Risk analysis of the portfolio of serviced clients
Remuneration is one of the key reasons why people work in sales. For the sake of predictable earnings, it’s a good idea to regularly analyse your portfolio of serviced clients and reflect on the possible risks associated with it.
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A client portfolio is the group of clients you have acquired or serviced. Regardless of whether you sell office supplies, insurance or cars, you have clients in your portfolio that should be given a special ‘key client’ status. Key clients are an important source of the business contacts which determine not only your current level of income, but also your future sales opportunities. Key customers can help you earn more. However, the ability to care about your entire portfolio of clients contributes to maintaining financial stability.
The risk of poor time allocation
20% of clients generate 80% of revenues - this is the well-known Vilfredo Pareto principle, which speaks of “the key few and the trivial many.” Practically everyone who deals with sales has heard about this principle with respect to sales volumes and margins. However, is the analysis of the volumes or margins transactions enough to determine the key customer in the portfolio? I suggest you take a look at this issue more broadly, in relation not only to such obvious costs as the cost of discounts, transport, and storage, but also the time allocated for customer service and care - time which was therefore not devoted to other customers.
Consider the following:
- How much time do you spend on servicing a key customer?
- How much time does it take you to do things that are not directly related to sales (related to customer service) yet still take up your time and attention?
- What criteria should a client meet in order to be classified as a key client?
By analysing your key clients, it’s worth trying to summarize not only those parameters directly related to finances, but also those related to time of service. The conclusions may be surprising. Do you spend as much time on one key client as on four smaller clients? How does this translate into your earnings? It may be surprising that a larger client often has the option of negotiating larger discounts, and their service is more demanding. When that translates directly into your earnings, that’s great. However, when it requires a lot of commitment and the commission isn’t exactly what you would have liked, it’s worth briefly analysing your actions and deciding what clients you really want to serve.
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