Successful entrepreneurs also network widely as they know by networking they will be increasing their netWORTH – not just in monetary terms, but as an expert in the market. They build a rock solid reputation as more people get to know them.

They are strong relationship builders. Watch a successful entrepreneur at a networking event. They will ‘work the room’, getting to know as many people as possible. They are beginning the process of building relationships that are for two way benefit. Successful entrepreneurs are genuinely interested in the success of others, and will support others towards their success.

Secret 4: Seize Your Market

Successful entrepreneurs have a laser focus on the market that they are in and want to conquer. Consider the differences between a machine gun that scatters bullets versus a sniper gun that aims and hits the target. Successful entrepreneurs want to be snipers! They own their market/industry.

They also trust the process of their market. Successful entrepreneurs recognise that trust takes time and is a process. They give value. For every $1 spent they want to ensure they give at least $5 in value back to their customers. They come from a position of service. It’s all about the customer experience.

Customer profitability is also key; they get to know their customers and in doing so, will understand how they as entrepreneurs can add further value to the customer, which of course leads to increased profitability, and at times, new product/service ideas.

Follow-up and feedback is key! Successful entrepreneurs are fuelled by customer feedback, as it helps them improve their products and services.

Secret 5: Strong Leadership

Successful entrepreneurs are strong leaders, and through others are strong managers.

As leaders, successful entrepreneurs impart their vision to staff, customers and other stakeholders. They are positive and they can tolerate ambiguity while heading towards the achievement of the vision. As a result, they are very flexible, able to change direction when necessary in order to achieve their vision.

As leaders, successful entrepreneurs surround themselves with excellent managers; they build top notch business teams. They are not afraid to have more able people than them working for them. Successful entrepreneurs are excellent delegators to their management team.

Successful entrepreneurs recognise the importance of strong business management, including: financial management, marketing/sales management, operations management and customer service. With the advance of technology, successful entrepreneurs also drive their businesses hard in terms of systemisation, automation and where possible, outsourcing non core functions. They create processes that are replicable through systemisation. Think about what Ray Kroc achieved with McDonald’s.

Secret 6: Sacrosanct: Time!

Time is money, and successful entrepreneurs understand the value of time. We all have 86,400 seconds or 1440 minutes in a 24 hour day. The way in which those minutes and seconds are spent leads to greater or lesser success. Successful entrepreneurs also know how to focus on what is important and how to delegate what they don’t need to focus on. They recognise where they should spend their time and energy.

Successful entrepreneurs recognise that they need to be accessible, but for the right reasons; productive reasons.

Successful entrepreneurs leverage other people’s time; they ensure their employees are working towards the achievement of their vision.

Secret 7: Self Improvement

Successful entrepreneurs spend time on improving themselves. They are attracted to ongoing learning and knowledge, be it books, learning programmes, conferences, watching videos, they soak up new knowledge.

They also allow time to re-energise. They take time out with family and friends for recreation, as that in itself is a form of self improvement.

Often successful entrepreneurs are excellent at other pursuits. For instance, it is widely known that Bill Gates and Warren Buffett are phenomenal Bridge (card game) players

Many successful entrepreneurs also take their health seriously, and include exercise as part of their daily routine.

Seven Secrets Unearthed

It is always interesting to hear about what causes others to be successful. But as entrepreneurs ourselves, what are we committing to in our businesses in order to achieve the entrepreneurial success we are seeking?

If you have learned something from the Seven Secrets of Super Successful Small Business Entrepreneurs, what might you change in your business to emulate the behaviours of super successful entrepreneurs?

“The future belongs to those who believe
in the beauty of their dreams.”
– Eleanor Roosevelt

Stand Out Entrepreneurs (In my opinion)

There are many entrepreneurs across the world that modern day entrepreneurs can take inspiration from. Here are some stand out entrepreneurs who have made a significant impression on me over time. Google them if you have not heard of any of these names.

Who are your inspirational entrepreneurs?

