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#155709 - 01/30/05 01:46 PM 80/20 Rule
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
The 80/20 rule states that approximately 80% of your profits come from 20% of your customers. From a marketing sense you are better off trying to sell something new to these prime customers, than to try to attract new customers.

I just went through my database and noted the people who either refer business, or have me work without getting competitive bids (sometimes even without a bid or estimate), and pay within 35 days. It turned out to be 21% of the total list.

I was curious if anyone else is identifying their prime customers & what you might try to sell to them.

Dave

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Business, Office, Estimating, Legal:
#155710 - 01/30/05 05:55 PM Re: 80/20 Rule
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
Dave, my "bread and butter" customers are just that. They were there for me when I started out and have been there for me through the years. I have built up a trust thing, that I am sure you have with yours.

The reason I bring up this point is, that it is Ok to sell them on something new, only if they need it. If you try to sell one of your "bread and butter" customers on something, and they get the feeling you are pushing something based on sales and profits, you run the risk of loosing them.

I could be wrong here, but I don't want to take that chance. It's business.

I take my 20%and find ways to save them money. In turn, that makes me money. One important part that every customer wants to here is his/her return on investment. It has to be worthwhile for them.

Case in point:
A well know insurance company was having security issues from their employees at night. The lots, they felt, were not bright enough. All 400W HPS lights. They were putting out the dim yellow light. Typical HPS lighting.

They called several EC's in the area to dicuss their concerns. The one they were using at the time reccomended replacing all the poles with taller ones and installing new lights on these new poles. Another one recommended the same fix action and also went as far as adding more poles. These costs were in excess of $50,000.

The building super, noticed one of my trucks one day, and decided to call me. I met with him at night and we dicussed his lighting concerns. To make this short, I talked him into replacing the HPS bulbs and ballasts with MH. We left the poles alone and added 1000W MH to them. Total bill, $27,000.
The EC he was using was trying to "bleed" one of his customers for all he was worth.
His customer is now mine.

In short, you can go after your best customers, but be careful, it may backfire.
If they got you this far and they keep you going, don't mess with it..........


Dnk........

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#155711 - 01/30/05 07:20 PM Re: 80/20 Rule
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
I have a really cool cordless saw for cutting conduit, a Fluke meter that's super-acurate, a cell phone, a PC with a hard drive that's 10 times as big as I'll ever need, etc..

It's not about bleeding people, it's about SALES. There's such a used-car-salesman feeling among contractors. When I'm bidding a job, I'll suggest a few other things they might also want.

This is America...need has nothing to do with it!

Dave

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#155712 - 01/30/05 08:24 PM Re: 80/20 Rule
Jps1006 Offline
Member

Registered: 01/22/04
Posts: 609
Loc: Northern IL
I would be concerned about coming off as having my interests before theirs. I don't see a problem with trying it. Ultimately if you suggest something and they go for it, it's their decision.

If you are going to try it, make sure what you are offering really does have a benefit. Energy savings is a good one. Offer retro fits. It really depends on the customer. You need to pin down what is important to them, and market to that. If you can identify a legitmate need before they do, not only are you making the sale, but you can be the hero too.

I guess I would say it that way. Try to identify a legitamte need of theirs with their best interest in mind. If you think you got one, run it by them.

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#155713 - 01/31/05 08:21 AM Re: 80/20 Rule
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
Dave,

Quote
"It's not about bleeding people, it's about SALES. There's such a used-car-salesman feeling among contractors. When I'm bidding a job, I'll suggest a few other things they might also want".


I agree,totally. When Bidding a job I always try to suggest the things they may have forgot, that is Sales.

However, I meant on the "bleeding" part of my post, that some EC's will litterally bleed things out of people. I have seen guys put in the wrong transformers because they were on the print. Fully knowing it was a misprint, and then overcharging for a change order to install a new one later. That too, is a form of Sales. They banged the customer all the way on that job. But then, they lost that customer for ever, once they found out what the EC was doing. Now that EC has to look for another customer to bang again, just to survive.

That's all I was stating, that is one way of doing business. I can't do things like that.
I like having people who trust me, and will be there for me for a long time.

I find that newer customers are better "targets", for the lack of a better word, to try new sales approaches on. Then if the sales work, or the equipment works like it should, then I'll go back to my bigger accounts and submit it to then. I don't experiment with my customers who I make a living off of.

Sorry if I sounded like a "used car salesman".
I didn't want to come off that way.

Dnk......

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#155714 - 01/31/05 03:00 PM Re: 80/20 Rule
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
I didn't mean you sounded like a used car salesman, Dnk. I meant that most of us are so uncomfortable with sales that we feel like we're coming across like a used car salesman if we try doing any sales with customers. Sales is part of the business, as is marketing, estimating, etc, but sales is the one that most of us are uncomfortable with.

Dave

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#155715 - 01/31/05 04:19 PM Re: 80/20 Rule
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
I agree with you there, I hate the sales end off things.
First because I am too busy to take on new work.
I have pondered the idea of hiring a commision based sale rep to try new areas, but that would leave me back looking for talented help again, and WE all know what that is like........


Dnk......

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#155716 - 01/31/05 05:41 PM Re: 80/20 Rule
renosteinke Offline
Cat Servant
Member

Registered: 01/22/05
Posts: 5305
Loc: Blue Collar Country
First of all, I'd like to propose this as a topic for one of our Wednesday Night chat sessions....Don' be shy!

Secondly, I learned my "business from a friend who ran a convenience store, and another who worked in a business not usually found outside Nevada; bothe had the same thing to say:
"The customers that make a business succeed are the small, regular customers who know what they want, and pay on time."

From this I derived the principle of "sharpening my pencils" for the good customers. It is foolish to give a discount to someone you'll never see again!
Another thing I've learned is that good customers realise that you have to make money to survive....just don't try to retire after each job!

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