Tip: ending the year right

“Bad customers will drain you of passion. Really bad customers will drain you of both passion and profits. Unfortunately, most bad customers will degenerate into really bad customers if you don’t do something about it.” -Dharmesh Shah

There is no doubt that having the wrong clients can quickly sink a company and put all its clients in a bad position. Here is an exercise to help you know which clients are winners and which may be bleeding you as you launch into the new year. (I recommend doing this in a spreadsheet.)

1. Make a list of your engagements over the past year
2. Beside each engagement enter:
   1. Revenue generated
   2. Total profit (total profit = revenue – ((billable + non-billable hours) * cost per hour))
   3. Profit margin
   4. On a scale of 1-10, how much you enjoyed it
   5. Whether this client has been a one-time buyer, repeat buyer, or better yet, an advocate (refers work to you)
3. Now sort the customers by each of the columns

You may be surprised at what you discover. Often I find I favor clients based on how much revenue they produce and how much I enjoy working with them. But profit margin is critical, as well as the amount of repeat work they bring or refer. If you’d like some help measuring your profit and profit margin, stay tuned.

Just be consistent

Have you ever been to the grocery store, went to aisle 7 where the baking powder always is, but couldn’t find it? Anywhere? That can be very irritating. If the store never had baking powder or at least gave me some indication of where it had moved (if it moved), the irritation would lessen significantly.

It turns out the baking powder had been moved to the other end of the isle, but the big “Baking Powder” hadn’t been moved with it. More commonly, the store is just plain out of something, but I have no way of knowing that so I waste my time searching.

Consistency puts customers in control of their experience. Do I want a quick, cheap meal? I go to Taco Bell. Do I want something nice? I go to the Acropolis. When customers are in control they at ease.

Back to the grocery store: I don’t expect you to carry endless varieties of specialty breads (which I enjoy). I don’t expect you to have everything you carry in all the time (although it would be nice). But would you at least keep things in the same place so I can know when something is out of stock?

I’m left asking myself, are we providing consistency to our customers?