Industry

John D Rockefeller – Oil industry and philanthropist
Andrew Carnegie – Steel industry and philanthropist
Henry Ford – Car industry
Graham Hart – Packaging
Sir Richard Branson – various including air travel
James Dyson – Inventor and industrial designer

Technology

Bill Gates – Microsoft
Steve Jobs – Apple
Mo Ibrahim – technology and now philanthropy
Rob Drury – Xero accounting system

Food

Howard Schultz – Starbucks
Ray Croc –McDonald’s

Internet

Jeff Bezos – Amazon
Mark Zuckerberg – FaceBook
Larry Page and Sergi Brin – Google

Retail

Philip Greene – Fashion industry
Laurence Graff – Diamond industry
Anita Roddick – Body Shop
Estée Lauder – Cosmetics

Entertainment

Walt Disney – I think we all know who he is!
Simon Cowell – Music industry
J. K Rowling – Harry Potter books
Oprah Winfrey – TV and publishing
Martha Stewart – TV, publishing and retail

If you would like to learn more about business, please download any/all of the FREE resources that may be helpful to you at www.adelemclay.com/free-resources

Other articles on What Makes Successful Entrepreneurs:

Entrepreneurship vs The Meaning of Life
What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
NZ Entrepreneurship Success
Leadership Qualities
Supercharge Your Profitable Business!
Mega Entrepreneur Defined!
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

Mega Entrepreneur Defined!

What’s a Mega Entrepreneur? That is the most common question I have been asked since launching my Mega Entrepreneur Programme for entrepreneurial success around the world.

The definition of ‘mega’ according to the Oxford Dictionary is ‘very large or huge’. That’s part of what being a mega entrepreneur means to me, but that’s not all of it. Very large or huge is relative and personal. Very large or huge for me could be quite small for you.

Becoming a Mega Entrepreneur with my Mega Entrepreneur Programme means working towards being worldclass at what you do in business, regardless of how very large or huge you want your business to be. It means being worldclass in every aspect of your business. Worldclass leadership. World class branding. Worldclass marketing. Worldclass sales systems. Worldclass operations management. Worldclass people processes. Worldclass planning and finance.

A Mega Entrepreneur is focused on creating a worldclass business; the journey towards being worldclass is never ending. It is a constant, yet that is the excitement and joy of it.

One of the many measures of success in becoming a Mega Entrepreneur is the size of the financial reward within the business and in the pocket of the Mega Entrepreneur. How very large or huge do you want your game of business to be?

“Small business success means making money: thousands, millions or billions. You choose.” ~Adèle McLay

As a Mega Entrepreneur you decide how ‘mega’ you want to be. It’s your journey in business, supported by me and my Mega Entrepreneur Programme.

The journey on the Mega Entrepreneur Programme encompasses seven modules:

VIVA Leadership™
Brand Star™
Tri-POD Planning and Finance™
LOVE Marketing Mastery™
REAR Customer Delivery™
ROLE People Performance™
MAGNET Sales Systems™

The Mega Entrepreneur and their team will work towards continuous mastery in each of the modules during the journey. The financial rewards will arrive as a result.

Why become a Mega Entrepreneur?

Why not? Do you want to be more successful as an entrepreneur? Do you want to make more money in your business? Maybe you had a big dream or vision for your business and life, and your journey towards that achievement hasn’t been very successful so far.

What was your vision for your business? What is stopping you achieving it? Fear? Lack of knowledge or business support? Personal confidence?

What are the consequences of you not achieving your vision for your business and life? Disappointment over an unrealised dream? Not having the financial security and assets in life that you promised yourself and your family? A feeling of letting yourself and your family down?

Yet, by achieving your dream or vision for your business, life would be different. Financial freedom would be assured. Financial freedom also offers something else. Choice. You would have choices with what to do with your money… bigger house… more houses… cars… holidays… philanthropy… and much more. What do you want as a result of your entrepreneurial success? Whether you want it or not, you will also receive recognition with your increased success. You may well feel more loved and appreciated by your family, friends and community. Is that important to you?

You can achieve everything and anything you want in business, so long as your WHY is big enough. What is your WHY for being successful in business?

Once you have determined your WHY, then decide how big you want your success to be. I challenge you to think big. Dream about becoming a Mega Entrepreneur… at whatever level you want to play at in business. Become worldclass in your industry within your business. Nothing is stopping you other than your own beliefs and actions.

