Saturday, November 25, 2006

Do You Buy?

One of my non-computer hobbies is collecting records.

Yes, records. Old, plastic, vinyl, and much older materials.

I have about 2,000 LPs and about 1,500 78's.

In the days before everything was posted to the web or catalogs were available electronically, vendors used to send out paper catalogs. This cost them money, so they usually asked for $1 or $3 for a one-year subscription to defray the cost. If you ordered records, then they would send you the catalog for free the next year.

But if you didn't order for awhile, your catalog would come with a message written across the front:

"Do You Buy?"

It wasn't really a "communication" that required a response. It was more of a communiqué to let you know that you weren't going to get another year's worth of catalogs.

December is a great month for asking your clients the same thing: Do You Buy?

Most small consultants do not cull out their mailing lists/client lists very often.

The process is quite simple. We run a report in QuickBooks and sort all clients from highest to lowest sales. At the bottom of this list is the guy who bought a battery for $29.99 and the woman who attended a seminar for $49. Not far up from there is a group of people who think they're our clients, but really aren't.

If someone only buys labor, and only buys 1-2 hours a year, they're really not our client.

Some of these people are officially handed off to other consultants. This happens when they call us and we tell them that they really don't fit our model any more. We refer them to one of the consultants in our user group and everybody's happy.

Others haven't bought anything since we put them on the list of clients to be passed on. So they get a letter, nicely worded, that says that we can no longer support their needs. It invites them to call us if they need a referral.

Then the important house cleaning takes place: We take these folks (both groups) off our mailing list. Our newsletter, with materials, labor, and postage, costs about $1.50 each per month. But aside from the cost, I don't want these folks to call us.

They never have a big project, they'll never sign a contract, and they buy a new server every seven years whether they need it or not.

Too many of us spend too much time and energy chasing micro-customers. Perhaps it's because, when we start out, we need work. So we take what we can get. But over time you need to move past this. There are three primary reasons for this.

First, these customers take a lot more time than your "normal" customers. Before you can sell them something, including services, you need to come up to speed on their systems. Since the last time they called you, they bought an educational version of Office and installed in on the receptionist PC; they changed ISPs; and they bought three new laptops. Since you were not consulted or involved in any of this, you have to spend time that's normally not billable. And all that to get 1-2 hours of labor. In my opinion, this is not worth your time.

Second, your time has value. Yes it does. Now you need to start acting like it does. Your 2-3 hours spent getting an hour's wages out of this customer could be more profitably spent doing many things. You could read a good book. If you need recommendations, let me know. You could study for the 70-282 exam or another MCP exam. You could even give away your time to one of your larger clients. They'll love it. But make sure you let them know what you're up to. You could even give away your time to prospects via free network analyses that might turn to "real" jobs.

Third, you need to determine whether the client will ever be above the threshold you require for an engagement. Here's what I mean:

Major projects and all clients should have a threshold. If a client or project can't get over the threshold, then it's not worth your time. This might be a profit of $1,000 or of $5,000. Or, it might be some other messure, such as having one server, five workstations, and the intention of buying a new server.

It takes some getting used to. But you'll see that your top ten clients produce a huge percentage of your revenue -- certainly 80% and perhaps even 90%. The next ten clients product 90% of the remainder. And all the clients after that don't amount to 5% of your revenue. Look at them really hard. Let's be honest here. They keep saying they'll spend money. They're well-intentioned. Etc. Etc. But the truth is: these "clients" take more than their share of time and they return little or nothing.

So ask the simple question "Do You Buy?" If the answer is no, take them off your list.

2 comments:

  1. Lakhani6:11 AM

    Respected Sir,

    We would like to know, if you could link to IT Training related website from you Blog.

    education.seo@gmail.com

    Regards

    Lakhani
    PS: This isn’t spam and hence not including website address

    ReplyDelete
  2. Looks like spam to me.

    ReplyDelete

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