Do Your Customers Make You Money?By admin | 28th September | Marketing Ideas, Marketing Skills, Marketing Strategy, Marketing Training
This post follows on from last week’s Visibility and Credibility posts and looks specifically at PROFITABILITY…
You need to be seen and trusted first (Visbility and Credibility), before people will buy from you. But how can you be sure you’re achieving profitability through your marketing?
If you’ve heard of Pareto’s Principle, you’ll know that (on average) 80% of your customers bring you 20% of your revenue – and 20% of your customers bring you 80% of your revenue. In which case, do you want any customer, at any cost, or do you want another one of the 20% who bring you 80%?? (If that makes sense.)
If you don’t keep records of profit, you may be seduced by increases in turnover. But anyone can be busy, all day long. That doesn’t mean you’re making any money. For example…
If you ran a hotel, you could let all your rooms for £10 each and you’d probably have 100% occupancy – and lots of money flowing through the business. But, if it costs you £12 to service each room (in terms of cleaning, breakfast, electricity etc.) you might as well have stayed empty – you’d have made more money.
Duncan Bannatyne often quotes “Turnover is vanity and profit is sanity”. So, know your numbers and ensure you’re making good profits. (If you’re not, then turn away the unprofitable business and spend more time with your family.)