If you would like to learn more about business and becoming a Mega Entrepreneur, please download any/all of the FREE resources that may be helpful to you at www.adelemclay.com/free-resources

I look forward to hearing of and/or supporting your success as a Mega Entrepreneur.

Other articles on What Makes Successful Entrepreneurs:

Seven Secrets of Super Successful Entrepreneurs
Entrepreneurship vs The Meaning of Life
What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
NZ Entrepreneurship Success
Leadership Qualities
Supercharge Your Profitable Business!
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

Who Wants High Customer Retention?

Hopefully All Small Businesses Do!

Are you losing customers in your small business? Or do you have unhappy customers that you risk losing? Go on, be honest with yourself. Most businesses have customers that they unexpectedly lose to a competitor. Customer retention doesn’t have to be a problem in business, but often it is.

Recently I had an experience that left me feeling annoyed as a customer. Sadly it was with a charitable organisation that I like and have loyally supported for a number of years. They did some things that I found really irritating, which also led me to tell them I found their behaviours inappropriate. They challenged me, and told me that they were a business too and needed to act in this way. I disagreed. In the end, what they have ended up with is a loyal customer who is not happy and may take her ‘charity dollar and time’ elsewhere as there are plenty of charities needing support across the world!

My experience got me thinking about how small businesses may or may not treat and value their customers.

Did you know that studies have consistently shown that approximately 84 percent of customers who leave a supplier depart due to perceived indifference or an unresolved conflict? Only 9 percent of customers who leave do so because of price. I find these statistics fascinating and thought provoking.

What are you doing in your small business to ensure that your valued customers feel important and looked after, and that any conflict that arises is resolved?

Also, do you know which customers are most vulnerable to moving away from your business? I call them your ‘Look Out’ customers. The ‘Look Out’ customers are those that are highly profitable to your business, but you are not enjoying working with them and they may not enjoy being serviced by your business. What would happen if you lost a whole lot of profitable customers? What might that do to your business?

In my opinion, businesses must continue to evaluate the way in which they are supporting and servicing their customers, ensuring their customers feel valued and appreciated. If you are not thinking about this and if you don’t have plans in place to ensure customers are valued, then your business runs the risk of losing customers.

One way to achieve this is to talk to them. Perhaps you can survey your customers to see what they are thinking, explaining that your business is constantly seeking to improve the customer service it offers. You may be surprised (or even disappointed) with the responses you get. Regardless, the information will be helpful in enabling your business to better serve your most important customers.

Do you know who your most profitable customers and valued (or enjoyable) customers are? Many businesses do not. I have developed my L⁴ Customer Profitability Quadrant ™ which enables a business to determine the status of all its customers. L⁴ means your customers fall into four quadrants, being:

‘Lose Them’ – these customers generate low profitability and low enjoyment or value to your business.
‘Look Out’ – these customers generate high profitability and value to your business, yet the enjoyment is low, so there is a ‘flight risk’ with them.
‘Lift Up’ – these customers are valued by your business and enjoyable to work with, but they are not very profitable and the chances are high that your staff are spending too much time servicing them because they are enjoyable.
‘Lots More’ – these customers are ‘gold dust’ for your business. They are highly profitable and valued, and they are enjoyable to work with. They need to be thoroughly looked after by your business, and you want more of them.

In summary, no business wants to lose customers unnecessarily. Quality of service, respect and appreciation will go a long way towards ensuring customers remain loyal.

If you would like to learn more about how to determine your own L⁴ Customer Profitability Quadrant™ for your business, then please go to www.adelemclay.com/free-resources to download the FREE e-book entitled Who Are YOUR Most Profitable Customers?

Knowledge is power. By understanding the dynamics of your customer base, you are better able to respond to ensure you retain and grow your most important and profitable customers.

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Is Customer Service YOUR Key to Business Success?
Creating Superior Customer Value – do you do that in your business?
Finding Customers via LinkedIn
Using YouTube for Finding Customers
Which are Your Most Profitable Customers?
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?

Supercharge Your Profitable Business!

