The Impact of customers on Your Place in the Ecosystem

May 25, 2015

Although planet Earth cannot do much about its place in the solar system, there are many things you can do to influence, if not control, your place in your ecosystem. In a prior blog we talked about the importance of culture and values on the employee performance – and your ability to attract new employees.

The second question you need to address is “Who are our customers?” and “Are these our ideal customers?” Oftentimes companies will make the mistake of thinking “all customers are created equal” – but they’re not! Some customers actually cost you money because they don’t pay on time, require a lot of customer service, and never seem to be satisfied. Other customers may buy a lot of product but at a price with such a low margin that you don’t make enough to cover your overhead. Other customers treat the sales process as a transaction and are not interested in developing a relationship; they only intend to buy the low cost solution. These types of customers do not care about strategic value, and none will provide you visibility into their long-term strategy – if they have one.

The kinds of customers you really want are those who see you as a strategic partner, who value what you offer, who bring a smile to your face when their names are mentioned, who pay on time, and who are looking for a long-term relationship. If you want to grow, you need to begin the process of “disengaging with” or firing the customers who are in the first three categories, and spend your time and energy finding customers in the fourth category; they are the ones who will help your business grow.

Here’s an exercise that’s been illuminating to most of our CEOs.

  1. Make a list of your 20 top customers.
  2. Now categorise them by (revenue), and calculate the percent of revenue each one provides.
  3. Now recategorise them in terms of their contribution to the bottom line (profit) and calculate the percent of revenue they provide.
  4. Now list these companies in terms of strategic importance to your growth (and your company to their growth).
  5. Finally, order them in terms of the customers you most like working with.

Now compare your four lists and look at the top ten on each list. In the best of all worlds, there would be a high degree of overlap, i.e. the same companies appearing on all four lists. If that’s not the case, then you have a problem it needs to be addressed immediately, because you cannot grow if you don’t have the right kinds of customers.