We all have them. Clients we hate taking calls from.
Why do we avoid some clients?
Is it their manner? They take to long to do, decide, or pay? Their purchases are too small and they aren’t likely to increase their budget with us?
How do we decide what to do with them? We hate to lose the business, and we don’t want to get a poor reputation for not helping someone or worse yet if someone feels we don’t accept them because we are too busy.
I don’t have a quick fix for you but rather a system to rank all of your clients. Then when someone is a drag on you, you have a resource from which to make a decision.
We can talk about choosing your clients on another blog. Right now I want to talk about the value of your current clients.
🔜 Grab my free Google spreadsheet to track your client’s ranking and schedule an hour to set this system up.
Measurable Qualities of Clients
🔘 First Year Sales
🔘 Total Lifetime Sales
🔘 Length of Time with your company
🔘 Clients as Referral Sources
🔘 Timely Payments
🔘 First Year Sales
The first number we calculate is the total of all sales the client buys in their first year with you. Use the calendar year, January – December to track this even if the client starts late in the year and continues into the next year.
To come up with a ranking system for this, calculate your average first sale with a client.
In my previous gardening business, the average first sale was $2200. This had grown from $1,750 which is a good trend. I’ll use these numbers for examples as I had 15 years of data providing me with a valid baseline.
🔜 In the 5 point ranking system, create five ranges of first sale amounts.
For example, this is the value I used in the gardening business:
1. $500-$1000 (Set the acceptable lower limit of your sales)
2. $1001 – $2199
3. $2200 – $4000
4. $4001 – $7500
🔜 Place these ranges in your Google spreadsheet in Column C replacing the Red Numbers.
🔘 Total Lifetime Sales
As it says, this is the amount of money the client has spent on your products or services since their first purchase. When evaluating a client, I feel we don’t put enough weight on this number.
Create your ranking for this by looking at your current and past client lifetime sales totals. Find the average as you did above and create ranges again. My average lifetime sales figure was $18,000. Therefore, I set the number within the middle range (#3) and then set the other ranges based on my Total Lifetime Sales figures.
1. $5000 – $9,999
2. $10,000 – $14,999
3. $15,000 – $24,999
4. $25,000 – $34,999
🔜 Place these ranges in your Google Spreadsheet in Column D replacing the Red Numbers.
🔘 Length of time with your company
Length of time with your company is self-explanatory. You do need to decide if you track this in years or months depending on the typical buying patterns of your clients.
Set up a chart with a range of time that is indicative of the history of your best clients, your middle clients, and your shortest term or sporadic clients.
For instance, my top ranked clients were with me for 10+ years. They receive a 5.
Then I set the following chart:
0-1 Year – 1
2-3 Years – 2
4-6 Years – 3
7-9 Years – 4
10+ Years – 5
🔜 Place these ranges in your Google spreadsheet in Column E replacing the Red Numbers.
🔘 Referral Source*
You want to track three kinds of data in this. First is the number of referrals they give you each year. The second is the number of these referrals resulting in a sale. The final number is the dollar value of sales from your clients from that referral source.
Use this ranking for this category:
- 1-2 Referrals
- 3-5 Referrals
- 6+ Referrals
Referrals resulting in a sale
- 1-2 Referrals
- 3-5 Referrals
- 6+ Referrals
Referred Sales Value:
Use the same sales ranges as in the First Sale ranking above. Eg.
- $1001 – $2199
- $2200 – $4000
- $4001 – $7500
*This number is also significant to track from your non-client referral sources such as strategic partners, vendors, pr and advertising and networking.
🔘 Timely payments
Give the client from 1 to 3 points depending on how timely their payments are.
1 – Constantly have to follow up and chase after the money
2 – Usually pays on time but you do have to send a reminder bill
3 – Client always pays on time
The ‘Ole Phoof’
About a year before I sold my container gardening business, I had a call from a potential client who lived in a high-end community. I went up to meet with him and his wife and found them to be a nice couple, both of whom were retired professionals closing in on the century mark. The stories they could tell!
They accepted my proposal for a few new pots and redeveloping a dozen older, large pots and planters.
We discussed the design, they gave me my standard 50% deposit and away I went.
Installation day went well, however, there were a lot of questions and some concerns about irrigating the pots. We got everything straightened out with no apparent problem.
I returned to complete the post-installation checkup and everything was growing nicely. But he was not happy. He said the flowers on the balcony were not flowering and he wanted to be able to see flowers from his chair.
I realized that he was partially blind and he could not see the smaller blossoms of mixed colors. He needed larger blossoms of bold single colors that would mass into a huge bouquet of color discernible by his limited vision.
Usually I pick up the second check when I do the followup visits. But he did not want to give it to me because of the lack of color.
This is understandable but the change he needed represented less than 5% of the entire job and so far he had only paid 50%. I tried to get part of the final payment but he would not budge.
We replaced the flowers in two pots and sent the final bill. Two weeks later my Operations Manager called about the payment and he told her he wanted me to come back up. I really did not want to go because I felt there was going to be another complaint or confrontation.
I made the appointment, blasted my favorite singalong rock music on my drive to their home and emboldened myself to turn the visit into a positive experience.
Upon my arrival, they welcomed me with a glass of ice tea and invited me to join them on their balcony. After a short amount of time filled with chit chat, he pulled a folded check out of his shirt pocket and handed it to me with a twinkle in his eye. He said, “Thank you for giving me the garden I wanted. I just wanted you to come up for your money so I could thank you in person.”
I had been ready to put him in the category of “Do not accept” meaning not to offer or accept any more business from him. But the ‘Ole Phoof’ turned out to be a really great gentleman with a fabulous story. He just wanted to make sure he got what he wanted. I can’t blame him for that.
But what if I had cast him aside? His total sales ranked in my mid-level clients with a healthy lifetime sales potential. That and meeting a couple who inspire me to strive for a long healthy life were worth the period of angst that I went through.
Now for the more difficult qualities of clients as they are entirely subjective.
4 Unmeasurable Qualities of Clients
🔘 Communication and Accessibility
🔘Likability (Rank each client on the 1 to 3 scale with 3 most likeable.)
Talk about subjective! Let’s hope you can rank this quality as honestly as possible. If you have staff, what do they think? What is it about the person that you don’t like? Can you live with it or would you rather not have this person in your life – ever.
The one good thing about this system is that a client normally is not fired on this factor alone.
🔘 Amenable (Give 1 Point for each item checked. )
__ Are they ready or willing to take action
__ Open to advice
__ Willing to listen?
🔘Communication and Accessibility (Give 1 Point for each item checked.)
__ Are they a good communicator?
__ Do you have a clear path to communication? I.E., Do you know how to consistently reach them?
__ Do they get back to you in a reasonable amount of time?
▶️ Totaling Your Points
Add up the total points for each client. The spreadsheet will do this for you and insert their Ranking of A -D.
The maximum number you will have is 38. Once you have each client’s points, the spreadsheet will categorize them according to this chart:
So what does this mean?
Maybe those D clients are not worth your company’s or your time and energy.
I suggest you find a way to ease them out. You can talk to them honestly that you don’t feel you are the best company to service their needs, that as you have grown or you are only working with clients that are of a certain size or level.
Be sure you can give them a referral of who might be a better fit for them.
The goal now is to cultivate your C clients into B’s and grow your B’s into A’s. However by no means, should you accept any D level clients.
Want some help? Grab my free Google Spreadsheet to track your client’s ranking. And comment below if you have any questions or stories of your own to tell!