To Make More Money, Reduce Your Client List
By Don Peppers.
Differentiating customers by value allows a firm to prioritize it's marketing effort, allocating more resources to high-value customers while minimizing the resources applied to low-value customers. In some businesses, this strategy may even lead the firm to trim the overall size of its client base.
Starting in 1989, Minneapolis consulting and research business, Custom Research Inc.
(http: / /www.cresearch.com) began focusing exclusively on high-volume, repeat customers in the Fortune 500 category in an effort to combat flat profit margins.
In 1989, CRI increased its larger client population, from 25 to 34, while trimming its overall client list to 67, down from 138 the previous year.
Turning away existing clients is a tricky business, but it can be rewarding. In implementing this strategy, CRI has reaped extremely high retention rates, doubling its revenues, all the time focusing its efforts on improving the quality of service it