Many small business entrepreneurs enter the world of self employment with a technical skill that they learnt, while generally working for someone else. When they decide to take the leap and become an entrepreneur, they are in the sea of unknown. Will they sink or swim?

I believe that it is now the time of the small business entrepreneur. Worldwide, small business success is the key to all economies improving. Across the world, if we had highly profitable and successful small businesses employing people, how different would the economic world be right now?

To have a profitable business, I believe there are 10 key strategies, that if implemented, will transform a small business. So what are they?

Mindset – if the small business entrepreneur has a dream for their business, believes they can achieve it, they will move mountains to achieve the success they dream of. A positive mindset is critical to success.

Lifelong Learning – I believe we can never know enough. If an entrepreneur is constantly learning new business skills, and importantly, implementing the new knowledge, they will achieve the business success and business profits they are seeking.

Cash Flow Management – My favourite saying is: Turnover = Vanity; Profit = Reality; Cash Flow = Reality!! By having effective cash flow management systems in place to ensure the business remains in positive cash flow, the small business entrepreneur will have a viable business. While cash is not profit, if it is not collected, it will never become profit, as it will be written off as a bad debt.

Monthly Financial Management – do you know the difference between annual financial accounts and monthly financial management? Get effective management financial management systems in place, and your business will never be the same as you will ‘tweak’ your business performance and profitability throughout the year.

Product and Service Profitability – Do you know which are your most profitable products and services? Understand this, and your promotional campaigns will be driven around your most profitable products and services. All that leads to more profitability.

Customer Profitability – Do you receive any and all customers that come your way? Many businesses do. Understand your existing customer profitability, and strategically seek out more of the same types of customers, and you will watch your business profits soar.

Cross, Up, Down, Frequently Selling – Many businesses do not make further offers to their customers that support the original sale, and nor do they have strategies in place to sell to their existing customers more frequently. Get this right, and you will be selling more and more frequently to your customers, resulting in more profit in your business.

Pricing – My favourite subject in business. Your customers will pay for what they value, yet pricing is one of the scariest subjects for small business. Get your value proposition for your customers right, and you can charge more.

Finding ‘Lots More’ Customers – Most small business entrepreneurs do not have marketing strategies in place to identify, market and communicate with potential customers. Did you know that it takes approximately seven interactions with a potential customer before they will buy from you? Many businesses (big and small) do not invest enough time and resources to continue marketing to their potential customers.

Systems, Automation and Outsourcing – Another of my favourite subjects. Does your business have a systemised and automated approach to business or is it a ‘random’ experience that your customers have when they buy from you? Get this right and a business is scalable upwards. Similarly with outsourcing, as it provides many opportunities for the small business to ‘look’ bigger than it actually is simply due to outsourcing some of the activities that the small business entrepreneur cannot or should not be doing.

If you would like to learn more about finding more profitable customers for your business, please download any of the FREE resources that may be helpful to you at www.adelemclay.com/free-resources

Other articles on What Makes Successful Entrepreneurs:

Seven Secrets of Super Successful Entrepreneurs
Entrepreneurship vs The Meaning of Life
Mega Entrepreneur Defined!
What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
NZ Entrepreneurship Success
Leadership Qualities
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

Leadership Qualities

Guest blog by Dr Jane Cox

A common myth to dispel at the start is that leadership qualities are the same as the qualities of a good manager – they are not. Some great leaders are good managers, but many good or even great managers, have very little by the way leadership qualities.

Managers get the best out of processes and procedures, leaders get the best out of people.

Leadership qualities can be fluid in definition; in some cases the very qualities that defined a leader’s great leadership qualities in one set of circumstances work against them in another; an obvious example that comes to mind is Winston Churchill, Britain’s Prime Minster during World War II; very few people would argue that his dogged determination and utter single-mindedness was a major factor in the eventual Allied victory, but after the war the public had no appetite for that very same dogmatism and he was effectively thrown out of office.

Which illustrates another key point about leadership qualities – leadership qualities are about taking people willingly along with you, not just telling them what do.

All that said, there are some common traits I think one can define as “leadership qualities”.

