Q: How—and why—should I cull my customer list?
A: There’s a well-known rule in business, known as the Pareto Principle, which states that 20% of a business’s customers typically account for 80% of their sales. It’s definitely worth your while to focus your resources on cultivating your top customers. You may even want to “fire” some clients so you can better concentrate your efforts where they’re most likely to produce results.
Just as you can reduce your physical inventory to free up your cash, you can clean out your customer database to free up your resources. Start by dividing your customers into three categories:
- A = Customers who buy frequently
- B = Customers who make occasional purchases
- C = Customers who have failed to respond to your sales and marketing efforts
The customers on your A list deserve the most attention. You may want to target them with special offers and campaigns. You’ll also want to maintain contact with your B-list customers, but don’t squander excessive time and money chasing those on your C list.
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