In my own business, we were serving almost 4000 customers a year "Badly....". With a small team, customers' wants and demands were becoming increasingly difficult to manage. The likes of Amazon and large corporates are moving us all towards a prime, next-day expectation.
On the one hand, I think this is great. When my Father started the business in 1978, we were taught to call customers "Sir and Madam" Today, it is only in the 5* restaurants that you would expect that service, and "Madam" has too many other meanings to be appropriate today.
There were many factors involved in my making the decision to "Cull" our customers. This wasn't in a villian moustache way, but just the realisation that unless we charged a considerable amount more for a low value job, these small jobs were simply bleeding margin from the business. From an accountant's point of view, it would have been easy to simply double-pricing; however, the customer demographic that these smaller jobs attracted just couldn't afford this, and so the kindest action was to signpost them to a smaller company that had the resources but not the overheads to offer a better service.
This small step has allowed the business to focus on what we have worked hard to build. It now recognises the hours and hours of R&D, the expertise in our small teams, and, more importantly, that we all reduce hours and spend our time serving a small number of customers better than a large number of customers badly.
I created the Customer Energy Matrix and incorporated several MBA-style models in the process. Inspired by BCG Growth-Share Matrix (Boston Consulting Group, 1970), The Customer Profitability Analysis, developed by Robert Kaplan (the same Kaplan who created the Balanced Scorecard) and Pareto Analysis — the 80/20 principle, this matrix strips out any complexity and gives a very visual way to identify who your customers really are.
This simple exercise allowed me to list my last 50 customers and then score them 1-10 on their profitability and the energy it took to serve them. The results were surprising even to me. As we had streamlined and created robust systems for some of the larger jobs, they were taking as much time and energy as some of the very small jobs. Literally, a £ 1,000 job took the same time as a £10 job. We realised very quickly that the legacy business was just no longer viable, and we made some changes to the business that to this day have seen customer numbers reduce from 4000 2 years ago to 2500 1 year ago and today 1000 per year.
I've built this exercise as the first part of my framework, 60 Hours a Week, because it is where I started, and I think the most powerful after the mindset exercises I did to allow me to see "why" I was still serving these legacy customers and why I felt an obligation to them.
If you want to give it a go, please feel free to download my easy to follow excercise, https://drive.google.com/file/d/1YPFRzded3TW33X0g9Y6Gt13Eg1prKgRq/view?usp=drive_link
This isn't an overnight fix, in fact it has taken me 12 months to really get it right, I followed the six step system I have now shared in the 30 Hours A Week workbook, I changed my messaging from " Get cheap stuff here" (and guess what I got from that) to "Innovative unique products".
This system has allowed me finally to cap the number of hours a week I need to work, I serve my customers well and the google reviews continue to flood in.