These are:

Honesty
Integrity
Ability to admit your mistakes
Ability to handle stress
Compassion
Flexibility
Tenacity
Mental (if not psychical stamina)

The ones that get missed in most people’s list of leadership qualities are compassion and flexibility, which is why tyrants & bullies often get mistakenly thought of as great leaders – no great leader leads through fear.

I recall some years ago reading an article about two very different heads of businesses.

First was T.J. Rodgers, CEO of Cypress Semiconductors, who was nominated as “America’s toughest boss at the time”. In Fortune magazine he is described as a crypto-sadist! The plaque above his desk gives you an insight into the man’s character. It reads, “Be realistic; demand the impossible! “, and demand the impossible he did. Employees were given short deadlines and, if they were not met, their paycheques were stopped until they had complied.

“Everyone is treated equally in this firm”, said TJ, “my cheque is also stopped if I fail to deliver on time”. Then he added in his inimitable style, “Of course I don’t have to worry about that crap as I am a millionaire”.

Employees didn’t last long as a rule but those who could stand the pace earned top rewards. And the results spoke for themselves. At the time to company held seventh place in a highly competitive industry.

The other businessman featured was the late Sam Walton, then the richest man in the USA with a personal fortune of $25 billion (at the time the second richest man is only worth a paltry $8 billion!).

Sam’s approach to his Wal-Mart employees was totally different. When his fatal cancer was diagnosed, Sam climbed into his Cessna and spent his last few months visiting as many of his 345,000 Wal-Mart employees as possible. At these meetings he was hugged and kissed by thousands of tearful people, all of whom loved him dearly. One of his last comments was, “No man had this much fun making money”. Starting at the age of 44 he built this business in 30 years through developing loyalty and pride in his people.

Were both men successful? I suppose the answer is “yes” when one relates their achievements entirely to business, building shareholder value and all the other bean-counting measures.

Were both men great leaders? Not in my book.

Dr Jane Cox is a business psychologist, who works with large corporates and entrepreneurs, supporting them on a range of business issues, including leadership, communication, performance improvement, and much more. Dr Cox and Adèle McLay are business partners, having created the Millionaire Entrepreneur Business School that is launching in 2015.

Other articles on What Makes Successful Entrepreneurs:

Seven Secrets of Super Successful Entrepreneurs
Entrepreneurship vs The Meaning of Life
Mega Entrepreneur Defined!
Supercharge Your Profitable Business!
What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
NZ Entrepreneurship Success
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

NZ Entrepreneurship Success

Picture this…. Massive share market crash! Bankrupted country! Government bailing out the largest bank! Sound familiar? That picture I painted could have been the UK, USA, or many European countries in 2008 and beyond. In fact, it was New Zealand in 1986, during the last share market crash.

Those were dire times in New Zealand. Many people lost their jobs as companies were bankrupted or substantially retrenched. As well, the public sector was totally restructured, making many redundant. Many unemployed people in New Zealand had to re-invent themselves to stay living in New Zealand, or face the idea of relocating to Australia or further abroad to find work.

As a result, the late 1980s and beyond spawned a new era of entrepreneurship in New Zealand. Over the years, New Zealand has gone on to become a country that encourages small business and entrepreneurial success, and many of New Zealand’s small businesses ‘punch above their weight’ on the international stage.

In the renowned Forbes business magazine, New Zealand is continually credited as being one of the best places in the world to be in business and to be an entrepreneur. New Zealand achieved the ranking of number one in 2012, and number two in 2011, whereas, the UK was 10^th, Australia 11^th, and the USA 12^th in 2012.

Most other world economies can encourage and support small business through creating a transparent and stable business climate at the macro level, just as New Zealand has. As well, small businesses need to be supported by other structures. Among other things, New Zealand has a fantastically successful national and free Business Mentoring scheme in place that is sponsored by many of the country’s largest corporates in support of small business.

Finally, it takes an entrepreneurial spirit and attitude to be successful as a small business entrepreneur, and that comes from within!

As a born and bred New Zealander who now lives in London, I have been an entrepreneur for most of my working life. I have also coached and mentored many small and very successful businesses and entrepreneurs. My passion is supporting small businesses to be hugely successful. I look forward to sharing my top tips and insights in my blogs, tweets and other online and social media channels.

