Not All Customers Are Created Equal

Not All Customers Are Created Equal

Not all customers are created equal. When it comes to profits and customers relationships, some customers are much more valuable to you than others are and vice versa, you are more valuable to some customers that you are to others. In order to break out of the commodity price trap, you have to be able to create more value for your customer. But you cannot create value unless you have access to your customer and you won’t get access to your customer unless you have a strong relationship.

The more access you have to your customer, the more information about your customer that you have access to. The more information that you have access to, the better able you will be at crafting a value creating proposal. That’s the good news. The bad news is that some customers are easier to bond with than others. Your ability to pinpoint which customers are willing to develop a relationship with you and which ones are not is your key to higher profitability.
You’ve heard of the 80/20 rule before. The 80/20 rule applies to many situations. For instance, on average, the top twenty percent of the salespeople in this country make about eighty percent of the sales. Another example is that twenty percent of your customers account for eighty percent of your profits. Using the 80/20 rule as a guide can help you decide which accounts to focus your resources of time, energy and effort.

Company culture is your window into your customers thought processes, their purchasing processes and also their relationship processes. Company culture, for those unfamiliar with the term, is the overall psychological profile that a company has manifested through its employees by virtue of the management profile of the company leadership. In other words, whatever characteristics the leadership of the company emphasizes to its employees will be the same profile exhibited by those employees to its vendors. If top leadership emphasizes and rewards an open and accessible leadership style, then those traits tend to be inherited by the employees that work under them. If the top leadership emphasizes closed thinking and protective politics, then the company culture will generally follow suit. Sometimes by design, but mostly by accident, a company passes down their culture to their employees, simply by rewarding specific behaviors or sometimes by failure to reward other behaviors.

It can sometimes be easy to spot a company culture that isn’t very open to forging relationships. The typical signs are low employee morale, lots of office politics and a self-centered psychology focused on individual goals rather than on corporate goals. This type of company culture results into low profitability, low quality output and a commodity pricing mentality for their own produc offerings. It should go without saying that if a company has a commodity pricing mentality for their products and services, then their purchasing processes will also focus on commodity pricing mentality as well. By recognizing your customers company culture, you can make better decisions on how much you want to allocate your time, energy and efforts. The quicker you learn to recognize the culture of a commodity pricing mentality, the quicker you can decide to get out of the selling process before you’ve invested too many resources on a little or no profit account. This frees you up to better focus your resources on the twenty percent of clients that understand that you have more value to offer then other than just the lowest price.

This is not to say that you shouldn’t ever go after any business with companies that are focused on commodity pricing. This is just a way of helping you identify what type of purchasing thought processes that you are dealing with so that you can make the appropriate selling strategy. Remember, according to the 20/80 rule, you will always have some portion of your clients that are transactional focused, meaning that they are only interested in price. But by thinking about company cultures and how they affect your access into their business, you begin to recognize your ability to provide value creation solutions and you can re-allocate your time appropriately. Ideally, you will probably want to spend eighty percent of your time with twenty percent of your customers.