Segmentation & Classification

If you recall last month’s Part 1 segment where we focused on client segmentation, you may remember my comment that, one of the key markers in growing a successful business - profitable business - is knowing who you are, what you do, where your expertise lies, and who your customers are; the most profitable ones! As I work with individuals, I try and establish a baseline of where they were, where they are now, and where they want to go; my job then is to help put them on the right path so they can see their vision come to fruition. So how is this done?

Last moth we discussed “segmentation”, categorizing your clients by vertical markets so your messaging is current, relevant, and engaging. This month’s focus will be on “classification” and the importance of this process when it comes to running a lean sales organization.

We Start with a Plan
As mentioned before, having a strategic plan is CRITICAL, not a “in my head plan”, but one that is committed in writing; one which can be reviewed, one which can be proactively changed or modified as you move forward. The classification process helps you identify your ideal vertical markets and specific clients within those vertical markets.

What Does Your Ideal Client Look Like?
Imagine for a moment that you have no clients and start at the top, certainly we would like all our clients to be “A” listed types, however, that’s not realistic. Begin by asking yourself, in an ideal world, what would my ideal client look like, what qualities and characteristics would they exude? Note, these qualities must go beyond tons of orders and spending a lot of money. Here are a few of the characteristics and qualities I would encourage you to consider, understand that the numbers and percentages WILL and should vary for each individual company:

• At least $20k+/year

• 45%+ or greater profit margins

• 50%+ of their business

• Great sales volume - $ 

• Great profitability - %

• Appreciates the relationship and demonstrates it

• Nice/easy to deal with

• Open to options and possibilities

• Receptive to new and creative ideas

• Doesn’t bid out quotes

• Pays within our terms or pre-negotiated terms

• Pleasant and easy to work with

• Good attitude and respectful

• Open-minded and willing to work together to solve problems in a fair equitable manner

• Understand the value of services, i.e. willing to pay for additional services, if required

• Communicates and agrees to expectations/services offered at the beginning

• Reasonable in expectations, i.e. does not expect 5,000 piece shirt order the next day or if it could be done then they are willing to pay for the rush production

• Place orders well in advance to avoid potential issues

• Good communication and accessible where calls or emails are promptly answered 

• Places orders regularly

• Places large orders often throughout the year. Minimal budget constraints.

• Give referrals for new clients and willing to make introductions

• Wants an on-going relationship. Loyal and does not seek out competitors.

Imagine if you could find that client, now consider the above points and select the ones that mean the most to you and then go to your client list and classify them. Having your “A” completed, this gives you the baseline to effectively determine the other categories.

Classification Categories
I classify m clients in the following manner, I teach this grid when working with my teams:

• A, B, C, D, E – these categories stair step down, generally as it relates to the amount of sales only. The solid characteristics and profitability, in my opinion, should not vary.

• F – this category is for those clients who are bad news, that don’t pay their bills, give you a hard time, don’t value you or what you do. These client-types are ones you want to dump, not follow-up with at any level. Getting rid of these clients, opens huge opportunities with your better clients and prospects. (For a full list of criteria, please email me at cquicksell@ipromoteu.com)

• H – HOLD - when you bring on a new client and you can’t be sure how the client will track. In this scenario, you want to monitor this new client’s progress for about 120 days and then appropriately assign them a category.

• I – INACTIVE - These are clients you have not had any dealing with for over six months, you’ll want to review and determine if any on this list are worth targeting to try and resuscitate. At some point, you had these folks as accounts so they must have been good before, they may be worth getting back.

Why Does It Matter, What’s the Purpose?
You have 24 hours in a day, no more, no less – use them wisely. When I’m building my client base I want to work with and give my top clients the bulk of my time. When I prospect, I want to prospect to similar types of clients, those that fall into the “A” mold for qualities and characteristics, and vertical market standpoint.

I use this from a marketing perspective as well. My marketing budget is allocated and tiered on a sliding scale for both existing clients and prospects. 70% of the budget is allocated for existing clients and tiered A-E, 20% for prospecting, 10% on hold for miscellaneous during the year. I allocate 6% of my gross sales to my marketing budget.

Connect With Your Clients
There are so many levels in which you can touch your clients; social, email, postcards, note cards, product sampling, and creative direct marketing - each have a function, each carry a cost. Through my market scheduling I divvy up the budget accordingly.

Having a plan, really knowing your clients, understanding how your business is trending, which markets and specific clients within those markets are giving you your best most profitable business, will put you on a path of success like you’ve never known.

Take the time to classify and segment your clients, reevaluate every year, for a healthier and more profitable business.

Here’s to making the balance of 2019 memorable and for setting the tone for a highly profitable 2020!

As always, continued good selling, & start the process now - CQ