The 80-20 Rule

For those of us that are self employed, dealing with customers is an everyday part of business. As you may imagine not all customers are 'ideal customers. Depending on your industry this can be limited by qualifying clients prior to signing.

That's another story though. At the moment I am just talking about indentifying troublesome trends. Some time ago when I was in business school, we we're taught the 80-20 rule for CRM (customer relations management).

Basically, it means that you shouldn't be spending 80% of your time on clients only worth 20% of your gross business/profit. You know, the client from hell that wants it all, wants cheap and wants it yesterday. Once can't always just take any business that comes their way. Some foresight as to what the future may hold with the potential client is prudent.

A friend of mine, Wayne, had a close up and personal (not to mention ongoing) encounter of such a nature.
We had delivered a project for a client that was...well let's say, fussy. They had inquired as to our availability to do more work, which I declined under the guise of being to busy. The client had also inquired as to some of Wayne's services. When asked, I told him to run screaming. He took the stance of "how bad could they be?". Since then he has lost many, many, hours with little in the way of compensation.

So the next time you find you're working extensive hours for very little profit, have a look around. Have any 80-20's? Clean them up and be a little more careful in how you qualify your clients.

Watch your step