There’s an old saying that if you’re indispensable, then you can’t get promoted. Whether or not that’s still true will have to be debated another time, but it has relevance for how we think about our sales accounts.

Pareto’s Law revisited

Pareto’s Law states that 20% of your input will give you 80% of your output. Conversely, 80% of your input will give you only 20% of your output.

Let’s think about that for a moment.                                                            

Your best clients

What 20% of your sales accounts give you the greatest income? Which of them get you closest to your financial targets? And which of them also have the largest profit margins?

Let’s look at that from a different perspective.

Your worst clients                                                                                                                            

Which 80% do you spend the most time on, but still get the smallest results? Which of them are the biggest headaches? Which of them would you most like to get rid of?

It rather begs the question, doesn’t it? Why do you insist on holding onto the clients who cause you the most grief, but who give you so little in return? Wouldn’t you love to be someone like Alan Sugar and say, “You’re fired!”?

One management consultant, who follows this principle religiously, raises his rates every year, and fires the bottom 10% of his clients.

Do you have the courage to do that?

You’re losing money

The fact is that if you don’t, then you’ll lose money over time. In these low-inflation days, that may seem less likely, but it will happen.

The only way that you can earn more for your work and deliver your expertise to the companies who really want it is if you get rid of those who aren’t that serious.

The question then is, “why do you hold onto those accounts that are so unprofitable”?

There are probably at least two answers to this. One is that you have an inherent sense of loyalty to them. You wouldn’t feel good about yourself if you just dropped them.

Another is that you feel that they’re almost ready to turn the corner. It’s like that you have prospects like this. You keep pursuing them – we call it “staying in touch” – because we think that the deal is nearly done. All that is required is a little more time.

The thing is that time is something that you don’t have. In fact, these people are diminishing the value of your time by asking you to spend more of it with them, whether they are a client or only a prospect.

No doubt you disagree. Why? Because you charge for your time. If they want more time, then you bill them for more hours or days. But that’s a false economy, and you know it. There are only so many hours in the day, and only so many billable days in a year. If you charge for your time, then you automatically limit what you can earn.

Have you ever thought about it like that?

You see, when your worst clients eat up your time, it prevents you from using it to find better paying clients. So instead of earning more money, you’re losing it!

Playing to break even

Psychologists will tell you that it’s in our make-up to avoid losses. In other words, we have a propensity to play not to lose rather than to play to win. We feel that if we haven’t lost, then it’s because we’ve won. This is a lie that we tell ourselves.

We also flatter ourselves by assuming that more billable time is a win. “They need me, so I must be winning”.

The truth is that there’s a third option. You can break even without winning, and when it comes to selling, breaking even is a loss, right?

Consistency

There’s another problem. It’s called consistency. Once we have behaved or believed in a particular way, it’s very difficult to behave or believe in a way that is contrary to that.

Marketing is based on this. It’s the principle behind giving a free small gift or offering something with a high perceived value for a knocked-down price. Once we have accepted the product, we feel obligated to purchase the next one we’re offered which is likely to be more expensive.

If you are in the habit of holding onto your unprofitable, time-consuming accounts, then you’ll have to overcome the feelings of guilt that will arise when you tell these people that they need to find someone else; that you have done all you can for them. That’s because it will be inconsistent with your past behaviour to let them go.

Another lesson from Pareto

There’s another way to look at Pareto’s Law that you need to take very seriously. It’s that 20% of your pitches will give you 80% of your business. That’s the good news.

The bad news is that 80% of your sales pitches will fail to yield any business at all.

Now the problem is knowing when to stop pursuing those that won’t succeed.

The thing is that you probably know when to stop. It’s that you lack the discipline to do it. You know when it’s unlikely that a deal will come off, but instead of literally cutting your losses, you live in hope.

Hope doesn’t make sales. Selling does. And you see, that goes back to this idea of consistency. You’ll feel that you haven’t done enough because you abandoned a particular prospect sooner than you might have done.

What should you do?                                                                                    

Take the time to do a cost-benefit analysis on your sales accounts. Identify those who give you the most and take the least in return in terms of your time. These are the clients you want to hold onto. After all, they are giving you the vast majority of your income.

Remember that you can’t put a price on time, even if you bill for it. And while we’re on the subject, you should be billing for the project, regardless of how long it takes to do it. In that way you can demonstrate to your clients that your focus is on value, which is what matters the most anyway.

Then make a list of those who eat up your time and either raise your prices so much that they admit they can’t afford you or fire them.

And when you do part company, do it nicely. Introduce them to someone who can give them the time and expertise that they require for a price that they can afford.

That way, everyone wins.

If you want to win more sale, email me and let's talk.