Together, let’s build a world full of hugely successful small businesses. Entrepreneurship is the future of business.

Other articles on What Makes Successful Entrepreneurs:

Seven Secrets of Super Successful Entrepreneurs
Entrepreneurship vs The Meaning of Life
Mega Entrepreneur Defined!
Supercharge Your Profitable Business!
Leadership Qualities
What Makes Great Entrepreneurial Leaders?
All Work + Little Play = Boring!
Entrepreneurial Success without Fulfilment: Who Wants That?
Millionaire Mindset
7 Secrets of Business Success
Sir Richard Branson Asks…
Ordinary vs Game Changing
Thriving within the Juggling Act
Business Success and Cookie Dough
What Ice Cream Flavour is Your Business?

Finding Customers Via LinkedIn

Are you using LinkedIn proactively as a tool to seek out potential customers? Many users are not. They merely have their profile loaded, and that is it! Yet, if you are serious about growing your business, then in my opinion, LinkedIn must be considered as a key marketing tool in your armour.

Let’s look at some statistics.

LinkedIn’s ambition is to have 3 billion users on the site; it currently has 277 million users… it has a long way to go, but that is already a lot of professional users to engage with. Two hundred countries are currently represented on LinkedIn.

As of the date of this blog, there are some 3 million business pages, and 2 million groups on LinkedIn. Eight thousand new groups are started each week, and there are approximately 187 million monthly unique visitors to LinkedIn.

Forty percent of users check their LinkedIn account each day, so there must be some benefit to them in checking their accounts that often.

Finally and phenomenally, in 2013, 5.7 billion searches were done on LinkedIn. That is a lot of people seeking out and building relationships with others.

So how about considering your level of engagement with LinkedIn? Are you an active or passive user of it? If you are active, how active? Can you improve your visibility and credibility within LinkedIn in order to attract the people to you that you are seeking?

If you are a passive user, and you are keen to grow your business, how about learning more about how LinkedIn can support the growth of your business?

Back to Basics – Your Personal Profile

Remember that before someone does business with you, they are now very likely to check you out on LinkedIn. So what is your profile saying about you at present? Is it complete? Is it professional? Based on what you see on your own profile, would you do business with you?

Your name and headline are really important. Please ensure you put your full name into your profile – first and last names… many people do not. Then consider the ‘keywords’ you want to be found by as your professional headline is searchable. For example, I want to be found as a business coach or consultant, so I have those words in the headline of my profile, along with other words and phrases. Your keywords should also be repeated throughout your profile.

The rest of your profile must be an accurate reflection of you, including all the roles you have had and companies you have worked for; your uniqueness; your interests; other organisations you are involved with; awards and achievements. Also, remember to list your areas of speciality as they are searchable too.

Using LinkedIn to Build Business

While I am not a teacher of LinkedIn, I am a reasonably advanced user of the tool, and I believe in continuing to use it to build my visibility and credibility so that when I am ready, I can make approaches to people I would like to ‘link in’ with, in the hope they will be impressed with my professionalism and background, such that they connect with me, and we can begin to build a business relationship.

LinkedIn has an excellent advanced search function for seeking out people. Let us assume you are an architect in London, and you want to build relationships with landscape architects in central London. By using the advanced search function you can narrow down using keywords and location parameters to locate all the landscape architects in the local area that you want to build relationships in. You can then communicate with those people, by joining the same groups as them, or asking for introductions to those people if people in your network are connected to them in LinkedIn. Once you are connected to them, you can begin building a business relationship, that may well result in business opportunities.

If you are interested in knowing more about how to become a proficient user of LinkedIn for business, then how about seek out an expert who can support you in getting your profile right on LinkedIn so that you can maximise the business opportunities.

The key for your business is to use LinkedIn as another marketing tool to grow your business. As both the Forbes and Fortune Magazines have said, LinkedIn is the ‘Number one social media tool on the planet.’ So go, to it. Embrace LinkedIn and watch your small business grow!

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Is Customer Service YOUR Key to Business Success?
Creating Superior Customer Value – do you do that in your business?
Using YouTube for Finding Customers
Which are Your Most Profitable Customers?
Who Wants High Customer Retention?
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?