Focus On Your Top Customers

WHEN VILFREDO PERETO noted, in 1906, that 20 per cent of Italy’s population owned 80 per cent of the country’s property, he had no way of knowing how widely his observation would apply to the world of economics, and to businesses. Since then, the Pareto Principle, or the 80-20 rule, as it is usually known, has proven sufficiently flexible to turn up in all kinds of business scenarios and has become an accepted part of global management thinking. Thus, we hear that 20 per cent of a company’s employees produce 80 percent of its results and, with suitable modifications to fit different areas or industries, the list of examples goes on. However, one of the most important applications of the rule is that 80 per cent of an enterprise’s revenue comes from 20 per cent of its clients. If you accept that – and the consistency of those proportions turn out to be uncanny – then every company should try to understand as much as possible about the top fifth of its customers and listen closely to everything they say. Of course, that does not mean disregarding or undervaluing the rest. But there is no escaping the fact that the leading 20 per cent ultimately determine the success or failure of your product, service, sales and strategies and, therefore, whether your company stands or falls. To obtain the necessary range of information and opinion, it is not enough simply to track monthly figures or lines on graphs. Instead, successful businesses conduct a complete and continuous analysis of their best customers to understand everything from who they are to what...

Stay On Top of the Game

EVERY BUSINESS LEADER knows just how precious time can be. As responsibilities increase and technology advances, it can often seem that there are simply never enough hours in the day. Obligations pile up to chair meetings, join conference calls and attend client functions, and all the while there is that ceaseless inbound flood of emails, texts and phone messages expecting urgent attention. Executives, of course, soon learn that having to deal with all these demands is just a function of the modern business world. As a result, they become used to logging on to inflight wifi, addicted to their smartphones, and are experts in the art of the short-term fix. And that can turn out to be a major problem because, in the midst of all the running around and chasing to hit this month’s sales figures or next quarter’s financial targets, it is very easy to take one’s eye off the ball. Unwary leaders repeatedly make the mistake of getting too caught up in the day-to-day aspects of the business. Instead, they should remember one of the first principles of good management is to take a step back and look at the big picture. Being able to see the broader context is a prerequisite for career progress and the long-term viability of a company. And, while it takes time and application to develop the necessary business acumen, a number of tools are available to help. One of the best known is the SWOT model, which provides a basic framework for analysing a company’s strengths, weaknesses, opportunities and threats, and how to maximise or counteract them as appropriate. Another...

Seeing the Bigger Picture

AT SOME POINT in every successful business career, a discernible change in personality and behaviour must take place. It is not a question of Jekyll and Hyde or Clark Kent to Superman, just that the time inevitably arrives when the approach and outlook appropriate for taking the first few steps on the corporate ladder will no longer do. A sales director cannot think and act like a sales manager, nor a vice-president of finance like a compliance officer. So, anyone aiming to rise through the ranks must also be ready to undertake the steady self-transformation that will allow them to cross the invisible, but certainly not arbitrary, line that exists in every organisation. On one side are the “workers”, the people primarily focused on the tactical implementation of company policy. They may have years of experience and all kinds of fine sounding titles, but essentially their role is to sell products, deliver services, execute operations and push paper in the time-honoured style. On the other side are the “managers”. They, too, have learned the ropes in the approved fashion, but have then gone on to assume far greater responsibilities and, in particular, to oversee key aspects of strategic development. What makes this transformation possible is an ability to see the big picture. It is not something that happens overnight or occurs by magic after a certain number of years. Rather, it is a distinct skill, developed through application, study and awareness. It comes from an in-depth understanding not just of the company, but of the industry as a whole, the competitive environment, and the dynamics at work in the...

Make Your Voice Heard

IN THE WORLD of business, if you don’t have an opinion, one thing is certain: you won’t get very far. Whatever your role, be it employee, supplier, service provider or adviser, whoever is paying you will expect value for money and, in their eyes, that will include ideas, suggestions and clear evidence that your grey matter has been fully engaged. Previous business generations largely favoured the command-and-control model. Rigid hierarchies determined which people in an organisation or a working partnership were expected to do the thinking and whose role was more or less just to follow instructions. But nowadays most enterprises have woken up to the fact that employees and other contacts at every level can draw on diverse experiences and an extensive education. Therefore, they will have valid points of comparison, should have interesting opinions to share and ought to be asked to contribute more broadly to the overall success of a venture. The best team leaders and senior executives see the wisdom in canvassing a wide cross-section of views on all key aspects of the business. These moves can be obvious, though not always acted upon, such as seeking comments from customers on customer service standards. Or they can go much further, determinedly pushing staff to re-examine their own roles and interactions on a regular basis as a means of unearthing untapped talent, identifying areas for improvement in the business and being sure to get the best out of everyone. In taking this approach, the last thing managers want to hear is “the same old stuff”. They are looking for insights and original opinions which, when adopted...